NextTrade's plans to expand its exchange-traded fund (ETF) trading are facing setbacks. Contrary to its previous schedule to begin ETF trading in November, the company is now expected to struggle with its application for full approval in September. The Korea Exchange is pushing to exclude ETFs from trading in the aftermarket, complicating the trading timeline.
As of August 28, financial industry sources indicate that NextTrade has not yet applied for full approval for ETF trading. Industry experts predict that the application will likely not be submitted in September. Given that the approval process typically takes over two months, the prospect of starting ETF trading in November now seems unlikely.
The uncertainty surrounding the start date for NextTrade's ETF trading has raised questions about how long trading hours can be extended. Initially, NextTrade planned to open all trading sessions—pre-market, main, and aftermarket—but is now considering starting with regular market hours and expanding based on market conditions.
Earlier this year, NextTrade aimed to apply for full approval after system testing following the Korea Exchange's extension of trading hours on September 14, with plans to commence ETF trading in November. Methodological discussions related to ETF trading had largely been concluded, and technical development was nearly complete.
However, recent controversies surrounding single-stock leveraged products and increased market volatility have rapidly changed the situation. Asset management firms and securities companies have expressed concerns about market operations and price management amid volatility, leading to an agreement earlier this month to refrain from participating in the Korea Exchange's aftermarket ETF trading.
Financial authorities are also prioritizing market stability. Reports suggest that authorities and the exchange are considering amendments to the implementation rules for the introduction of the aftermarket, which would exclude ETFs and exchange-traded notes (ETNs) from the list of tradable products.
As a result, NextTrade's timeline for launching ETF trading, initially set for November, is now under review. Although the exchange's rule amendments do not directly involve NextTrade, the challenges faced by market participants remain significant.
In the current situation where the Korea Exchange has blocked aftermarket ETF trading, if NextTrade were to proceed with its ETF trading first, it could face the burden of directly coordinating liquidity provider (LP) issues with securities firms.
A NextTrade representative stated, "While we can technically proceed regardless of the exchange's stance on aftermarket ETF trading, the positions of asset management firms and other market participants are more important. We believe there is no need to push aggressively to persuade the market. We are carefully considering various aspects of the market situation."
* This article has been translated by AI.
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