Will the Establishment of Alternative Exchanges Gain Momentum? Service Contract Procurement Underway

Preparation Service for Alternative Exchange Establishment
Expectations for Fee Reduction upon Establishment

The KOSPI closed at 3,031.68, up 63.47 points (2.14%) from the previous day, marking the first time it surpassed 3,000 based on the closing price. On the 7th, at the Korea Exchange in Yeouido, Seoul, after the market closed, Jeong Il-moon, CEO of Korea Investment & Securities, Son Byung-doo, Chairman of the Korea Exchange, Na Jae-cheol, Chairman of the Korea Financial Investment Association, and Park Hyun-chul, CEO of Bukook Securities (from left to right in the front row), along with employees, held a celebration event commemorating the KOSPI breaking 3,000. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Junho Hwang] A service project for the establishment of Korea's first Alternative Trading System (ATS) will soon be launched. The establishment of the ATS is being promoted by the 'ATS Establishment Committee,' composed of securities firms willing to invest, and the Establishment Secretariat, a part-time organization within the Korea Financial Investment Association responsible for the practical work of the establishment.

According to the financial investment industry on the 5th, the ATS Establishment Committee recently proposed commissioning a service project, and the Secretariat is exploring ways to commission academic institutions and others for the project.

The ATS will have the function of executing trades of listed securities, which until now only the Korea Exchange (KRX) has had in Korea. However, unlike the KRX, it will not have listing or market surveillance functions. From an investor's perspective, the establishment of the ATS could lead to fee reductions through competition with the KRX. Additionally, by utilizing the latest IT technologies, trading speed can be increased, and various service improvements such as narrowing bid-ask spreads are expected.

If the service project begins, it can be seen as a renewed push for the establishment of the ATS after about two years. The establishment of the ATS became possible with the revision of the Capital Markets Act in 2013, and interest grew significantly after the trading volume limit was raised to 15% in 2016. In 2019, the committee and secretariat were established, but discussions did not proceed due to opposition from the KRX, the COVID-19 pandemic in 2020, and the stock market crash. Recently, with the stock market soaring, discussions on the establishment have reignited.

In particular, Sohn Byung-doo, Chairman of the Korea Exchange, stated, "I believe the time to oppose has passed," adding, "Recently, trading volume has surged, and there are movements toward establishment by a consortium including the Korea Financial Investment Association and IT companies. (With the establishment of the ATS) a healthy competitive environment among trading platforms will be created," increasing the likelihood that the ATS establishment will gain momentum.

An industry insider said, "This service project will be an internal discussion to determine whether the current time is appropriate for establishing the ATS and what is necessary for its establishment."