Next generation neural interfaces for upper-limb (and other) prostheses aim to develop implantable interfaces for one or more nerves, each interface having many neural signal channels that work reliably in the stump without harming the nerves. To achieve real-time multi-channel processing it is important to integrate spike sorting on-chip to overcome limitations in transmission bandwidth. This requires computationally efficient algorithms for feature extraction and clustering suitable for low-power hardware implementation. This paper describes a new feature extraction method for real-time spike sorting based on extrema analysis (namely positive peaks and negative peaks) of spike shapes and their discrete derivatives at different frequency bands. Employing simulation across different datasets, the accuracy and computational complexity of the proposed method are assessed and compared with other methods. The average classification accuracy of the proposed method in conjunction with online sorting (O-Sort) is 91.6%, outperforming all the other methods tested with the O-Sort clustering algorithm. The proposed method offers a better tradeoff between classification error and computational complexity, making it a particularly strong choice for on-chip spike sorting.