1. Home
2. Stock Trading For Beginners

Korean Stock Exchange

Written By

James Barra

Written By

James Barra

James is an investment writer with a background in financial services. He has worked as a management consultant, where he delivered large-scale operational transformational programmes at some of Europe's biggest banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Edited By

Jemma Grist

Edited By

Jemma Grist

Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.

» Jemma Grist Profile Page

Fact Checked By

William Berg

Fact Checked By

William Berg

William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.

» William Berg Profile Page

Updated

Jul 10, 2024

Korean Stock Exchange (KRX) brokers offer access to the only securities exchange based in South Korea. With a market cap worth over $2.46 trillion and a trading volume of 81 billion shares, day trading on the KRX is an attractive choice for investors. This review will look into its history, how the KRX works, market opening schedules, investing rules and more. We also provide comparison tips to help you choose between KRX brokers, including suggestions of the best brokers with access to the Korean Stock Exchange in 2024.

How To Compare KRX Brokers

As part of the KRX program rules, you are required to open an account with licensed brokers to start investing on the exchange. Here are the key factors to look at when choosing between KRX brokers:

Fees

It is important to be fully aware of any trading fees or charges. Don’t get caught out by unexpected or hidden costs. As a day trader who places a high volume of trades throughout the day, commissions can add up and take away from profits. Therefore, you want to choose a provider with low commissions and tight spreads to make investing worthwhile.

Also consider other charges such as account funding fees, exchange data subscriptions and withdrawal costs. The best KRX brokers will publish all this information on their website so you can review this before committing to a live account. eToro, for example, offers commission-free stock and ETF investments, including on the iShares MSCI South Korea ETF (EWY). Nonetheless, a 0.15% spread fee applies to all non-US instruments.

Instrument

KRX brokers offering stocks are few and far between. Interactive Brokers is an outlier, offering access directly to the exchange and allowing traders to purchase stocks such as Kia, Samsung and LG Electronics.

However, for the majority of retail traders, the best way to trade the KRX is through an ETF. ETFs are funds that contain a mixture of instruments, often stocks, that aim to track a market or industry’s performance. The most liquid and widely offered ETF is the iShares MSCI South Korea ETF (EWY), which gives traders exposure to the South Korean economy. 

Platforms

KRX brokers that offer a choice of trading platforms and software should rank highly in your comparison. This is where you will likely spend most of your hours when executing KRX trades, and will display the pricing information for your investment decisions. Check that the platform offers the right tools, price data, charts and graphs for technical analysis.

If you want the option of on-the-go investing, you should opt for KRK brokers with a mobile app.

Customer Service

When your trades are on the line and you encounter any issues, you will need KRX brokers with a responsive customer support team. Make sure that there are multiple ways to contact them and in the methods that suit you. This may include toll-free telephone numbers or live chat services. Additionally, most customer support teams have 24/7 opening hours, available in several languages. Pepperstone, for example, offers a 24-hour non-UK telephone, available seven days a week. Alternatively, retail traders can contact the brokers’ support team via live chat or WhatsApp.

What Is The Korea Exchange (KRX)?

History

The Korea Exchange was established in 1956 and initially operated independently. In 2005, the KRX we know today was formed when the Korean Stock Exchange, the Korean Securities Dealers Automated Quotations (KOSDAQ) and the Korean Futures Exchange joined forces.

The merger occurred as an outcome of the Korea Stock & Futures Exchange Act, which aimed to reduce costs and improve investor efficiency in response to rapidly changing financial markets.

The result was the creation of three divisions: the Stock Market Division, the KOSDAQ Market Division and the Derivatives Market Division.

The company is headquartered in Seoul and Busan, South Korea but the Korean Exchange Bank has numerous trade centre branches around the world.

How Does The KRX Work?

In 2021, the Korea Stock Exchange listed 2,448 companies, totaling a market cap of USD 2.6 trillion. In April 2021, the KRX trading volume reached over 86 billion shares, with a trading value of over 620 billion KRW (USD 540 million) in the same month. There are several large-cap, mid-cap and small-cap indices that hold a variety of companies arranged by market capitalization and other factors.

Under each market division, investors have a wide choice of tradable instruments. Access will vary between KRX brokers:

KOSPI Market Division

• Stocks
• Bonds
• Exchange-Traded Funds (ETFs)
• Exchange-Linked Warrants (ELWs)
• Real Estate Investment Trusts (REITs)

KOSDAQ Market Division

• Stocks

Derivatives Market Division

• Single Stock Futures
• Indices
• Equities
• Bonds
• Forex
• Commodities

KRX Indices

The Korean Stock Exchange has a total of 372 indices as of April 2021, covering equities, derivatives/commodities, fixed income, and more. The following are the standout KRX  indices:

Korea Composite Stock Price Index (KOSPI)

KOSPI was initially introduced in 1983 and is calculated based on market capitalization. It is the stock market index that is representative of South Korea in the same way as the S&P 500 represents the United States.

