Seoul – Korea's capital markets are set to undergo a major transformation with the launch of Nextrade, the country's first alternative trading system (ATS), on February 4th. This marks the introduction of competition in the operation of the capital markets, which is expected to bring significant benefits to stock market investors.
With the launch of the ATS, daily stock trading hours in Korea will increase to 12 hours, from 8:00 AM to 8:00 PM. Nextrade will operate simultaneously with the Korea Exchange (KRX) during regular trading hours (9:00 AM to 3:30 PM), and will also offer pre-market (8:00 AM to 8:50 AM) and after-market (3:30 PM to 8:00 PM) trading sessions.
This expansion of trading hours is expected to provide investors with greater convenience and flexibility in managing their investments. Additionally, Nextrade will introduce new types of orders, such as midpoint orders and stop limit orders, which will allow investors to implement more sophisticated trading strategies.
The launch of Nextrade is also expected to lead to increased competition in brokerage commissions, which could result in lower trading costs for investors. Nextrade plans to offer commissions that are 20-40% lower than those of the KRX.
The Financial Services Commission (FSC) has granted Nextrade a license to operate as a multilateral trading facility. The FSC will also implement measures to ensure the stability and fairness of the market, such as strengthening surveillance and supervision of trading activities.
The FSC plans to further revise regulations to allow for the trading of exchange-traded notes (ETNs) and exchange-traded funds (ETFs) on the ATS. This is expected to further enhance the attractiveness of the Korean capital markets to investors.
According to the FSC, 32 securities firms have expressed their intention to participate in the Nextrade market. 15 firms will participate in the entire market from the launch, while 13 firms will initially participate only in the pre- and after-market sessions, and will join the entire market in September. Four firms will join the entire market in September.
Nextrade will select trading stocks from among the highly liquid stocks listed on the KRX. The company plans to gradually expand the list of tradable stocks to around 800 within the first four weeks of operation. The list of tradable stocks will be announced at a joint briefing on February 12th.
From the end of June, Nextrade plans to implement a regular change in tradable stocks, selecting and announcing the stocks five trading days before the end of each quarter, and applying the changes from the first trading day of the following quarter.
The launch of Nextrade is expected to bring greater competition and innovation to the Korean capital markets, which will ultimately benefit investors.
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