The Korea Exchange (KRX) will open an "aftermarket" starting on the 14th that allows investors to buy and sell stocks in real time until 8 p.m., even after the regular session ends. After NEXTRADE (NXT) launched in March last year, effectively leading the night trading market alone, the exchange is now stepping directly into that space.
According to the financial investment industry on the 13th, the exchange's aftermarket will run for four hours from 4 p.m. to 8 p.m. for the KOSPI and KOSDAQ markets. After the regular session from 9 a.m. to 3:30 p.m. ends, there will be a 30-minute after-hours close auction, followed by real-time order matching from 4 p.m. The existing after-hours single-price session from 4 p.m. to 6 p.m. will be abolished starting that day. This is the first expansion of trading hours in 10 years since the regular session close was pushed back by 30 minutes in 2016.
The exchange's claimed strength is the number of tradable stocks. With the exception of those requiring market oversight—such as investment warnings or delisting trades—most KOSPI and KOSDAQ-listed stocks can be bought and sold. There are currently 2,766 listed issues. By contrast, under the Enforcement Decree of the Financial Investment Services and Capital Markets Act, NXT has handled only about 600 issues per quarter due to a trading volume cap (15% of the exchange). This effectively opens night trading for stocks that could not be traded on NXT. However, exchange-traded funds (ETF) and exchange-traded notes (ETN) were excluded from the scope on the grounds that they could increase volatility.
NXT counters with fees. NXT's trade execution fees are about 30% lower than the exchange's. Its aftermarket also opens at 3:40 p.m., 20 minutes earlier than the exchange. Because the two markets' operating hours overlap, if investors do not specify a market, brokerages will route orders under the smart order routing (SOR) system to wherever execution probability and price are more favorable.
The trading method does not differ greatly from the regular session. Orders can be submitted only as limit, best-limit, or most-favorable-limit, and the price band is ±30% from the previous day's close. The volatility interruption (VI) mechanism to curb sharp swings, as well as short-selling regulations, are applied exactly as in the regular session.
Ahead of the launch, the exchange ran a simulated market mirroring real conditions for 23 weeks from Apr. 6 to the 10th of this month to check systems. It initially planned to open both a premarket and an aftermarket at the end of June, but adjusted the schedule to open the aftermarket first. The premarket rollout has been delayed for system development reasons. The exchange says it plans further expansion, including introducing a premarket, and, in the long term, is reviewing building a trading framework approaching 24 hours.
In the market, some say the expansion broadens investors' choice of trading venues and enables faster reflection of disclosures after the close or sharp moves in overseas markets into prices. However, there is also a view that, because NXT already offers real-time trading until 8 p.m., investors will not feel much change. Concerns include the possibility of executions at abnormal quotes given the typically thin trading during those hours, and the low participation of institutional investors in night trading is also cited as a challenge.