SK FSC Approves Nextrade's Launch of Alternative Trading System

The Financial Services Commission (FSC) of South Korea has granted final approval to Nextrade for the operation of an alternative trading system (ATS), marking a significant step towards the diversification and competition of Korea's stock market. Nextrade is scheduled to begin operations on March 4, 2025.

This approval follows the initial endorsement of Nextrade in July 2023 and several months of preparation, including a seminar held in May 2024, where key measures for ATS operation were discussed. Nextrade's entry into the market is part of broader capital market reforms aimed at improving market accessibility and transaction convenience for investors.

Nextrade will introduce extended trading hours, operating both pre-market (08:00-08:50) and after-market (15:30-20:00) sessions, alongside the regular trading hours of the Korea Exchange (KRX). This will result in a total of twelve hours of daily trading. Additionally, Nextrade will offer new order types, such as mid-point and stop-limit orders, to enhance investment strategies. Transaction fees will be reduced by 20% to 40%, fostering competition and reducing costs for investors.

Market oversight will be integrated between Nextrade and KRX, ensuring uniform regulatory standards. Securities companies will be required to adhere to best execution rules, and Nextrade will follow the same market surveillance and price limit mechanisms as KRX. Short selling will be restricted during pre-market and after-market sessions, with regulations consistent with those at KRX.

Nextrade's launch will begin with a gradual introduction of tradable items, with 32 securities companies already expressing interest in participating. The FSC continues to work on regulatory adjustments, including the potential for ATS to trade ETFs and ETNs, to ensure a smooth and effective transition.

The initiative is expected to strengthen Korea's capital markets by offering investors more options, improved transparency, and enhanced competition.