Nextrade, South Korea’s first alternative stock exchange, is set to launch on Feb. 4 that enables trading of stocks listed on the Kospi and the Kosdaq for 12 hours a day.
The Financial Services Commission (FSC) approved the launch of Nextrade at a regular meeting on Wednesday.
It was the first time to give the greenlight to an alternative stock exchange operator since the country began discussing the introduction of the 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. and 3:30 p.m.
The alternative stock exchange will allow for more various bidding options, while bringing down trading fees charged to brokerage firms.
They are required to buy or sell stocks in clients’ best interest to comply with the duty of the 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 stock’s closing price on the Korea Exchange a day before.
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 the Nextrade even after the short selling ban is lifted at the end of February.
By See-Eun Lee and Ahla Cho
see@hankyung.com
Yeonhee Kim edited this article.
