South Korea’s financial landscape witnessed a significant development with the debut of Nextrade, the country’s first alternative stock exchange, challenging the long-standing monopoly of the Korea Exchange (KRX). Launched with 10 blue-chip stocks, Nextrade aims to expand its listing pool to 800 stocks by the end of March, promising increased market liquidity and competition in the equity markets.
Nextrade introduced extended trading hours compared to KRX, allowing pre-market trades from 8 a.m. and after-hours trading until 8 p.m. The alternative exchange also offers more bidding options and lower trading fees for brokerage firms, emphasizing compliance with the duty of best execution, a new rule for stockbrokers in the country.
While the launch of Nextrade didn’t bring significant changes to trading systems, a notable addition is the smart order routing feature, enabling investors to optimize trade execution between KRX and Nextrade. On its first trading day, Nextrade saw moderate activity, with YG Entertainment Inc. emerging as the top performer, followed by Kolon Industries Inc. and LG Uplus Corp.
Despite minimal price discrepancies between KRX and Nextrade, some investors found the dual-display of quotes and stock movements complex. The Korea Exchange, established in 1956, has been the sole operator of the country’s main bourses, the Kospi and Kosdaq. While short selling is permitted on Nextrade, it is restricted during pre-market and after-market hours.
Nextrade’s gradual expansion and competition with KRX signal a transformative phase for South Korea’s capital markets. By fostering greater market competition and offering innovative features like smart order routing, Nextrade aims to establish itself as a viable alternative to the traditional exchange, paving the way for a more dynamic financial ecosystem in the country.
Industry experts view Nextrade’s emergence as a positive step towards diversifying South Korea’s financial market, providing investors with more options and driving efficiency in trade execution. The new exchange’s focus on market liquidity and fair trading practices underscores a commitment to enhancing transparency and investor protection in the evolving financial landscape.
As Nextrade continues to expand its listing pool and attract more market participants, the competition between the alternative exchange and Korea Exchange is expected to intensify, ultimately benefiting investors through improved services, lower costs, and enhanced trading opportunities. The evolving dynamics in South Korea’s financial sector reflect a broader trend towards market liberalization and technological innovation in the global financial industry.