Commuter-hour trading surges amid market volatility, boosting NXT’s share

[Financial News] Heightened geopolitical tensions in the Middle East have increased volatility in the Korean stock market, sharply boosting trading value on NextTrade (NXT) this month. In particular, trading in the pre-market and after-hours sessions, used by investors to react quickly to overseas market moves, has risen to the point that some stocks are approaching the trading value levels seen on the Korea Exchange (KRX).
According to NextTrade on the 11th, the average daily trading value in this month’s NXT pre-market session (8:00 a.m.–8:50 a.m.), when index volatility has been elevated, reached 10.0536 trillion won as of the 10th. This is nearly 10 times higher than the 1.463 trillion won recorded in December last year, and it is also a sharp increase compared with last month’s 5.0976 trillion won.
The average daily trading value in the after-hours trading session (3:40 p.m.–8:00 p.m.) also more than doubled, from 3.8336 trillion won last month to 8.1467 trillion won this month. On March 3, right after war broke out in the Middle East and the Korea Composite Stock Price Index (KOSPI) plunged, after-hours trading value hit 16.4173 trillion won, setting a new record high.
Since the start of this month, there have been repeated cases where NXT’s single-day trading value for large-cap stocks has exceeded that on the Korea Exchange (KRX). For example, on March 4, when the KOSPI fell by more than 12%, Samsung Electronics Co., Ltd. recorded 16.2297 trillion won in trading value on KRX, while its NXT trading value reached 17.2664 trillion won, surpassing the main exchange.
Considering that from the beginning of the year through the end of last month, Samsung Electronics’ NXT trading value had been only about 40–50% of its KRX level, the surge suggests that more investors are turning to the pre-market and after-hours trading sessions as volatility increases.
In the regular session (9:00 a.m.–3:20 p.m.), NXT’s share of trading is also closing in on that of KRX. According to Koscom CHECK, NXT has accounted for an average of 43.45% of regular-session trading value in KOSPI so far this month. That is more than 10 percentage points higher than the 34.12% in January and 35.64% in February.
On March 3, when the KOSPI dropped more than 7%, 47.68% of KOSPI trading value, or 47.862 trillion won, was executed on NXT. KRX’s share that day was 52.32%, narrowing the gap in trading value between the two venues to about 4 percentage points.
In the KOSDAQ (Korean Securities Dealers Automated Quotations) market, however, KRX still holds a dominant share. Since the beginning of the year, NXT’s share of trading value in the KOSDAQ regular session has remained in the 20–40% range.
Analysts view the shift as the result of more investors trying to respond preemptively in a highly volatile environment, combined with the appeal of faster order execution and better pricing, which has dispersed trading to the alternative trading venue.
Since its launch in March last year, NextTrade has been adjusting the number of listed stocks it handles to comply with the so-called "15% rule" on trading volume, as its volumes have grown rapidly. Under the Enforcement Decree of the Financial Investment Services and Capital Markets Act, an alternative trading venue’s average daily trading volume over the past six months cannot exceed 15% of the Korea Exchange (KRX) volume. NextTrade initially selected 700 stocks—375 KOSPI names and 325 KOSDAQ names—as eligible for trading in the first quarter of this year, but it has cut that number to around 640 due to the surge in volume.
A NextTrade official stated, "This month, as geopolitical risks have come to the fore and market volatility has increased, trading in the pre-market session and after-hours trading session has risen sharply," adding, "However, even with the higher volumes, there is no risk of breaching the 15% rule, as we are managing it by adjusting the number of stocks."
nodelay@fnnews.com Park Ji-yeon Reporter