[[The 24-Hour Trading Era Is Coming ②-1] "What Will Change?"... Opportunities and Risks Through the Eyes of Retail Investors

"Significant Benefits for Those With Time Constraints, Such as Office Workers"
Survey Shows 7 Out of 10 Retail Investors Oppose 24-Hour Trading
Concerns Over Fatigue, Price Distortion, and Gaps in Market Surveillance

If Korea's stock trading hours move beyond the 8to8 (12 hours) system and eventually transition to a 24-hour market, how will the investment environment for "Donghak Ants" (Korean retail investors) change? The most significant change would, of course, be increased convenience. Investors would be able to buy and sell stocks without being restricted by time, and could respond in real time to events happening on the other side of the globe. However, concerns have been raised about increased market volatility, investor fatigue, and a rise in impulsive trading.

Stocks Like Crypto... Expected Effects of 24-Hour Trading

According to The Asia Business Daily on November 12, the results of a recent anonymous survey conducted among 90 individual investors showed that more than half of respondents, or 51.1% (multiple responses allowed), cited "increased trading convenience for investors with time constraints, such as office workers" as the greatest expected benefit of extended trading hours. This was followed by "the ability to respond more quickly to overseas market conditions" (28.9%) and "increased liquidity in the domestic stock market" (24.4%). Nearly 10% of respondents said that opportunities for capital gains would also expand.

The Korea Exchange, which has stated its intention to introduce the 8to8 system within the year and eventually move toward a 24-hour market, is gauging demand for extended trading hours by observing the rapid growth of the alternative trading system (ATS) NextTrade, which first implemented the 8to8 system. Launched in March this year, NextTrade surpassed 10 trillion won in trading volume as of June, and just four months later, broke through the 20 trillion won mark. The proportion of trading volume accounted for by individual investors on NextTrade has also consistently remained around 86%.

Song Kimyung, Executive Director of the KOSPI Market Division at the Korea Exchange, stated, "The most realistic approach is to first switch to a 12-hour system like the alternative trading system within the year, then observe the trend and gradually move toward a 24-hour system along with institutional improvements."

Lee Seongbok, Senior Research Fellow at the Korea Capital Market Institute, said, "Investors who were previously restricted from trading due to the overlap between market hours and working hours may be encouraged to participate in the market thanks to extended trading hours. This effect will be even more pronounced in stock markets like Korea's, where individual investors make up a large proportion." He also noted that individual investors who have participated in the cryptocurrency market are already accustomed to 24-hour trading, which helps reduce psychological resistance to extending stock trading hours.

7 Out of 10 Retail Investors Oppose 24-Hour Trading... Concerns Over Fatigue and Price Distortion

For investors, however, expanded trading hours are not entirely welcome. The longer the hours, the greater the risk of investor fatigue, and liquidity disparities could worsen. The burden on market surveillance and oversight functions would also increase, raising the risk of various incidents. In the recent survey, 7 out of 10 investors expressed negative opinions about a 24-hour trading system for these very reasons. While 71.1% of respondents opposed (strongly or somewhat opposed) a 24-hour trading system, only 15.6% were in favor (strongly or somewhat in favor).

In particular, "increased investor fatigue and disruption to daily life" was cited by 78.9% of respondents (multiple responses allowed) as the top concern regarding longer trading hours. This reflects anxieties that, like cryptocurrency investors, they may have to stay up late to react to global events in real time. One individual investor, Mr. A, said, "If stock trading goes 24 hours, full-time investors like me could die from overwork," expressing a sense of resignation. Additionally, 35.6% (multiple choices allowed) of respondents believed that longer hours spent monitoring prices would lead to more impulsive and short-term trading.

The possibility of price distortion is also a major risk cited by investors. As trading hours are extended, liquidity may become dispersed, resulting in periods of sharply reduced trading volume. Even with NextTrade, which currently operates on an 8to8 system, there have been numerous instances where, due to the absence of market makers to fill the order book, certain pre-market stocks have hit their upper or lower price limits immediately after opening with only a small number of orders.

Regarding this, Executive Director Song commented, "The essence of pre-market and after-market trading is to provide investors with broader trading opportunities through extended hours. The large gap in price volatility between pre-/after-market and regular sessions is also seen in the United States." He added, "However, to reduce such volatility, there are market stabilization mechanisms that can be adopted at the exchange level, the most representative being price limits and volatility interruption devices (VI)."

A senior industry official, who requested anonymity, said, "There will not be loopholes in the unfair trading monitoring system or neglect of investor protection, as some investors fear. To ensure this, not only the exchange but also securities firms will need to prepare both systemically and in terms of regulations."