The alternative trading system (ATS) NextTrade (NXT), launched in March, will suspend transactions of 53 stocks including Hanwha Engine and HYUNDAI HYMS. This is to comply with the so-called '15% rule,' which states that the total trading volume should not exceed 15% of the domestic market.
According to NextTrade on the 31st, transactions of a total of 53 stocks will be suspended, including 22 stocks in the securities market and 31 in the KOSDAQ market. These stocks will be excluded from regular and closing trading sessions in NXT. The suspension period will last from the 1st to the 30th of next month.
In the securities market, trades will be suspended for stocks such as Hanwha Engine, HD Hyundai Construction Equipment, TONGYANG Life Insurance, Doosan Fuel Cell, Sanil Electric, and Pulmuone, while in the KOSDAQ market, trades of LS Marine Solution, Global Tax Free, ROBOTIS, APRIL, and HYUNDAI HYMS will also be halted. NXT noted that 'depending on future trading situations, more stocks may be added or the suspension period may be extended.'
The stocks that were suspended from trading were selected from those not included in the KOSPI 200 and KOSDAQ 150 indices, based on their transaction volume. Currently, some stocks like Kolon Industries, S-Oil, and Dongkook Pharmaceutical have been reported to have average daily transaction volumes exceeding 30% of KRX's over the last six months, indicating a possible future transaction suspension in NXT.
The current capital market law enforcement ordinance stipulates that for alternative trading systems, the average daily transaction volume over the past six months cannot exceed 15% of the total market transaction volume, based on the end of each month. If alternative trading systems utilizing the infrastructure of Korea Exchange (KRX), which is responsible for market creation and management including listing and market surveillance, grow too large, it may lead to 'free-riding' controversies and go against the original intention of inducing competition between exchanges.
As of August 20, NXT has already suspended trading for 26 stocks including YG PLUS, SK eternix, SK oceanplant, ISU PETASYS, and ILJIN Electric in the first phase. Including those stocks now added, a total of 79 stocks cannot be traded until the end of September. Trading can occur through KRX during regular hours from 9 a.m. to 3:30 p.m., but it will not be possible during additional NXT trading hours (pre-market from 8 a.m. to 8:30 a.m., and after-market from 3:30 p.m. to 8 p.m.).