On the 15th, the first day of the Korea Exchange (KRX)'s cut to stock trading fees, alternative trading system (ATS) NEXTRADE (NXT) saw its turnover drop 37%.
According to NEXTRADE (NXT), the day's premarket (8 a.m.–8:50 a.m.) and main market (9 a.m.–3:20 p.m.) volumes were 43,140,696 shares and 76,291,752 shares, respectively. Compared with the Dec. 1–14 average, premarket volume rose 38.2%, while main market volume fell 10.6%.
Turnover diverged as well. Premarket turnover came to 1.7507 trillion won, 17.0% higher than the Dec. 1–14 average (1.4968 trillion won). In contrast, main market turnover was 3.4151 trillion won, plunging 37% from the Dec. 1–14 average (5.4251 trillion won).
The market views the Korea Exchange (KRX)'s temporary cut to stock trading fees as the direct cause. The Korea Exchange (KRX) switched the current single trading fee rate of 0.0023% to a tiered rate system from today through Feb. 13 next year, cutting fees by 20%–40%.
If an investor places an order without designating an exchange, the smart order routing (SOR) system automatically allocates the order after comparing fees, likelihood of execution, and other factors. As the fee gap narrowed, some orders that had been flowing into NEXTRADE (NXT) appear to have shifted to the Korea Exchange (KRX).
The fee cut will be implemented temporarily for two months.