As transactions through NextTrade, Korea's first alternative trading system (ATS), have surged, the Financial Supervisory Service (FSS) has begun building a system for investigating unfair transactions. It is interpreted that the FSS aims to enhance its monitoring capabilities, considering that NextTrade does not have its own market surveillance system, unlike the Korea Exchange.
According to financial authorities on the 18th, the FSS is promoting the 'ATS unfair transaction investigation system establishment project.' This year, it plans to introduce a system that collects data related to unfair transactions, including detecting abnormal transactions, market manipulation, and monitoring theme stocks, based on ATS trading information.
NextTrade was launched last March to break the monopoly of the Korea Exchange and promote competition. The ability to trade for 12 hours a day, from 8 a.m. to 8 p.m., has led to a sharp increase in usage among individual investors. Last month, the trading volume market share of NextTrade reached 31.8%.
Despite the increased convenience for investors through NextTrade, concerns persist that a wider variety of unfair transactions may emerge. This is the backdrop for the FSS accelerating the establishment of the system.
Immediate changes are expected as NextTrade introduces new bidding systems such as average price bids and stop-limit bids, which will likely revise existing abnormal transaction detection algorithms. Additionally, since transactions are executed at both the Korea Exchange and NextTrade according to the smart order routing (SOR) during regular trading hours, it is anticipated that the analysis methods for detecting abnormal transactions and the transaction reproduction functions will also be strengthened.
In particular, NextTrade only handles simple brokerage operations and lacks its own market surveillance function. This differs from the Korea Exchange, which actively shares information with the FSS through its own market surveillance system.
To this end, the FSS plans to acquire the capability to receive and analyze trading information from NextTrade through this project. It has also decided to establish a database on suspected unfair transactions.
An FSS official said, "To respond to the diversifying environment for investigating unfair transactions, we will establish an investigation system for unfair transactions in ATS and strengthen the surveillance system in a multi-market structure," adding, "We intend to further solidify the monitoring system through the operation after the introduction of the investigation system."