Korea Information & Communication (025770) has been fully suspended from trading on Nextrade, Korea's alternative trading system (ATS), through June 30. The preemptive measure was taken as recent sharp share price gains concentrated trading volume near regulatory limits. Critics say that Nextrade's repeated stock adjustments to comply with volume regulations are fueling growing confusion among investors.
According to Nextrade on the 21st, trading of Korea Information & Communication has been suspended across the pre-market, main market, and after-market sessions from that day through June 30. The company has recently emerged as a key player in next-generation payment systems after news that it would participate as a payment infrastructure partner in the Bank of Korea's central bank digital currency pilot project. The stock, which stood at 7,830 won on the 9th, climbed to 15,910 won on the 20th, doubling in a short period.
Nextrade halted trading of the stock after determining that the individual stock limit was likely to be breached as investor inflows pushed trading volume sharply higher. Under current rules, an ATS cannot exceed a daily average trading volume equivalent to 15% of the overall market or 30% for any individual stock over a six-month basis. "This is a preemptive measure to ensure compliance with the per-stock limit regulation," a Nextrade official said.
This is the first time Nextrade has singled out and suspended a specific stock. The ATS had previously scaled back the number of tradable stocks in stages to comply with volume regulations, cutting 79 stocks in August, 66 in September, and 20 in November last year, and excluding another 50 in February this year. Nevertheless, pre-market and after-market trading has been growing rapidly, repeatedly bringing volume close to regulatory thresholds.
Market observers point to growing confusion among investors. In particular, investors who primarily use the pre-market and after-market sessions are facing inconvenience as the pool of tradable stocks suddenly shrinks. "As Nextrade's tradable stocks are managed on a fluid basis, this could reduce foreign investors' accessibility to and predictability of the Korean market," an official in the financial investment industry said. "At a time when foreign investor interest is rising, volume regulations are acting as a constraint on market growth."
With trading values expanding, concentration in individual stocks is bound to intensify as well, raising the likelihood that similar cases will recur. Despite the recent conflict in the Middle East, the Korean stock market has shown solid growth, and Nextrade's daily average trading value this month has far exceeded 20 trillion won.
