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Nextrade ATS set to break KRX's 70-year trading monopoly on March 4

Published: 07 Feb. 2025, 17:59

SHIN HA-NEE
[email protected]

Kim Young-don, a Nextrade official, speaks during a press briefing on the alternative trading system in western Seoul on Feb. 7. [YONHAP]

Nextrade (NXT), an alternative trading system (ATS), is set to debut on March 4, putting an end to the seven-decades-long monopoly of the Korea Exchange (KRX) as the country’s sole bourse operator.

Trading hours will be extended to span from 8 a.m. to 8 p.m., and investors will be provided with a more diverse range of options for stock investments, according to NXT.

“The goal is to secure a market share of at least 10 percent in three years,” said Kim Young-don, a NXT official, during a press briefing on the upcoming alternative trading platform held in western Seoul on Friday.

During the early operations following the launch, only 10 stocks will be available for trading, which will gradually increase to 800 by April.

NXT will offer pre-market trading from 8 a.m. to 8:50 a.m. and after-hours trading from 3:30 p.m. to 8 p.m., in addition to regular trading hours. If news reports that could significantly affect investment decisions emerge after 6 p.m., trading for relevant stocks will be halted immediately, and whether to resume trading will be decided the following day.

Thirty-two securities firms expressed their willingness to participate in trading so far, with 29 set to take part in the initial trading on March 4. Of the 29 brokerage firms, 14 will trade only during pre- and post-market hours, not regular hours, in the early phase of the introduction.

With the launch of the NXT secondary trading platform, securities firms must adhere to the duty of best execution, meaning they must execute trades on the most favorable terms possible for their customers. Therefore, when an investor places a buy order for a stock, a brokerage will be required to buy the stock at the lowest price available either on the Korea Exchange’s Kospi and Kosdaq or NXT.

NXT expects that introducing an alternative trading system will boost capital inflow into the domestic stock market, as seen in previous cases of financial markets in Australia and the United States.

Trading costs for investors will also decline, according to NXT, due to its lower transaction fees — which are about 20 to 40 percent lower than that of KRX — as well as to fresh competition between KRX and NXT.

BY SHIN HA-NEE [[email protected]]