Consisting of the most common stocks listed on KOSPI, it is also considered Korea’s key economic indicator that gauges the overall health of the KOSPI market. The KOSPI and its subsidiaries are the most popular global indices.

KOSPI 200

The KOSPI 200 index, otherwise known as the Korean blue-chip index, was established in 1994. It served as an underlying index for futures and options. The 200 companies listed are market and industry leaders from the Stock Market Division, which features decent liquidity. With a 70% market value of the KOSPI, this index moves alongside it.

More importantly, KOSPI 200 is listed on the futures and options markets and is one of the most highly traded indices in the world.

KOSDAQ 150

The KOSDAQ 150 index was introduced in 2015 and represents the technology sector in Korea. It is currently used as the underlying index for futures and ETFs. The constituents listed are calculated based on market capitalization, sector representativeness, and liquidity. When KRX investing on the KOSDAQ 150, retail traders are speculating on the rise and fall of top global names such as Samsung, Kia and LG Electronics.

KRX 300

The KRX 300 index was created to maximize the market cap coverage of both KOSPI and KOSDAQ. Therefore, it represents a combination of 300 sector leaders in both of these markets. The shares listed on the KRX 300 are chosen for their market capitalization, liquidity, and sector representation standards. It was created in 2018.

Korea Stock Exchange Program Rules

If you wish to trade on the Korea Stock Exchange, there are a few basic KRX rules to consider. Korea-based investors must open an investment account through licensed securities companies or brokers that have obtained a KRX membership. KRX orders can only be placed through these members.

On the other hand, foreigners need to obtain an Investors Registration Certificate from the Financial Supervisory Service.

The FSS is Korea’s integrated supervisory authority. Afterwards, foreigners need to open an account with a local custodian bank that provides custody, money transfer and security settlement services.

Korea Stock Exchange Listing Requirements

Admission

Before a firm can be traded via KRX brokers, let’s consider what it takes for a company to be listed on the exchange. The South Korea Stock Exchange has set out strict criteria that companies must meet to float on the exchange. The KRX  rule system is divided into quantitative and qualitative criteria, which differ from the KOSPI to the KOSDAQ to the KONEX market. Some formal listing review requirements are as follows:

Quantitative Criteria To Be Listed On KOSPI:

• Paid-in capital must equal or be over KRW30 billion
• The company must have been in operation for three or more years
• The expected number of shares to be listed must be one million or more
• Recent sales from the company must amount to KRW100 billion or more, with previous three-year sales averaging KRW70 billion

Qualitative Criteria:

• Transparency of Business Operations – This includes corporate governance, internal control systems and fiscal transparency
• Continuity of the Company – This refers to the stability of operations, finance and other business issues i.e. the existence of conflict and litigation
• Protection of Investors – This includes disclosure transparency, protection of minority shareholders and stock market integrity

KRX Exchange Opening Hours

Sessions on the KRX work similarly to other major stock markets around the world. Whether you’re investing in stocks, futures markets, derivatives or trading on the KOSPI, they can all be executed within the times below. The regular schedule including extended hours are as follows:

Trading days: Monday to Friday (GMT +9:00):

• 8:00am – 9:00am KST: Pre-Hours
• 9:00am – 3:30pm KST: Main Session
• 3:40pm – 6:00pm KST: Post-Hours

The South Korea Exchange trading hours are a total of 6 hours and 30 minutes per day, whereas other markets can be open anywhere between 5 to 7 hours a day. Shorter sessions can mean increased liquidity, less volatility, tighter spreads and more efficient markets.

According to the South Korea Stock Exchange calendar, there are some market holidays to consider. These will be reflected in all KRX brokers’ published calendars. The trading holidays work in a similar pattern each year. It might be worth referring to previous Korea Stock Exchange 2020 and 2021 trading calendars for example. Typical holidays include New Year’s Day, Korean New Year, Independence Day, Chuseok Festivity and Children’s Day.

Biggest Players

You can find the largest businesses that dominate the KRX on the KOSPI indices. Typically, Korea is famous for its technology and automotive companies, many of which are well-known around the world.

For example, Samsung currently leads with a market cap of over $470 billion. Other familiar brands include Hyundai ($44.82 billion), Kia ($30 billion) and LG Electronics ($27.44 billion).

As you can see, these companies have outstanding valuations that are worth considering when day trading shares on the KRX. These equities are likely to be the most frequently traded via KRX brokers, with high trading volumes suitable for intraday traders.

Why Trade The Korea Stock Exchange?

