The Korea Financial Investment Association Forms ATS Task Force... Aiming to Complete Official Approval Within the Year

▲ Yeouido Securities District, Seoul

[Asia Economy Reporter Hwang Yoon-joo] The securities industry is actively preparing for preliminary approval ahead of the financial authorities' announcement of the Alternative Trading System (ATS) guidelines. The plan is to complete the full approval within this year.

According to the industry on the 10th, the Korea Financial Investment Association (KOFIA) has formed a task force (TF) for establishing ATS and is awaiting the financial authorities' ATS guidelines.

The KOFIA TF organization is a temporary internal team newly established within KOFIA to respond to the ATS establishment 'guidelines' and support the establishment tasks. Previously, seven securities firms including Mirae Asset Securities, Samsung Securities, NH Investment & Securities, Korea Investment & Securities, KB Securities, Kiwoom Securities, Shinhan Financial Investment, and KOFIA formed the 'ATS Establishment Committee.'

The ATS establishment procedure involves the financial authorities releasing guidelines, applying for preliminary approval of ATS, and then applying for full approval. Once the financial authorities release the guidelines this month, the preliminary approval application will be submitted immediately. The preliminary approval review is expected to take at least two months (45 business days) to three months. The full approval will be applied for in the second half of the year, aiming to receive ATS approval within the year at the earliest.

The ATS Establishment Committee is most concerned about the 'IT system.' Unlike the Korea Exchange, which has listing review and market surveillance functions, ATS only handles stock trade execution. The securities industry believes that if the IT system is well established, ATS operations will begin in 2025. An industry official explained, "The goal is to secure up to 15% of stock trading volume after ATS opens, but if there is a trade execution accident, it could cause difficulties in initial settlement."

Meanwhile, ahead of the guideline release, attention is also focused on whether differentiated operations such as high-frequency trading (HFT) and dark pools, requested by the ATS Establishment Committee, will be permitted. While HFT has clear advantages, high-frequency traders can use order speed to take quotes, which may disadvantage individual investors. Dark pools, which mean anonymous trading, can hide the orderer and transaction price, raising concerns that individual investors might suffer losses.

The Korea Exchange is positive about ATS establishment from the perspective of stock market development. However, it emphasizes the principle of 'same function, same regulation,' stating that if differentiated operations such as HFT and dark pools are allowed, the same rules should apply to the exchange as well.

This content was produced with the assistance of AI translation services.