South Korea Permits Foreign Institutions to Trade in Dollar-KRW

South Korea announced on Sep 26 that it will begin accepting applications from foreign financial institutions for permits to participate in the onshore dollar-won interbank market beginning Oct 18.

In a statement, the finance ministry stated that the government intends to allow qualifying foreign companies to participate in the onshore market beginning in 2024 in order to open up the foreign exchange market and boost trading.

Currently, the Korean won can only be traded directly with the dollar through local banks between 9 a.m. and 3.30 p.m. local time.

In the second half of next year, the country plans to extend onshore trading hours until 2 a.m., or the end of London business hours, as part of its regulatory overhaul to encourage more foreign participation in the currency market.

According to the ministry, to qualify for the permit, financial institutions must meet the capital and liquidity requirements of Basel III and be licenced banks or brokerages in the country where they are headquartered.

Financial institutions will be able to trade in the dollar spot market as well as FX swaps.