Korea Exchange (KRX) will push in earnest to extend stock market trading hours in June. Investor convenience is expected to improve as stock trading becomes available from 7 a.m., but some are voicing concerns about side effects such as price distortion from dispersed liquidity and mounting investor fatigue.
According to the financial investment industry on the 13th, Korea Exchange (KRX) shared a plan to extend trading hours with member firms during its business report to the Financial Services Commission on the 12th. The gist is to open a premarket (7–8 a.m.) and after-market (4–8 p.m.) around the regular session, which currently runs from 9 a.m. to 3:30 p.m. The target implementation is in June this year.
If the system is introduced, stock trading will be possible for about 13 hours a day. But some retail investors are grumbling. The concern is that the longer the trading hours, the more liquidity will be dispersed, thinning the order book and causing "price distortion," where share prices swing sharply even on small orders.
A retail investor said, "If large orders flow in during low-volume hours, stock prices can fluctuate wildly," and noted, "If news from the U.S. stock market is reflected in advance in the 7 a.m. premarket, it will force real-time responses and cause extreme investor fatigue." The person added, "Haven't we been witnessing charts being distorted in the after-market due to thin quotes?"
Experts also point to potential side effects from dispersed liquidity. Lee Seong-bok, a research fellow at the Capital Market Research Institute, said, "If trading hours are extended, market liquidity will be dispersed throughout the day and intraday liquidity gaps could widen," adding, "This can trigger price distortion in individual stocks and, for the market as a whole, risk weakening the price discovery function."
However, there are positive assessments of the direction of extending trading hours itself. Lee said, "Even so, with global competition for liquidity intensifying, extending trading hours is inevitable in some respects," and added, "If market accessibility declines, Korea may have to accept disadvantages in attracting global investment capital."
Korea Exchange (KRX) also says the move reflects global trends and investor choice. As major markets are expanding trading hours, with the New York Stock Exchange (NYSE) and Nasdaq pushing to build 24-hour trading, the domestic market should also improve access to secure global competitiveness.
Some investors agree with the intent of the system but argue that safeguards are needed for a smooth rollout. Rather than allowing all stocks across the board, they say implementation should proceed in stages, focusing on blue chips with large market caps and low volatility. There are also calls to restrict short selling, as in the existing after-market, to account for retail investors who are at a disadvantage in information and capital.
Meanwhile, the industry cites the growth of alternative trading systems (ATS) as the reason the exchange is hurrying to extend trading hours. As NEXTRADE (NXT), launched last year, quickly increased its share by focusing on the pre- and after-market, the analysis is that a full-fledged defense of market share has begun. In fact, as NXT's trading volume surged last year and neared the "15% rule," the cap on trading volume, Korea Exchange (KRX) temporarily cut trading fees to keep it in check.
An official at a financial investment firm said, "It is true that extending trading hours is a global trend, but following a system after NXT set it up is largely about defending market share," and added, "For NXT, which is subject to market-share limits, losing even the advantage in trading hours would deal a significant operational blow."