NextTrade, the alternative trading system (ATS) set to officially launch next month, has been confirmed to have a market system capable of handling up to 150 million orders per day. The assessment is that this is not a small capacity given that it will start with limits on tradable items. Other performance metrics related to trading, including processing performance, order bandwidth, and number of lines, are understood to be on par with the Korea Exchange (KRX) system. It is reported that financial authorities, having experienced a system failure incident with the U.S. ATS Blue Ocean last year, ordered the development of a stable market system for NextTrade.
According to the financial investment industry on the 12th, the daily processing capacity of NextTrade's market system, which is currently under testing ahead of its launch on the 4th of next month, is a maximum of 150 million orders.
A NextTrade official noted, "The peak number of orders during the stock investment fervor of the pandemic was about 150 million," adding, "Considering maintenance and management expenses comprehensively, it was judged that starting with a processing capacity of 150 million orders is sufficient."
The fact that a regulation applies to the ATS, stating that the average daily trading volume over the past six months cannot exceed 15% of the securities market share, is also the background for NextTrade setting its daily processing capacity at 150 million orders. The 150 million orders represent 16% of the 940 million orders maximum daily processing capacity of KRX's EXTURE 3.0.
Other key trading-related performance of the NextTrade system has been found to be similar to the KRX system. The trading processing performance was 50 microseconds (one-millionth of a second), the same as that of EXTURE 3.0. The order bandwidth between the exchange and member firms is 50 Mbps, surpassing EXTURE 3.0's 45 Mbps. The number of lines is 9, which is similar to KRX's 10 lines.
Industry officials stated that considering that NextTrade is an ATS, is subject to market share regulations, and will only trade 800 items, it has secured excellent performance. An official from the information technology (IT) sector of a securities firm said, "Given that NextTrade has expressed a plan to start with 10 trading items and gradually expand, it seems there will be no overload issues due to capacity."
Financial authorities have been most concerned about system errors since the decision to launch the country's first ATS. In particular, after the order cancellation incident at the U.S. weekly trading ATS Blue Ocean in August last year, it is known that NextTrade was strongly urged to ensure system stability. A senior official from the Financial Services Commission said, "While the activation of ATS is something that should be observed over time, system errors undermine trust itself."
NextTrade developed its market system in collaboration with SK C&C. NextTrade will operate a pre-market from 8 a.m. to 8:50 a.m. and an after-market from 3:30 p.m. to 8 p.m. This will extend the domestic stock trading hours to 12 hours.