Officials from Nextrade work at the company headquarters in Seoul, Tuesday. Yonhap
By Lee Yeon-woo
Nextrade, which went into operation on Tuesday as Korea's first alternative trading system (ATS), is facing a series of system errors, making some brokerage firms hesitant to participate amid growing investor concerns, industry officials said Sunday.
Nextrade initially planned to launch its regular market, after-hours trading market and block and basket trading markets simultaneously on Tuesday. However, as of Sunday, the block and basket trading market has remained non-operational.
Block and basket trading involves multiple securities being traded together as a single package, a method often used by hedge funds and institutional investors.
The issue stems from a malfunction in the circuit breaker system, which is designed to halt trading in stages if a stock's price declines by more than 8 percent compared to the previous day.
Prior to launch, Nextrade conducted a simulation and identified that trades continued to be executed in the block and basket market even after the Korea Exchange's circuit breaker was triggered. As a result, the company decided to postpone its opening.
"The block and basket trading market is primarily used by institutional investors, so its impact on individual traders is expected to be minimal," a Nextrade official said. "We will reinforce the circuit breaker system and proceed with the market’s opening."
This is not the first time that system glitches have affected Nextrade's services. On the first two days following its launch, some brokerage firms experienced delays in order execution and market data retrieval.
"Shortly after the market opened on Wednesday, Kiwoom Securities' home trading system encountered numerous minor glitches following its latest update, making for a rather unsettling start to a day," an investor wrote to an online investment community.
"There were many detailed errors related to trading, such as order book lag, and real-time position calculations. Concerned that these issues could disrupt my buy and sell orders, I opted to trade cautiously on that day," he added.
Similarly, at Mirae Asset Securities, real-time order execution updates on its mobile trading system and home trading system were delayed, forcing investors to place duplicate orders.
The Financial Supervisory Service is investigating the cause of system errors and assessing their impact on the affected securities firms.
As ongoing errors raise concerns about system stability, securities firms that have yet to participate in the ATS are adopting a more cautious stance. They have expressed intentions to enter the market in phases after confirming system stability.
Currently, 14 securities firms are taking part in Nextrade trading, including Mirae Asset, Samsung, NH, KB, Kiwoom and Hana.
Some question whether the ATS was launched hastily before its infrastructure was fully prepared.
"If you are going to introduce it, do it properly. I believe Nextrade and securities firms need to strengthen their system stability for safe trading," another retail investor wrote.
English (United States) ·