[Era of Multiple Exchanges] "Contributing to Capital Market Advancement by Improving Investment Culture and Market Accessibility" (Interview)

Interview with Kim Hak-su, CEO of NextTrade
Goal is '10% Market Share Within 3 Years of Launch'
"Transaction Costs Will Decrease and Trading Will Be Activated"

Kim Hak-su, CEO of NextTrade, is being interviewed by Asia Economy in his office at the Financial Investment Center in Yeouido, Seoul. Photo by Kim Hyun-min kimhyun81@

"The introduction of Alternative Trading Systems (ATS) will improve investment culture and market accessibility, contributing to the advancement of the capital market."

Kim Hak-su, CEO of NextTrade, who is preparing to launch Korea's first alternative trading system in March next year, made this remark about the expected effects of introducing ATS.

CEO Kim is a capital market expert who has served as Director and Commissioner of the Capital Market Division at the Financial Services Commission, Director of the Financial Services Bureau, and President of the Korea Financial Telecommunications & Clearings Institute. Over a decade ago, during his tenure as Director of the Capital Market Division, he was directly involved in laying the groundwork for the introduction of ATS. He foresaw early on that the introduction of ATS could contribute to the efficiency of trading systems, minimization of transaction costs, and activation of trading.

CEO Kim emphasized, "The addition of another exchange is unprecedented in our market, so everyone will watch with curiosity. We will meet those expectations and interests."

The Positive Functions of ATS Learned Through Overseas Business Trips: "Lower Fees and Increased Trading Volume"

CEO Kim said that during a business trip to Australia when he was Director of the Capital Market Division at the Financial Services Commission, he was able to experience firsthand the effects of introducing ATS. Australia operated a single exchange called the Australian Securities Exchange (ASX) but established an alternative trading system called Chi-X Australia (now CBOE Australia) in 2011. Kim recalled, "I visited thinking it would be about the size of the Korea Exchange, but it was a smaller company than expected. I remember a few staff members warmly welcoming me." He added, "Years later, I went on another business trip last year. I was curious about how much the company had grown. I even met again the person who had explained the ATS business to me over ten years ago, and he remembered me."

He continued, "Now that exchange has grown to hold about 20% market share in Australia," and noted, "Since the establishment of ATS, a healthy competitive system between exchanges has been created, leading to lower fees and increased trading volume."

Afterward, CEO Kim began to specifically plan the introduction of a competitive exchange system in Korea. He said, "I thought it would be good to have an exchange smaller than the Korea Exchange. Then, after the COVID-19 pandemic, trading volume surged. The market began actively demanding the introduction of a new exchange to break the Korea Exchange's monopoly system." He added, "We then officially established the ATS Establishment Preparation Committee and started listening to industry opinions."

Targeting 10% Market Share Within 3 Years: "ATS Will Change the 'Investment Culture'"

Kim Hak-su, CEO of NextTrade, is being interviewed by Asia Economy in his office at the Financial Investment Center in Yeouido, Seoul. Photo by Kim Hyun-min kimhyun81@

CEO Kim cited the activation of trading as the primary expected effect of introducing ATS. He said, "Trading will be activated through extended trading hours and arbitrage trading to eliminate price differences between the two exchanges," and expressed his ambition, "We aim to capture about 10% market share within three years after launch."

Some argue that simply extending trading hours does not necessarily increase trading volume. In response, CEO Kim said, "For actual trading volume to increase to a meaningful level, improvements that change the 'investment culture' are necessary. Extending regular trading hours from the current 3:30 PM to 8 PM is a change significant enough to alter investment culture." He added, "According to a survey conducted earlier this year, over 80% of respondents said they would be willing to trade if trading hours were extended. It seems that individual investors, especially office workers, have missed trading opportunities due to busy daytime work. Also, institutions that value fees highly are likely to have strong interest in ATS."

CEO Kim mentioned fees and new trading types as differentiating factors from existing exchanges besides extended trading hours. He said, "Fees are 20-40% cheaper compared to existing exchanges. While current exchange fees are reasonably set, offering even lower fees is certainly meaningful. Overall, this will reduce trading costs." He emphasized, "Additionally, we have introduced new trading types such as midpoint pricing and stop-limit orders to reflect diverse investor demands. More granular quotes will increase the likelihood of trade execution and enhance price discovery functions."

Expanding 'Market Accessibility'... "Positive for Capital Market Value-Up"

CEO Kim said that the introduction of ATS will improve 'market accessibility' and positively impact the value-up of Korea's capital market. He stated, "Of course, stock prices fundamentally link to corporate value, but it is also important to shape the value of stocks as 'products.'" He emphasized, "By introducing ATS, we can provide competitive trading infrastructure and improve the stock distribution system. From the perspective of expanding 'market accessibility,' this will contribute to value-up." He added, "From the viewpoint of foreign investors, trading opportunities in Korea will increase. They are showing great interest in understanding our changes."

Finally, CEO Kim expressed gratitude to the many capital market stakeholders working hard to prepare ATS. He said, "We are creating a new system that has never existed before. There is still time to be patient to see the expected effects of ATS introduction, but there is a lot of work to be done immediately, and I see the staff struggling." He added, "However, these efforts are to develop our capital market and end the monopoly system of the exchange. I am always grateful to the securities firms and capital market stakeholders collaborating with us."

CEO Kim continued, "Ultimately, everything progresses because people move it. Through smooth collaboration with industry stakeholders, we will ensure that an advanced trading system is quickly established." He concluded, "We will continue to communicate with the market and strive to provide unique services distinct from existing exchanges. We are keeping the door wide open for future development potential."

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