As one of the top exchanges around the world, there are many reasons why investors are flocking to find KRX brokers that support trading on the exchange. The following are just some of the benefits of investing on the Korea Stock Exchange:

• Liquidity: The KRX offers high trading volumes with a healthy market cap, which makes it one of the most liquid stock exchanges in Asia. Thousands of companies from various industries feature on the KRX indices too. The introduction of a market maker system has also further increased liquidity.
• Diverse Investment Vehicles: The available traded instruments offered by the KRX provide more opportunities for a diverse portfolio. You can have your choice of over 300 indices, bonds, futures, ETFs and more. This also results in more opportunities to diversify any portfolio.
• Transparency: KRX has enhanced its credibility internationally by signing a Memorandum of Understanding (MOU) to cooperate with the Depository Trust & Clearing Corporation (DTCC) on a trade repository for information sharing. This means improved market data across several jurisdictions.
• Hours: The Korea Exchange offers extended hours before and after the main session. Additionally, its shorter market opening times mean higher liquidity, tighter spreads, lower volatility and more efficient trading. Furthermore, it allows for more time to consolidate any market news or data ahead of regular sessions.
• Growth: South Korea has rapidly grown to be a strong and stable economy. It is expected to grow at a rate of 2.3% to 3.6% from 2021 to 2026. It also has a stable annual per capita income of more than $30,000.

KRX Trading Tips

Strategy

Before you start investing on the Korea Stock exchange, it is key that you have an effective strategy. More often than not, unnecessary losses are due to poorly managed decisions. Nowadays, KRX brokers offer a plethora of stock charts, graphs, historical prices and market data that you can utilize for effective technical analysis. While some KRX brokers may charge fees for market data, there are still many resources that are free of charge. By utilizing the right tools, it can help you visualize a pattern, which will facilitate in making more accurate price predictions.

News

Keeping up with the latest market news and market data is key. You need to be able to anticipate market moves and stay ahead of any factors that can trigger significant price shifts. There are several resources you can utilize, from live news reporting to updates or even forecasts. Some popular financial news sources include Bloomberg, FT and Yahoo Finance.

The best KRX brokers will also integrate this information into their platforms, so you can keep up to date with the latest market data. News websites can also provide KRX calendars with any significant market holidays.

Timing

As mentioned, KRX trading hours can offer opportunities for increased liquidity and more efficient investing. While you can trade during extended hours, it does not necessarily result in more profit potential. Pre-market hours will have less volume and may have different rules. It also means limited liquidity with increased volatility and larger spreads. On the other hand, earnings trade reporting and key market news are generally announced post-trading sessions. This can result in major price swings during the after-hours market.

It is important to note that not all KRX brokers will offer out-of-hours trading. Reach out to their customer service team if this information is not clear.

Automation

Once you’ve perfected your strategy, it could be time to consider automated trading. Automating your trades with a robot that follows predetermined criteria can open up more opportunities for increased profits beyond what you could perform manually. Algorithms can also help you save time so that you can focus on research or other matters. However, any bot that will trade on your behalf should be backtested. Run the automation on a demo account before letting loose on your live funds.

Journal

Keeping a journal is a great way to monitor your KRX performance and what can be improved over time. We recommend noting it down on a spreadsheet or any other specialist software. Some examples of useful information to keep track of include:

• Price
• Entry & exit position
• Purchase & sale date
• Position size
• Reason for making the trade

With the frequency of trades placed during the intraday, it can be hard to know what is working and what isn’t. Therefore, visualizing data on your KRX successes or failures will make identifying a fruitful strategy much easier. Many established KRX brokers offer a journal section within their platform interfaces, meaning you won’t need to switch between pages to access your trade information.

Final Word KRX Brokers

Day trading with KRX brokers offers multiple opportunities to profit from indices such as the KOSPI, KOSDAQ or KRX. With a large market cap and high daily trading volume, it’s no surprise that many are choosing to day trade on the Korean Stock Exchange. However, to gain an edge in a competitive market, it is crucial to be prepared with an effective strategy that utilizes news and market data. Additionally, take note of our top Korea Stock Exchange brokers to ensure you are getting regulated, high-quality investing conditions.

FAQs

What Tradable Instruments Are Available On The Korea Exchange?

There are many markets day traders can get involved with on the KRX. Separated into the KOSPI, KOSDAQ and Derivatives Market Division, traders can get involved with: stocks, bonds, ETFs, ELWs, REITs, Indices, Futures, Equities, Forex, Bonds and Commodities. Access to these instruments will vary between brokers.

Does The Korea Stock Exchange Have Extended Market Trading Hours?

Yes. The Korea Exchange has extended trading hours from Monday to Friday. The pre-trading session occurs between 8:00 to 9:00 am KST, while the post-trading session is from 3:30 pm to 6:00 pm. The post-market session is also known as the single price auction. Extended hours are trading times that occur before and after an official session. Look out for KRX brokers that offer this. Pre-market and after-hours trading will generally have less volume, which means limited liquidity, increased volatility and larger spreads. Additionally, the Korea Exchange is not open on Saturday or Sunday.

Does The KRX Have A Trade Repository?

Yes. The Depository Trust & Clearing Corporation (DTCC) and the Korea Exchange signed a Memorandum of Understanding (MOU) to cooperate on a Trade Repository (TR) solution in Korea. The trade repository allowed for better transparency of derivative markets, increased cooperation across jurisdictions and reduce risks of financial instability.

Are There Any Trading Fees Associated With KRX Brokers?

Market charges vary between KRX brokers. Your provider may impose commission fees, deposit minimums and deposit and withdrawal fees. It’s important to be aware of all fees when investing in the KRX, as they may eat into your profits over time.