The Korea Exchange (KRX) will introduce a new after-market session running from 4 p.m. to 8 p.m., allowing investors to trade most KOSPI and KOSDAQ shares in real time long after the regular session closes.
The new session replaces a much more limited after-hours system. The previous system, which operated from 4 p.m. to 6 p.m., grouped orders and executed them at a single price every 10 minutes.
Disclosures made after regular trading hours can now be reflected in Korean share prices the same evening.
The new session also greatly expands the number of stocks available for evening trading.
About 2,400 securities are expected to be available on KRX, roughly four times the 610 issues currently offered through the after-market operated by alternative trading platform Nextrade, or NXT.
Most KOSPI and KOSDAQ shares and depositary receipts are included. However, securities under special market supervision will be excluded. These include investment-warning and high-risk stocks, extremely illiquid shares and stocks undergoing liquidation trading.
Exchange-traded funds (ETFs) and exchange-traded notes (ETNs) will also be excluded from evening trading for now because of concerns that thinner trading could increase price dislocations and volatility.
The same 30 percent daily price limits used during regular trading will apply to contain those risks. Volatility safeguards that temporarily slow trading when prices move too quickly will also remain in place.
Market orders will not be allowed during the after-market session. Investors must set the price at which they want to buy or sell.
The restriction is designed to reduce the risk of sharp price moves when evening trading is thin, as a large market order could otherwise sweep through several price levels when fewer orders are available.
Most investors will still be able to use the new session through their existing brokerages. Thirty-eight brokerages have joined the session, representing 95.2 percent of domestic trading value.
AJP Takeaways
- The Korea Exchange will run a new real-time after-market session from 4 p.m. to 8 p.m. from Monday, extending trading well beyond the regular market's 3:30 p.m. close.
- The new session replaces the previous 4 p.m.-to-6 p.m. system that matched orders every 10 minutes and expands evening trading to about 2,400 securities from around 610 available through Nextrade.
- KRX will retain the regular market's 30 percent daily price limit and volatility safeguards while prohibiting market orders during evening trading.
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