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South Korea is set to permit offshore companies to apply for trading rights in its local currency market starting next month. This move is part of the country’s ongoing efforts to have won securities included in major global indexes.
The decision received approval from President Yoon Suk Yeol’s cabinet earlier this week and will come into effect on 18 October, as confirmed by statements from the Finance Ministry.
In a broader context, South Korea has been reassessing its domestic trading restrictions with the aim of easing them. The goal is to make won-denominated assets a part of developed-market indexes, thereby attracting more foreign investment into the local economy.
Registered foreign institutions will be granted the ability to trade in the domestic market via FX brokerage firms. These institutions will also be required to demonstrate their financial stability and establish sufficient credit extension agreements with current market participants, among other prerequisites, according to the ministry.
Currently, the won is traded through local banks in Seoul between the hours of 9 a.m. and 3:30 p.m. The authorities have long-term plans to keep the onshore won market open 24 hours a day, with an initial extension to 2 a.m. planned for next year.
As of Tuesday, the won has depreciated by 0.9% against the dollar, hovering around the 1,348 level. The currency has seen a decline of approximately 6% this year.