Korea's first alternative stock exchange goes live
Breaking Korea Exchange's nearly 70-year monopoly, Nextrade offers extended trading hours, lower commission fees
Nextrade, South Korea's first alternative stock trading system, began operations on Tuesday, introducing a 12-hour trading system that extends beyond traditional market hours.
The key advantages of trading on Nextrade include flexible trading hours and lower commission fees. However, a limited number of available stocks and low initial liquidity are cited as potential drawbacks.
'We will make every effort to ensure that Nextrade provides swift, innovative services that meet the needs of the local capital market,' said Nextrade CEO Kim Hak-soo during the platform's launch ceremony in western Seoul on Tuesday.
Here are key questions and answers regarding the nation's new secondary stock exchange that ended Korea Exchange's monopoly of almost 70 years.
What is Nextrade?
Nextrade is South Korea's first alternative stock exchange. It was launched by a consortium of 34 securities and tech firms in November 2022 to promote competition in the domestic capital market.
After receiving final regulatory approval in February, Nextrade officially went live on Tuesday, breaking the monopoly previously held by Korea Exchange.
What are the benefits of trading on Nextrade?
Unlike KRX, which operates from 9 a.m. to 3:30 p.m., Nextrade offers extended trading hours, allowing investors to trade in the early morning or evening.
Nextrade's trading hours span 12 hours a day, from 8 a.m. to 8 p.m. Premarket hours run from 8 to 8:50 a.m., regular market hours from 9 a.m. to 3:20 p.m. and aftermarket hours from 3:40 to 8 p.m.
For operational convenience, trading is paused for 10 minutes twice a day: 8:50 a.m.–9:00 a.m. and 3:20 p.m.–3:30 p.m.
Nextrade will charge commission rates 20-40 percent lower than KRX's fee of 0.0023 percent. Additionally, Nextrade will waive all commission fees until April 30 to encourage trading activity.
Are all listed stocks available on Nextrade?
No. In its first two weeks of operation, Nextrade will offer only 10 stocks for trading:
Kospi-listed stocks: Lotte Shopping, Cheil Worldwide, Kolon Industries, LG Uplus, S-Oil
Kosdaq-listed stocks: Golfzon, Dongkook Pharmaceutical, SFA, YG Entertainment, Com2uS
By March 17, the number of available stocks will increase to 110.
By March 24, it will expand to 350, including major stocks such as Samsung Electronics, SK hynix, Hyundai Motor, Naver and Kakao.
Eventually, 800 stocks will be available for trading by March 31.
Currently, exchange-traded funds and exchange-traded notes are not available on Nextrade, but the operator hopes to introduce them later this year.
Can investors choose between KRX and Nextrade?
Yes. During regular market hours (9:00 a.m.–3:20 p.m.), when both Nextrade and KRX operate, investors can choose which platform to use, considering factors such as commission fees, trading speed and bid price.
During premarket and aftermarket hours, when only Nextrade is operational, investors must use Nextrade if they wish to trade.
If investors do not make a selection, brokerage houses will decide on their behalf based on the duty of best execution, meaning they will evaluate which exchange offers better pricing or stability and execute the transaction via the Smart Order Routing system.
Currently, 14 major brokerage firms, including Mirae Asset Securities, Kiwoom Securities, and Samsung Securities, support trading on Nextrade during all operational hours.
Another 14 mid-sized brokerage firms, such as Shinhan Securities and Kakaopay Securities, only offer trading during Nextrade's premarket and aftermarket hours for the time being.
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