Financial Services Commission Holds 'ATS Operation Plan' Seminar
Introduction of Mid-Price Quotes and Stop-Designated Quotes
Commission Fees Expected to Decrease by 20~40%
The Alternative Trading System (ATS) will officially launch in the first half of next year. The operating hours have been set from 8 a.m. to 8 p.m., and new order types such as midpoint orders and stop limit orders will be introduced. Additionally, trading of Exchange-Traded Funds (ETF) and Exchange-Traded Notes (ETN) will be possible on the ATS.
On the 9th, the Financial Services Commission held a seminar titled "ATS Operation Plan" at the Korea Financial Investment Association in Yeouido, Seoul, to announce these details aimed at the qualitative development of capital market infrastructure. The seminar was organized to share the operation plan and gather opinions from market participants.
In his congratulatory remarks, Kim So-young, Vice Chairman of the Financial Services Commission, stated, "Since NextTrade received preliminary approval for ATS last July, full-scale competition in stock market infrastructure, similar to major overseas countries, is beginning after more than 10 years since the introduction of the ATS system. We expect that competition will create an efficient and convenient market."
The most anticipated aspect of ATS operation, the operating hours, has been set at 12 hours daily from 8 a.m. to 8 p.m. NextTrade will add pre-market (8:00 a.m. to 8:50 a.m.) and after-market (3:30 p.m. to 8:00 p.m.) sessions before and after the regular trading hours operated jointly with the Korea Exchange.
Domestic stock trading hours will increase by 5 hours and 30 minutes compared to the current schedule (9 a.m. to 3:30 p.m.). The Financial Services Commission expects that salaried investors will be able to conveniently invest in stocks after work hours.
The types of orders will also increase. Currently, the domestic stock market offers market orders and four types of limit orders (regular, best, favorable, and conditional). ATS will add "midpoint orders," where prices are automatically adjusted to the midpoint between the best bid and ask, and "stop limit orders," which place limit orders when a specific price is reached.
The display time for the expected opening price and the single-price closing auction time on the exchange will be changed. This is to prevent market manipulation by exploiting the difference between single-price auctions, where orders are matched simultaneously at one price after order submission, and continuous trading, where trades are executed immediately when prices match.
NextTrade also plans to reduce transaction fees by approximately 20-40% compared to the Korea Exchange. The Financial Supervisory Service will soon finalize and present guidelines on best execution obligations, and securities firms will establish systems to automatically execute investor orders accordingly.
The Financial Services Commission plans to further refine the system in line with the purpose of introducing ATS. By amending regulations, ETFs and ETNs will be allowed to be traded on the ATS. To ensure institutional investors face no difficulties trading on the ATS, the obligation for a public tender offer will not apply even if they acquire and hold 5% or more of shares on the ATS, similar to the Korea Exchange.
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