On the First Day of the Alternative Exchange Launch, Here's How Investors Reacted

Smooth Debut for NextTrade on Launch Day
Some Investors Express Discomfort with the Changed Order Environment

NextTrade, which announced the dawn of the 'era of multiple trading venues,' had a smooth start on its first day. On the 4th, while the domestic stock market closed lower amid simultaneous selling by foreign and institutional investors, investors watched the emergence of the new exchange with curiosity and showed signs of adapting to the changed environment. However, concerns among investors, such as the spread of high-frequency trading (HFT) exploiting price differences between the two exchanges, have not been fully resolved, so it is expected that it will take some time for the system to stabilize.

On the 4th, at the main market of the alternative trading system (ATS) NextTrade, 10 stocks fell by an average of 0.46% compared to the previous trading day. A total of 213,983 shares were traded, with a trading value of approximately 8.832 billion KRW. Until the 16th, only 10 stocks?Lotte Shopping, Cheil Worldwide, Kolon Industries, LG Uplus, S-Oil, Golfzon, Dongkook Pharmaceutical, SFA, YG Entertainment, and Com2uS?can be traded on NextTrade for the first time. Subsequently, the number of tradable stocks will be gradually expanded, reaching up to 800 by the end of March.

On the 4th, the alternative trading system (ATS) 'NextTrade (NXT)' opening ceremony was held at the Financial Investment Center Building in Yeouido, Seoul. From the third person on the left attending the event are Jeong Eun-bo, Chairman of the Korea Exchange; Lee Bok-hyun, Governor of the Financial Supervisory Service; Yoon Han-hong, Chairman of the National Assembly's Political Affairs Committee; Kim Hak-su, CEO of NextTrade; and Kim Byung-hwan, Chairman of the Financial Services Commission, participating in the opening commemorative ceremony. 2025.03.04 Photo by Yoon Dong-ju

Along with the launch of the alternative trading system, the UI of securities firms’ HTS and MTS, which have been newly revamped, also welcomed investors. When accessing Daishin Securities’ HTS and checking one of the stocks available for trading on NextTrade, investors can see a new integrated quote (A) option. Investors can individually check the price and trading volume of desired stocks by pressing the K (Korea Exchange) or N (NextTrade) buttons, or press A to view combined information from both exchanges.

The order screen has added buttons for Smart Order Routing (SOR) and selecting each exchange. SOR orders are a system where, if the user does not specify an exchange, the securities firm executes the order in the most favorable way for the investor according to its best execution obligation. Some securities firms, such as NH Investment & Securities, offer this service under the name 'Smart Order.' However, the newly added 'mid-price' and 'stop limit' options require specifying one of the two exchanges to be used.

The UI appearance of Daishin Securities HTS and NH Investment & Securities MTS revamped along with the launch of the alternative exchange NextTrade.

There are some minor issues arising as investors adapt to the changed stock trading environment. A securities firm official reported that inquiries are flooding in, ranging from questions about the identity of NextTrade to how to place orders on the alternative trading system. On a domestic stock-related online community, many posts expressing inconvenience were also confirmed, such as "I can’t get used to the changed stock order screen" and "The securities app lags, possibly due to the introduction of the alternative trading system."

In particular, as temporary price differences between the two exchanges for the same stock have been confirmed, there are many voices expressing concern about the spread of high-frequency trading (HFT) exploiting this. HFT is a trading method where institutional investors, who connect directly to the exchange and computer systems without going through securities firms, earn large amounts of price differences in a short time by exploiting minute price fluctuations.

Park Hye-jin, a researcher at Daishin Securities, explained, "NextTrade’s low fees and fast execution speed may not be significant for general investors but are important for high-frequency traders," adding, "Since there will be clear differences in contract execution speeds among securities firms, the firm that dominates execution time in the after-market, where competitive trading concentrates, will lead the market."