On August 14, First Vice Minister of Economy and Finance Lee Hyoung Il convened the “Foreign Exchange (FX) Stability Council and Task Force for Korea’s Inclusion in the MSCI Developed Markets Index” meeting at the Korea Center for International Finance.
* Participating institutions: Ministry of Economy and Finance (chair), Financial Services Commission, Bank of Korea, Financial Supervisory Service, Korea Exchange, and Korea Securities Depository.
Participants first discussed the progress made since the inaugural meeting of the TF for Korea’s Inclusion in the MSCI Developed Markets Index held on July 15. Since the MSCI Global Market Accessibility Review in June pointed out areas for improvement, the relevant authorities have closely reviewed FX transactions, investment systems, and overall market infrastructure. In this process, they have also held consultations with market participants and working-level meetings with related institutions to gather a wide range of on-the-ground feedback.
The relevant authorities decided to draw up key reform tasks, including FX liberalization, simplification of foreign investment procedures, and improvement of settlement and clearing systems, and to promptly prepare detailed action plans. As part of this process, measures that are ready for swift implementation will be disclosed and put into effect even prior to the roadmap scheduled for release at the end of this year.
During the meeting, the participants decided to take decisive steps to improve settlement infrastructure and procedures in order to address the “settlement time lag” issue faced by foreign investors when investing in won-denominated securities.
First, with an aim to ensure smoother same-day securities payments by foreign investors, the operating hours of the Bank of Korea financial network (BOK-Wire+) will be extended from 5:30 p.m. to 8:00 p.m., allowing interbank fund transfers to take place even after the CLS simultaneous settlement deadline (6:00 p.m.). As the extension of the BOK-Wire+ operating hours entails a comprehensive review of system modifications by the BOK and participating institutions, along with liquidity management and staffing arrangements, the measure will be pursued through sufficient consultations with participating institutions and is targeted for implementation in April 2026.
Second, in line with the extended operating hours of BOK-Wire+, the Korea Securities Depository (KSD) will also extend the operating hours of its bondholder settlement system (e-SAFE) and significantly shorten the processing time at each settlement stage; this improvement will allow investors to complete settlement on the same day if they remit funds by 6:00 p.m.
Third, the burden on domestic custodian banks to report unsettled securities, which may arise due to the later timing of securities settlements compared to the current schedule, will also be alleviated. FX transactions by foreign investors will be reported separately as a distinct reason for settlement delays. The reporting frequency will be changed from monthly to quarterly so that domestic custodian banks can effectively extend the deadline for fund transfers.
VM Lee viewed the settlement infrastructure improvement measures as a meaningful step that directly addresses the inconveniences faced by foreign investors and enhances the perceived accessibility of the Korean capital market. He particularly emphasized that, by allowing the Korean won obtained through same-day CLS FX simultaneous settlements to be used immediately for same-day securities settlements, unnecessary burdens and costs – such as advance fund transfers or same-day Korean won loans – will be reduced.
The participating authorities assessed that the current improvement measures will bolster market stability during periods of large-scale fund movements, such as rebalancing around the April 2026 inclusion in the WGBI. At the same time, they will also provide a foundation for improved investor convenience in the future process of pursuing inclusion in the MSCI Developed Markets Index going forward. VM Lee called on the relevant authorities to maintain ongoing communication with the market and to make sure that global investors are fully aware of the changes and benefits.
The participants pledged to continue improving the institutional and infrastructural framework of the FX and capital markets to enhance transaction convenience and accessibility for foreign investors. Furthermore, they aim to strengthen the global competitiveness of Korea’s capital market by expanding the foundation for stable and sustained capital inflows.
Please refer to the attached files.
