South Korea’s Financial Sector Prepares for Major Market Overhaul: Extended Trading Hours Bring Challenges for Brokerages, Asset Managers, and Unresolved ETF Rules
South Korean brokerages and asset management firms are in a frantic race to prepare for significantly longer stock trading hours. This major market structure change, driven by the Korea Exchange (KRX), necessitates extensive system overhauls and increased staffing across the financial industry.
However, this transition is also revealing considerable strains within the sector. Labor unions are voicing strong opposition due to anticipated heavier workloads, while market participants express concern over critical unresolved trading rules for exchange-traded funds (ETFs) just months before the new system’s launch.
As industry officials indicated on Monday, securities firms and asset managers are actively evaluating additional hiring needs in anticipation of KRX’s planned trading hour expansion set for September.
A brokerage official commented, “Brokerages are already facing immense pressure preparing for these extended trading hours. Workloads for our IT and digital infrastructure teams have surged dramatically, prompting us to consider extra hiring and new workforce management strategies.”
This pressure has been building since March 2025, when South Korea’s first alternative trading system (ATS) launched, already requiring brokerages to upgrade their trading systems and boost staffing levels.
Asset managers are also bracing for increased operational burdens, particularly as ETF trading volumes continue to rise. Industry experts estimate that ETF turnover has soared to approximately 400 trillion won (around $285 billion), intensifying worries about potential shortages of skilled traders and liquidity management personnel.
“Managing ETFs effectively during extended trading hours will undoubtedly demand more traders, significant system upgrades, and necessary regulatory adjustments,” stated an asset management industry official. “Our current workforce is simply insufficient, making additional recruitment an unavoidable necessity.”
The KRX intends to expand trading hours from the existing 6 1/2-hour session to a much longer period, potentially stretching from 7 a.m. to 8 p.m., which includes both premarket and after-hours trading.
Initially, the exchange aimed for a June 29 launch. However, following concerns regarding system readiness and overall market stability, the implementation was postponed to September 14. Currently, KRX is conducting mock trading sessions with its member firms as a crucial part of the system testing phase.
Central to the industry’s anxieties is the operational framework for ETF trading during these extended hours.
While KRX initially allowed securities firms discretion on whether ETF liquidity providers would participate in extended sessions, the exchange is now reviewing making participation mandatory. This reconsideration comes amid fears of wider bid-ask spreads and increased price volatility in the absence of sufficient liquidity provision.
Furthermore, the exchange is contemplating maintaining the existing ETF creation and redemption deadline system. This approach aims to alleviate the administrative burden that could arise from longer trading hours.
Several critical operational details, however, remain unsettled.
KRX is still assessing whether ETF creation and redemption requests submitted during extended trading hours will qualify as same-day transactions. Approval procedures involving the Korea Securities Depository and various fund administration companies also need to be clearly defined.
Another proposal under consideration seeks to limit pre- and after-market ETF trading specifically to products that asset managers actively apply for. This measure aims to mitigate potential price discrepancies and protect investors from undue losses.
Industry officials caution that thin liquidity during extended sessions could lead to significant price distortions.
“For smooth ETF trading during extended hours, both liquidity provider activity and the creation-redemption process must function seamlessly together,” emphasized another official from an asset management firm. “Without clear operational standards, market confusion is inevitable.”
Another expert warned that low trading volumes outside regular market hours could severely amplify volatility.
“If a sudden surge in buy orders occurs when only a limited number of quotes are available, prices could experience sharp, rapid increases,” the official explained. “Trading volumes during extended hours are highly likely to remain considerably lower than those seen during standard sessions.”
Adding to these challenges, labor tensions are also escalating within the financial sector.
The Korea Financial Industry Union has maintained its protests and rallies against the KRX’s plan. They argue that worker concerns have not been adequately addressed throughout the process and are urging the Korea Exchange to abandon what they deem an unjustified extension of trading hours.
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