The trading volume of the alternative exchange "NextTrade (NXT)" launched in March of this year is rapidly increasing and is expected to exceed the trading volume limit set at 15%. While the domestic stock market has entered a bull market, the alternative exchange is constrained by regulations that allow it to handle only 15% of the total trading volume, leading analysts to suggest that investors primarily using the alternative exchange will not fully enjoy the benefits of lower fees in the second half of the year.
Some argue that this "15% rule" hinders the growth of the alternative exchange and advocate for regulatory relief. However, many experts point out that the alternative exchange, without the functions of a regular exchange, is only responsible for simple transaction execution, making the volume limit inevitable. From the perspective of the Korea Exchange, as the alternative exchange is only picking the most profitable trades, it cannot relax the volume regulations.
According to NXT statistics as of the 25th, the trading amount and volume of NXT reached the highest levels since its launch on the 24th. The combined trading volume of the pre-market, main market, and after-market was 410,000 shares, a dramatic increase of 136.8% from 170,000 shares at the beginning of the month. On the same day, the trading amount also peaked at 16 trillion 212.6 billion won.
Although the alternative exchange has shown significant activity since its first year, NXT is in a situation where it cannot simply rejoice due to the application of trading volume caps. According to the Capital Market Act, the average daily trading volume of the alternative exchange over six months cannot exceed 15% of the total market trading volume or 30% for individual stocks. If predetermined trading volumes are exceeded, transactions may be suspended.
As of the previous day, NXT's market share in trading volume was at 20%, surpassing the limit of 15%. However, since the trading volume cap is based on the six-month average, the volumes need to be monitored until September. Given the current trend, many stocks may face restrictions on transactions under existing regulations, according to industry evaluations.
Kang So-hyun, a researcher at the Capital Market Research Institute, noted, "Since June, the overall market share of the alternative exchange has been consistently exceeding the 15% cap, and while the cumulative average share has not yet reached 15% since the full trading of over 800 stocks began on March 31, it is expected to soon reach the cap if the current trend continues."
NextTrade is exploring various measures to avoid the risk of trading suspension. An NXT official stated, "We are considering several possibilities, such as setting volume limits on some high-volume stocks or restricting transactions, and we will take proactive measures before September to reduce the risk of trading suspension." This is intended to prevent a situation where operations in the pre-market and after-market could be halted.
Given the situation, there are calls to relax the trading volume limits set for the alternative exchange, which accounts for only a certain percentage of total transactions.
In a report published on the 24th, the Capital Market Research Institute stated, "The market share cap regulation may hinder the intent of the system, which is to improve the trading market structure through competition," and added, "In a situation where the market share of the Korea Exchange (KRX) is declining, the alternative exchange market must sufficiently expand for voluntary innovations like service improvements or fee reductions to occur."
However, many experts point out that since NextTrade is not a fully functional exchange, it is necessary to have regulations that allow it to handle only a portion of the transaction volume. Under the Capital Market Act, exchanges operate under a licensing system and must possess both infrastructure and public function.
Strictly speaking, the current alternative exchange is a "multilateral transaction execution company" specialized only in transaction execution and is not an exchange. Multilateral transaction execution companies do not perform the public functions that exchanges handle, such as listing, clearing and settlement, and market surveillance. Therefore, it is explained that it is inappropriate for NXT's transaction volume to increase excessively.
An official from the Korea Exchange explained, "If there are no trading volume limits and liquidity becomes excessively dispersed, there is a risk that issues related to investor protection and integrated market operations will increase."