Foreign brokerage firms are increasingly participating in the alternative trading system NextTrade (NXT). Following the recent additions of Morgan Stanley and Merrill Lynch, Goldman Sachs and CLSA Korea have joined this month, expanding the trading base for foreign investors in South Korea.
On August 31, NextTrade announced that it approved the membership applications of Goldman Sachs' Seoul branch and CLSA Korea on August 28.
Both firms plan to complete the implementation of a Smart Order Routing (SOR) system by the end of the year, after which they will begin trading on NextTrade. The SOR system automatically selects the most favorable market for order execution among multiple trading venues.
With this latest addition, the total number of NextTrade members has increased to 38. Notably, five foreign brokerage firms have joined since May, marking a significant increase in foreign participation.
Macquarie was the first foreign brokerage to join NextTrade in May, followed by the approval of Morgan Stanley and Merrill Lynch's memberships on August 1.
Morgan Stanley plans to complete its SOR system by November, while Merrill Lynch aims to finish its system by the end of the year and participate in all markets, including pre- and after-market trading.
The entry of foreign brokerages aligns with the growing trading volume of foreign investors on NextTrade. When NextTrade launched in March 2022, foreign trading accounted for only 0.4% of the total trading volume, but this figure has steadily increased.
By June of this year, the share of foreign investor trading had risen to 12.8%, up from 9.3% in June 2022, marking a 3.5 percentage point increase in one year. In July, this figure further increased to 14%, a rise of 1.2 percentage points from the previous month.
NextTrade believes that the expansion of participation by global brokerages will improve the trading environment for foreign investors in South Korean stocks.
Kim Hak-soo, CEO of NextTrade, stated, "The membership of Goldman Sachs and CLSA Korea marks the beginning of significant participation by global brokerage firms in NextTrade. We expect this will further enhance the trading conditions for foreign investors in South Korean stocks." He added, "We will support the market participation preparations of both companies while continuing to back the growing trading demand from domestic and international investors as a leading trading infrastructure for Korean stocks."
* This article has been translated by AI.
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