Korea’s First Alternative Trading System 'Nextrade' Officially Launches on March 4
Korea’s first Alternative Trading System (ATS), 'Nextrade,' is set to officially launch on March 4. On February 5, the Financial Services Commission (FSC) held its second regular meeting and granted Nextrade its final approval for operating as an ATS investment brokerage firm. This marks the introduction of a multi-market competitive system in the Korean stock market, which was previously monopolized by the Korea Exchange (KRX).
Extended Stock Trading Hours Introduced
Nextrade will operate regular trading hours in parallel with KRX, along with additional trading sessions: a pre-market session from 8:00 AM to 8:50 AM and an after-market session from 3:30 PM to 8:00 PM. As a result, Korea’s daily stock trading time will expand from 7.5 hours to 12 hours.
Authorities anticipate that extending trading hours, diversifying order types, and fostering fee competition will enhance investor convenience. Accordingly, KRX’s indicative opening price display time will be shortened, and trading on Nextrade will be temporarily halted during opening and closing auction periods.
New Order Types and Changes in Trading Methods
Nextrade is introducing new order types alongside existing market orders and four types of limit orders (standard, best bid, best ask, and conditional):
- Midpoint Order: Automatically adjusts to the midpoint price between the best bid and ask prices.
- Stop-Limit Order: Executes as a limit order when a specific price is reached.
KRX will also implement these new order types on Nextrade’s launch date, allowing investors to adopt more diverse trading strategies.
Securities Firm Participation and Gradual Expansion of Tradable Stocks
A total of 32 securities firms have expressed interest in participating in Nextrade, with 15 firms joining on the launch day. Some firms will initially participate only in pre-market and after-market sessions, while others plan to enter the full market by September.
Tradable stocks will be introduced in phases. In the first week, 10 stocks will be available, followed by 110 stocks in the second week. By the fourth week, approximately 800 stocks will be tradable.
Lower Trading Fees and Enhanced Investor Protection
Nextrade plans to set its trading fees 20-40% lower than KRX’s current transaction fees. Increased competition between markets is expected to reduce trading costs for investors.
To ensure investor protection amid the multi-market structure, financial authorities will implement an integrated market oversight system. The Financial Supervisory Service (FSS) has issued the ‘Best Execution Obligation Guidelines,’ requiring securities firms to establish Smart Order Routing (SOR) systems and execute orders based on best execution criteria. Failure to comply may result in fines.
Future Outlook
The launch of Nextrade is expected to bring significant changes to Korea’s capital markets. With extended trading hours, new order types, and fee competition among securities firms, investors will have more choices and flexibility. However, some industry insiders remain cautious about whether increased trading time will translate into higher trading volume.
Nextrade’s Head of Business Strategy, Kim Young-don, stated, “If major investment-related information is publicly released during after-market trading, transactions of the affected stocks will be immediately suspended.” This measure aims to prevent information asymmetry and ensure market stability.
All eyes are on Nextrade’s impact on the Korean stock market as it embarks on this new chapter.
