The Korea Exchange (KRX) will open an after-hours market on Sept. 14 that allows real-time stock trading until 8 p.m. following the close of the regular session. By replacing the existing single-price off-hours system with continuous auction trading, the exchange aims to improve trading convenience after the market close while stepping up competition for off-hours liquidity with Nextrade (NXT), which operates a market during the same hours.
KRX said on the 9th that it had completed revisions to its business regulations for the KOSPI and KOSDAQ markets and won approval from the Financial Services Commission (FSC), clearing the way for the after-hours market to begin operating on the 14th. The current single-price off-hours session, held at 10-minute intervals from 4 p.m. to 6 p.m., will be abolished, and orders will instead be matched in real time from 4 p.m. to 8 p.m. on a price and time priority basis. A total of 38 brokerages plan to participate in the after-hours market, together accounting for 95.2% of market share.
Because the NXT after-hours market runs from 3:30 p.m. to 8 p.m., trading will be available on both KRX and NXT between 4 p.m. and 8 p.m. If an investor does not specify a trading venue, the brokerage will compare execution probability and prices under its best execution standards and route the order to the market more favorable to the investor.
Eligible securities are KOSPI and KOSDAQ stocks, excluding the KONEX market, as well as depositary receipts (DRs). Stocks that did not trade in that day's regular session are excluded, along with issues requiring market oversight such as administrative issues, extremely low-liquidity issues, and investment caution or investment risk issues. Exchange-traded funds (ETFs) and exchange-traded notes (ETNs) cannot be traded either. KRX said it plans to review the timing for ETF and ETN trading again after assessing the stability and liquidity of the after-hours market and gathering industry feedback.
The daily price limit band will be set at plus or minus 30% of the previous session's closing price, the same as in the regular session. To protect investors, market orders will not be permitted, with only limit orders and best-bid and best-price limit order types allowed. Regulations designed to curb sharp price swings, including dynamic and static volatility interruption (VI) devices and the short-selling uptick rule, will apply in the same way as in the regular session.
KRX will also run a market-making program dedicated to the after-hours market for stocks that lack liquidity. Shares traded in the after-hours market will settle two business days after the trade date (T+2), the same as in the regular session. The window for receiving corporate disclosures will remain at 7:30 a.m. to 6 p.m. However, if grounds for a delisting are confirmed after 6 p.m., after-hours trading may be suspended. Market operation measures that take effect from the following business day will be announced after 8 p.m., once the after-hours session has ended.
KRX had originally planned to open a pre-market and an after-hours market at the same time in late June but decided to introduce the after-hours market first, reflecting industry feedback. "We ran a simulated market for 23 weeks from April 6 this year through the 10th of this month to check the stability of the system," a KRX official said. "With the New York Stock Exchange (NYSE) and Nasdaq also pushing to extend trading hours, we plan to gradually expand trading hours in the domestic stock market based on the results of the after-hours market."
