Korea to launch alternative stock exchange in 2025

South Korea will launch the country’s first alternative stock exchange Nextrade Co. in the first half of next year to enable stock trading for longer hours than on the Korea Exchange (KRX) bourse operator, the Financial Services Commission (FSC) said on Thursday.

On Nextrade, pre-market trade will be allowed between 8 a.m. and 8:50 a.m. before the market opens at 9 a.m. After-hour trade will take place from 3:30 p.m. to 8 p.m.

Thus investors will be able to trade stocks listed on the Kospi and the Kosdaq junior market for a total of five hours and three minutes longer than the KRX’s regular trading hours.  

Nextrade will also allow for more various bidding options.

It plans to bring down trading fees charged to brokerage firms by 20 to 40%, compared with KRX's.

TIGHT REGULATIONS

With the launch of the alternative trading system, the government will tighten its supervision of the two stock exchanges.

The FSC will apply the same standards to market stability measures such as circuit breakers and sidecar curbs, as well as to short selling, payments and settlement.

It will also require brokerage companies to fulfill the duty of best execution, or executing orders for clients' best interest. It will be the first time for South Korea to apply the rule. 

On Nextrade, short selling will be allowed only during regular market hours. Daily price moves are limited to 30% above and below the stock’s closing price a day before.

To help it compete on a level playing field with the KRX, the FSC will revise laws so that exchange-traded funds and exchange-traded notes can change hands on the alternative trading exchange.

Write to Gyeol Seon Sun at always@hankyung.com
Yeonhee Kim edited this article.