Q3 trading volume reached 7.66 billion shares, down 40.4% year-on-year.
17 stocks nearing volume limits; stabilizing pre-market price volatility remains a key challenge.
Trading volume on South Korea's alternative trading system, NexTrade, has declined by more than 40% over the past year. As the number of available trading instruments shrinks, the platform is increasingly forced to delist specific stocks due to high investor demand, highlighting the regulatory friction facing an exchange launched to promote competition through extended hours and lower fees.
Launched in March last year to challenge the dominance of the Korea Exchange (KRX), NexTrade sought to broaden investor choice by operating from 8:00 AM to 8:00 PM with lower commission rates. Competitive pressure has intensified since the KRX introduced its own after-market trading session on September 14.
In the third quarter of this year, NexTrade’s total trading volume fell to 7.66 billion shares, a 40.4% drop from 12.86 billion shares in the same period last year. Pre-market and after-market trading volumes also saw a 22.4% decline, falling from 4.31 billion shares to 3.34 billion shares.
To adhere to statutory volume caps, NexTrade has consistently trimmed its list of tradable securities. In its Q3 periodic review announced on June 26, the platform removed 32 stocks—20 from the KOSPI and 12 from the KOSDAQ. With no new additions, the total number of tradable stocks fell from 642 to 610.
NexTrade explained that the adjustments were intended to "ensure long-term compliance with regulatory limits as the volume ratio of certain stocks has been rising," preemptively managing volumes to avoid exceeding legal thresholds.
17 Stocks Near Volume Thresholds; Potential for Further Suspensions
Despite an overall decline in volume, liquidity has concentrated in select stocks, leading to their removal from the platform.
NexTrade announced on the 21st that DuChemBio and Bumhan Fuel Cell would be suspended from trading between October 26 and the end of December. As of the 20th, the cumulative volume ratio of these stocks on NexTrade relative to the KRX reached 99.47% and 99.33%, respectively, over the past six months. For the most recent 10-day period, these figures climbed to 108.82% and 116.84%, exceeding trading volumes on the KRX.
[Source: NexTrade notice regarding the suspension of DuChemBio and Bumhan Fuel Cell.]
Under the current Capital Markets Act, an ATS is restricted to 15% of the total market volume and 30% of individual stock volumes relative to the KRX. However, the 30% cap for individual stocks is currently under a grace period until September 2027, temporarily allowing for a 100% threshold.
Stock-specific volume ratios are calculated based on the trading volume of the KRX rather than the combined volume of both exchanges. With the current trend, DuChemBio and Bumhan Fuel Cell risked exceeding the 100% limit, prompting the preemptive suspension. Trading for these stocks remains uninterrupted on the KRX.
This marks the 11th time NexTrade has implemented such suspensions. With 17 stocks currently showing a cumulative volume ratio exceeding 90% relative to the KRX, the risk of further suspensions remains high. While exceeding 90% does not trigger an automatic halt, NexTrade continues to manage potential breaches by preemptively adjusting its product list.
While volume regulations are intended to ensure market stability in a multi-exchange system, the recurring exclusion of actively traded stocks has raised concerns that the policy may inadvertently limit investor choice.
Expanding Price Stability Measures; Pushing for Opening Auction System
Beyond volume management, NexTrade is working to improve its price discovery mechanisms. Currently, the platform uses a continuous trading method upon market opening without an opening single-price auction, which can lead to high price volatility for stocks with thin liquidity.
In September, NexTrade introduced a static Volatility Interruption (VI) mechanism to curb erratic price swings. Looking ahead, the platform is targeting the introduction of an opening single-price auction system by January 18, 2027, to mitigate price shocks caused by low-volume trades. The specific operational framework remains under consultation with financial authorities.
Despite its ambitious start, NexTrade continues to navigate the operational challenges of balancing increased market access with stringent volume constraints and price stability requirements.
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