Korean investors take up around 40% of overnight trading in US stock market
For Blue Ocean ATS, a broker platform that facilitates overnight trading for the US stock market, Sunday night is the peak trading hour as South Korean investors flock to execute orders before the US day trading begins.
“Sunday night is our biggest night when it is Monday morning for the Asian investors and Korean investors. They start trading at 8 p.m. when traditional exchanges here in the US do not open until 9:30 a.m. on Monday,” Brian Hyndman, president and CEO at Blue Ocean Technologies, said in a recent online interview with The Korea Herald.
Blue Ocean Technologies operates Blue Ocean ATS, providing after-hours trading between 8 p.m. and 4 a.m. Eastern time from Sunday to Thursday. Having launched its service in 2021, it is the only nighttime trader on the US stock market.
“What drove the overnight trading here is that people want to have the ability to manage their risk in real-time. We hear loud and clear from Korea, Hong Kong, Tokyo, Singapore and Australia that they want to trade US stocks during their daytime hour,” he said.
According to Hyndman, 40 percent of the total trading volume facilitated on Blue Ocean ATS is from Korea. Through the ATS, Korean investors can trade US stocks between 10 a.m. to 6 p.m. Seoul time. Another 30 percent come from the Asia-Pacific region, excluding Korea, while the rest comes from the US, Middle East and other regions.
“Over the past two years, we have seen a sharp increase in not only the number of shares but the number of Korean brokers connecting to the US,” he said.
Blue Ocean Technologies first joined hands with Samsung Securities in 2022 through an exclusive contract to secure Korean customers. It later expanded the scope of cooperation to other big-name securities firms such as Mirae Asset Securities and Korea Investment & Securities.
Having partnered with the Tokyo Stock Exchange in 2023 to expand the customer base, Blue Ocean Technologies also anticipates strong incomings from Japanese investors.
While Nextrade, Korea’s first ATS platform, is set to end the almost 70-year monopoly of the Korea Exchange in the first quarter of next year, Hyndman projects the competition to improve the overall Korean equity market in terms of size, technology and price.
“The competition is going to be good. It was good for the US stock exchanges years ago,” said Hyndman, with an extensive career in the equity market, having worked at companies such as Nasdaq and Brut, an electronic communications network for US equities.
The US regulators lifted the bar on the establishment of an ATS in 1998. There are over 70 ATSs registered with the US Securities and Exchange Commission as of April. Combined, they take up some 10 percent share of the transactions of listed stocks.
“These young, nimble alternative training systems came in with better technology. They brought high-frequency trading, and the volume has grown substantially over the past 20 years,” he explained.
While the new ATS operator in Korea will be limited to trade a 15 percent share of the transaction volume made during the regular hours of the Korea Exchange, Hyndman views the 15 percent cap as “sufficient.”
“Fifteen percent is probably a fair number to start with,” he said. “(If the new ATS is) successful it would get five or 10 percent, and I would be impressed.”
Though Blue Ocean ATS is the only nighttime trader on the US market for the time being, Hyndman foresees competition in the future.
“If the Nasdaq or the NYSE decided to jump into overnight trading, I view that to be positive news for Blue Ocean. I think the overall size of the pie would just grow bigger,” he said.
