The domestic first alternative trading system (ATS) NextTrade (NXT) began transactions on the 4th, with 10% of the trading volume of 10 available stocks through NXT being completed on that day. The bid prices showed a difference of about 1-2 ticks (the minimum price fluctuation unit) between the two exchanges.
On that day, the NXT trading volume (115,207 shares) and transaction amount (6.4 billion won) for the five stocks listed on the KOSDAQ accounted for 11.7% and 13.7%, respectively. In contrast, the trading volume and transaction amount for five stocks on the KOSPI were about 6-8%, lower than that of KOSDAQ.
According to NextTrade, the most traded stock in the regular market that day was YG Entertainment. A total of 88,026 shares were traded, amounting to 5.7 billion won, which is about 17% of the Korea Exchange's trading volume (503,965 shares) and transaction amount (32.4 billion won). Kolon Industries, S-OIL, and LG Uplus followed.
YG Entertainment was also the most talked-about stock in the aftermarket held at 3:30 p.m. It rose over 5% and more than 100,000 shares were traded within 1 hour and 10 minutes from 3:30 p.m. to 4:40 p.m., surpassing the regular market trading volume. The other stocks traded about 1,000 to 13,000 shares, with Kolon Industries (2.69%), Com2uS (2.23%), and Dongkook Pharmaceutical (0.77%) seeing gains compared to the previous trading day. The 10 stocks can be traded until 8 p.m.
NextTrade plans to gradually increase the number of transaction stocks to 800 by the end of this month. Major domestic corporations, Samsung Electronics and SK hynix, will be available for trading starting on the 24th. Furthermore, it plans to enable trading of exchange-traded funds (ETFs) and exchange-traded notes (ETNs) by the end of the year.
Investors noted that unless they set a specific exchange using the mobile and home trading systems (MTS/HTS) of brokerage firms, they did not feel significant inconvenience due to the implementation of the smart order routing (SOR) system. Brokerage firms submit orders using the most favorable conditions by considering the price, expense, and execution possibility of the stocks proposed by investors, in accordance with best execution guidelines.
Some retail investors attempted to take advantage of the bid differences between the two exchanges for "arbitrage" but a securities industry official explained that it was likely not easy. The bid prices of the two exchanges mostly moved closely together, and since there were not many bid quantities, even if it was possible, gaining significant profits would have been difficult. A source in the securities industry remarked, "Considering commissions and taxes, there were stocks that could potentially earn 1-2 ticks, but for related profits to be possible, the NextTrade market must grow significantly compared to now."
Some raised concerns that in the future, 'day traders' engaging in high-frequency trading could increase in off-hours market activities such as premarket or aftermarket. This is because if there are not many market participants, even slight changes in supply and demand could lead to increased price volatility.
In relation to this, Lee Bok-hyun, the head of the Financial Supervisory Service, stated at the NextTrade opening ceremony that "We will strengthen the unfair trading surveillance system and ensure stable maintenance of the IT system," indicating that a thorough monitoring system would be established.
Brokerage firms have initiated efforts to attract investors by reducing stock trading commissions and revamping their MTS in line with the launch of NextTrade. NextTrade is reported to charge transaction fees that are 20-40% lower than the Korea Exchange.
Mirae Asset Securities lowered its online commission from 0.14% to 0.136% from that day, and Kiwoom Securities also decided to apply a stock trading fee of 0.0145% for trades through NXT. Toss Securities also reduced the ATS trading fee to 0.014%, and KB Securities announced it would lower its commission rate to 0.0022763% until the 30th, following a temporary exemption of transaction fees for NextTrade.
Meanwhile, price changes in the alternative trading system traded until 8 p.m. after the regular market do not affect the opening price of the next day. The basic opening and closing prices are based on the trading prices of the Korea Exchange. The electronic disclosure times also remain unchanged from 7:30 a.m. to 6 p.m. NextTrade has limited the price fluctuation range for specific stocks in the premarket (8 a.m. to 8:50 a.m.) and aftermarket to ±30% based on the previous closing price of the Korea Exchange due to the possibility of increased volatility.