Nextrade, Korea’s first various inventory trade, is going through complaints from international buyers over a rule that limits buying and selling quantity, trade officers mentioned Wednesday.
Underneath the regulation set by the Monetary Providers Fee, Nextrade can’t account for greater than 15 p.c of the full buying and selling quantity on the Korea Change (KRX).
The rule is designed to make sure that Nextrade, which launched in March, challenges the KRX’s practically 70-year monopoly with out increasing excessively or creating pointless market competitors.
Nextrade has gained a aggressive edge over the common KRX market by providing longer buying and selling hours — from 8 a.m. to eight p.m. — giving buyers higher flexibility than the usual weekday window of 9 a.m. to three:30 p.m.
Nonetheless, the 15 p.c cap rule has turn out to be a stumbling block for funding, as Nextrade doesn’t transparently or promptly share how shut it’s to the cap or which shares could also be briefly eliminated, in response to trade officers.
They mentioned this lack of transparency is particularly difficult for international buyers, who face language and different boundaries in accessing related operational data.
“Nobody anticipated that it will broaden so quickly as to attract the eye of international buyers and create a stir available in the market,” mentioned Jung Eui-jung, head of the Korean Stockholders’ Alliance.
Citing latest knowledge, he famous that whereas home retail buyers nonetheless make up greater than 80 p.c of Nextrade customers, the share of international buyers grew from 0.4 p.c in March to almost 9 p.c in June.
He additionally famous that the platform began with simply 10 shares, grew to almost 800, and has partially suspended buying and selling 4 occasions to adjust to the 15 p.c cap rule.
The suspensions occurred on Aug. 20, Sept. 1, Sept. 22 and Nov. 5, progressively bringing down the variety of actively traded shares to 769, 716, 650 and at present 630.
The suspended shares embody Mirae Asset Securities, Kakao and Korea Electrical Energy Corp. — every a number one firm of their respective sectors — in addition to quite a few corporations linked to the worldwide increase in synthetic intelligence (AI).
“A giant cause international buyers are being attentive to Korean shares proper now’s the entire AI increase, and never getting clear solutions about these suspensions actually hurts Nextrade’s competitiveness,” mentioned a U.S. investor who recognized himself solely as Jason.
“As a international investor on Nextrade, it’s actually irritating when shares I traded simply the day earlier than immediately disappear with none warning due to this unclear 15 p.c cap rule,” he added.
An trade official urged exempting the pre- and after-market classes from the 15 p.c cap rule, separate from the common buying and selling window, including “such a call must be made in session with the KRX.”
