South Korea’s six major securities firms have joined forces to deploy an alternative trading system (ATS), inter-market or broker-dealer electronic platform that can lower the costs from trading on the registered exchanges.
According to investment banking sources on Wednesday, a consortium between six securities firms – Korea Investment & Securities, NH Investment & Securities, KB Securities, Mirae Asset Daewoo, Samsung Securities and Kiwoom Securities – agreed to put up a combined 100 billion won ($84.6 million) to launch the first ATS in Korea and file an application for the establishment approval to the Financial Services Commission in December this year.
The new ATS will provide the same services as the country’s sole stock exchange operator Korea Exchange but will not be regulated as an exchange to give more choices to day traders, they added.
When approved, day traders can more easily access the electronically matching of the buy and sell orders they place.
Market experts expect the ATS will bring new energy to Korean capital markets in which Korean Exchange has been serving as the sole platform for trading. Competition will lead to lower fees, new indices and an increase in trading hours, giving more investment choices for both retail and institutional investors and attracting more investment from foreigners, they say.
The move however upset the traditional exchanges. It is likely to be strongly contested by the Busan Metropolitan City, where the Korea Exchange headquarters have moved to as it can weaken the design of the relocation to groom the port city as a financial hub.
The Korea Exchange also complained that the ATS only intensifies unnecessary competition in the domestic securities market which is much smaller than that of the U.S. and Europe.
By Jin Young-tae and Lee Ha-yeon
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