Key points
- Blue Ocean ATS made 18 symbols unavailable starting with the session that opened Monday, August 31 at 8pm in New York, among them SOXL, KORU, SNDU, and RAM.
- That session is Korea's Tuesday business day, when brokers there sell US stocks from 9am to 5pm Seoul time, so those four had no price on the screen.
- An SEC rule stops an alternative trading system from being 5% or more of a stock's average daily volume in four of the previous six months.
- Korean investors net bought $1.36 billion of SOXL in the single week of July 28 to August 3, close to eight times the second-place name.
On September 1, Blue Ocean ATS told Korean brokerages it would stop showing prices for four funds during the hours Koreans buy US stocks. Maeil Business Newspaper (매일경제) reported it in Seoul that afternoon, once the session had already closed without them.
The four are all leveraged. There's the Direxion Daily Semiconductor Bull 3X Shares (SOXL), which tries to deliver three times the daily move of the NYSE Semiconductor Index. The Direxion Daily MSCI South Korea Bull 3X Shares (KORU) does the same with a Korean stock index. Then two funds at two times, the T-REX 2X Long SNDK Daily Target ETF (SNDU), which follows SanDisk (SNDK), and the Roundhill T-REX 2X Long DRAM Daily Target ETF (RAM), which follows a memory-chip fund that holds Samsung and SK Hynix.
Korean brokers call the service daytime trading, and it runs 9am to 5pm in Seoul while American clocks are on summer time. Almost all of them route it through Blue Ocean, an alternative trading system in the US that matches orders from 8pm to 4am New York time. So the session that opened at 8pm on Monday, August 31 in New York was Tuesday's working day in Korea, and it started with four popular funds missing.
Blue Ocean publishes these halts on its own website, once a month. "The following symbols will be unavailable on the Blue Ocean ATS beginning with the session starting on Monday, August 31 at 8pm EST," the September notice said, before listing all 18. The company has explained the reason on the same page in an earlier notice. "The rule is based around an ATS cannot be 5% or more of the NMS average daily volume during 4 of the preceding 6 months," it wrote, and it added that "the HALT is not coming from the exchanges, which are the common causes of HALTS."
Korean brokers said they would keep accepting limit orders through other alternative trading systems, so the funds can still be bought and sold. What's gone is the price. Maeil Business Newspaper called what's left blind ordering (깜깜이 주문), which is what it sounds like, an order sent without seeing what anyone is bidding.
Why these four, and why now? Metro Economy (메트로경제) reported on August 5, using Korea Securities Depository (한국예탁결제원) data, that Korean retail investors net bought $1.36 billion of SOXL in the week of July 28 to August 3. Second place that week was the ProShares UltraPro QQQ (TQQQ) at $172.64 million, so SOXL took in close to eight times more. Six of the ten most-bought names were leveraged funds, and KORU was one of them. The Kospi was falling that week, and Korean investors bet on it coming back by buying a New York fund instead. A few weeks later, they put another $798 million into SOXL in the week Nvidia reported.
Maeil Business Newspaper, citing the same depository, put the value of Korean investors' US stock trading at $48.9 billion in January and $65.6 billion in June, a rise of 34% across the first half of the year. The paper's figures stop there. It reads the halts as Korea's own doing. Blue Ocean didn't say that, and its rule counts share of total US volume rather than where an order came from.
