This paper examines the driving components of the lower volatility exhibited in the Korean financial markets compared to that of the U.S. market. Historically, the Korean equities market exhibited higher volatility than the U.S. equities market. Research conducted from 1998 shows that, while Korean equities markets displayed twice the volatility compared to that of the U.S. in 1998, that difference had begun to narrow since the 2000’s in 2009, the implied volatility of the Korean market had become lower than that of the U.S. market. This paper seeks to identify how investor type trading volume ratio and size in the Korean equities and nighttime markets contributes to a lower volatility environment as compared to the U.S. market. This concept namely, the shift in lower volatility of the Korean financial market as compared to that of the U.S., is referred to as 'the volatility reversal phenomenon’. The empirical analysis follows. Firstly, the retail and institutional trade volumes ratio in the Korea stock market positively contributed to the implied volatility reversal phenomenon. In contrast, the increase in foreign investor’s trade volume ratio was negatively related with, and thus prevented the occurrence of the implied volatility reversal phenomenon. Secondly, the retail trade volume ratio for nighttime future market positively contributed to the implied volatility reversal phenomenon, while foreign investors’trade volume ratio for nighttime futures market related negatively with the implied volatility reversal. Lastly, night time market volume has a negative relation to implied volatility reversal.