Alternative stock exchange Nextrade to launch on March 4

Nextrade, South Korea’s first alternative stock exchange, enabling trading of stocks listed on the Kospi and the Kosdaq for 12 hours a day is set to begin operations on March 4.

The Financial Services Commission (FSC) approved the launch of Nextrade at a regular meeting on Wednesday.

It marks the first time an alternative stock exchange operator has been given the green light since the country began discussing the introduction of an alternative stock trading system in 2013.

On Nextrade, pre-market trade will be allowed between 8 a.m. and 8:50 a.m. before the market opens at 9 a.m. After-hour trade will take place from 3:30 p.m. to 8 p.m.

Regular trading hours on the Korea Exchange will remain unchanged from 9 a.m. to 3:30 p.m.

The alternative stock exchange will allow for more bidding options, while bringing down trading fees charged to brokerage firms.

Brokerages are required to buy or sell stocks in clients’ best interest to comply with the duty of best execution, the first rule introduced for stock brokers in South Korea. 

Initially, investors will be able to trade 10 blue chips on Nextrade, with the number expanding to 800 by April.

The FSC will apply the same market stability measures as those for the KRX such as circuit breakers, sidecar curbs and volatility interruption.

Daily price moves are limited to 30% above and below the previous day's stock closing price on the Korea Exchange.

Total trading volume will be capped at 15% of the daily average of the KRX over the past six months, with that for any individual stock limited to 30%. 

Shorting stocks will not be allowed on Nextrade even after the short-selling ban is lifted at the end of February.

(The date of the Nextrade launch was corrected to March 4)

Write to See-Eun Lee and Ahla Cho at see@hankyung.com
 

Yeonhee Kim edited this article.