Korea Exchange
The Korea Exchange (KRX) is effectively reconsidering the introduction of a 7 a.m. pre-market session under its plan to extend stock market trading hours, originally set to take effect September 14. With industry pushback continuing and securities firms voicing growing concerns over the burden of system development and stability, momentum is building toward introducing only the after-market session first.
According to the financial investment industry Friday, the exchange recently gathered opinions from domestic securities firms on a scenario that would exclude the pre-market and open only the after-market. “The exchange recently surveyed whether systems could be built for various situations: opening only the pre-market, opening both the pre-market and after-market, or opening only the after-market,” an official at one securities firm said. The exchange is also reported to have reviewed the potential burden that could arise if preparations for introducing the T+1 system, which shortens the stock settlement cycle, proceed simultaneously with the establishment of a “One Board” framework for the extended trading hours.
Behind the exchange’s consideration of a shift in direction lies persistent concerns raised by the securities industry. The trading-hours extension being pursued by the exchange would establish a pre-market (7 a.m. to 7:50 a.m.) and an after-market (4 p.m. to 8 p.m.) before and after the current regular session (9 a.m. to 3:30 p.m.).
In particular, there have been continued concerns that the pre-market carries significant technical burdens, as its time slot overlaps with Nextrade, the alternative trading system that operates from 8 a.m. This is because unfilled orders and remaining volume must be processed within a short period during the transition from the exchange’s pre-market to Nextrade’s (NXT) pre-market (8 a.m. to 8:50 a.m.) and then to the exchange’s regular market. The original 7 a.m. to 7:50 a.m. window, leaving the 10 minutes before 8 a.m. empty, was set for this reason.
The exchange had initially planned to introduce the pre-market and after-market from June 29, but as industry pushback continued, it postponed the start by about three months to September 14. At the time, the exchange explained that the move “accepted the securities industry’s view that it was necessary to raise the completeness of the system development for extending trading hours and to secure sufficient testing time.”
Pushback from labor is also a variable the exchange is considering. Securities industry labor unions have maintained their opposition, arguing that extending trading hours could expand the working hours of front-line employees and increase the risk of financial accidents. In fact, some unions have held rallies and overnight sit-ins in front of the exchange’s headquarters, demanding the withdrawal of the plan to extend trading hours.
The exchange will convene the heads of major securities firms on the 19th for a meeting on extending stock market trading hours. “We have convened a meeting with the heads of securities firms that agreed to participate in the pre-market and after-market,” an exchange official said. “The purpose is to check the state of preparations and to gather opinions on the trading-hours extension.”