Korea’s first alternative trading system ends Korea Exchange's monopoly
A man walks past the Nextrade headquarters in Seoul, Monday. Yonhap
The first thing Kim, a 32-year-old office worker, will try after work on Tuesday evening is trading through Nextrade (NXT). He had been eagerly awaiting the launch of Korea's first alternative trading system (ATS), as he had missed several "key investment opportunities" while being occupied with work.
"You no longer have to wait until the next day to trade if you miss an opportunity due to work," Kim told The Korea Times. "I believe the introduction of an alternative exchange will add more dynamism to the domestic stock market."
The launch of the NXT on Tuesday marks the end of Korea Exchange's (KRX) 70-year monopoly on stock trading. The new exchange stated that lower fees and a variety of order types would improve investor convenience.
On the first day of its launch, a total of 213,983 shares were traded in the main market between 10 a.m. and 3:20 p.m., with a transaction value of 8.83 billion won ($6.06 million). Trading remained active in the aftermarket, which operated from 3:40 p.m. to 8 p.m., recording transactions worth 11.37 billion won.
While investors welcomed the changes, they also expressed mixed reactions, balancing optimism with concerns.
"I am still confused about the new investment rules," another retail investor surnamed Lee, a 40-year-old office worker, said. "The process seems a bit complex, so I may not be able to actively utilize it right away. For now, I plan to stick to my usual approach and gradually adapt."
There are also concerns about market volatility. With the launch of the ATS, differences in trading hours and order types may temporarily lead to multiple prices for the same stock. This might allow institutional or foreign traders who hold more knowledge and experience than retail investors to engage in high-frequency trading, seeking to capitalize on small price differences.
"Concerns are growing that the race for faster trading and the surge in high-frequency short-term trading will further entrench the dominance of foreign investors, institutions and securities firms, making the market increasingly exclusive to them," Jung Eui-jung, head of the Korean Stockholders' Alliance, said at an open forum held at the KRX headquarters on Feb. 20.
Korea's financial leaders celebrate the launch of Nextrade (NXT), Korea's first alternative trading system, during an opening ceremony at the Korea Financial Investment Associate (KOFIA) headquarters in Seoul, Tuesday. They are, from left, Korea Exchange Chairman Jeong Eun-bo, Financial Supervisory Service Gov. Lee Bok-hyun, Rep. Yoon Han-hong of the ruling People Power Party, who is also the head of National Assembly's national policy committee, NXT CEO Kim Hak-soo, Financial Services Commission Chairman Kim Byoung-whan and KOFIA Chairman Seo Yoo-seok. Yonhap
At the opening ceremony, NXT CEO Kim Hak-soo addressed these concerns, adding that the exchange would contribute to enhancing the Korean capital market and ensuring sustainable growth.
"Since a multi-market trading system is new for everyone, some have expressed concerns about potential market stability risks," Kim said. "However, we have conducted extensive testing to verify system stability and implemented institutional safeguards to maintain market order. Moving forward, we will closely monitor market conditions and make every effort to ensure smooth and stable operations."
Korea's stock market has been monopolized by the KRX since 1956. Critics argue that this long-standing monopoly has restricted the availability of diverse services for investors, reduced incentives for infrastructure investment and made it challenging to accommodate the growing demand for new financial products.
In the U.S., over 30 ATS already account for about 11 percent of the total stock market. In Japan, three ATS platforms collectively hold a 12 percent market share, while Australia has a single ATS that captures 20 percent of the market.
What has changed?
Investors can now trade domestic stocks on the NXT from 8 a.m. to 8 p.m., spanning 12 hours, nearly double the KRX’s six-and-a-half-hour trading window. However, the next morning’s reference price will still be based on the KRX’s 3:30 p.m. closing price. For investor protection, short selling is prohibited outside KRX’s regular trading hours.
Investors do not need to access the NXT separately for trading. When an investor places a buy or sell order, securities firms will automatically direct the order to either the KRX or the NXT, depending on which offers the most favorable conditions.
This week, 10 stocks began trading simultaneously on both exchanges, including Lotte Shopping, Cheil Worldwide, Kolon Industries, LG Uplus, S-Oil and YG Entertainment. Popular companies such as Samsung Electronics and SK hynix will become available for trading starting on March 24. The number of tradable stocks will gradually expand to a total of 800.
The NXT is also subject to market share regulations. If its six-month average daily trading volume exceeds 15 percent of the total market volume at the end of the month or if a single stock's trading volume surpasses 30 percent under the same criteria, trading on the NXT will be suspended.
If market-moving information is disclosed through the media or other sources during after-hours trading, trading of the affected stocks will be suspended. Investment derivatives, such as exchange-traded funds and exchange-traded notes, require separate approval and are expected to become available for trading on the NXT in 2026.