S.Korea to extend trading hours of local forex market

South Korea will extend the trading hours for the local foreign exchange market to attract overseas investors and improve the trading system so that foreign investors can directly participate in the domestic forex market.

Trading hours will be lengthened to 2 am from the current 3:30 pm as early as the second half of 2024, Deputy Prime Minister and Finance Minister Choo Kyung-ho said at a foreign press conference held at the Korea Press Center in Seoul's downtown on Thursday.

"Various regulations related to the Korean foreign exchange market have made it too closed and limited," Choo said, adding, "We need to change the market to be more open and competitive so that foreign exchange transactions can be further expanded and advanced."

According to the decision, Seoul's foreign exchange market will open at 9 am and close at 2 am the following day, which will increase daily trading hours by more than 10 hours. 

"By drastically improving the system and the investment environment to meet global standards, we will resolve the so-called Korea discount problem and make 2023 the first year that marks Korea's premium market," the minister said.

The government will clear regulatory hurdles so that all foreign financial institutions can participate in the Seoul forex market, which currently allows foreign financial service providers to trade only if they have branch offices in Korea.

South Korea will also introduce measures to improve the investment environment in the Seoul stock market within this month.

"To increase the accessibility of foreign investors, we will abolish the requirement to register investors' information and make more listed firms provide disclosures both in English and Korean from the beginning of next year," he said.

Specifically, the government will replace the current investor pre-registration scheme with internationally accepted personal passport numbers and legal entity identifier (LEI) numbers.

The scope of companies subject to English disclosure will be expanded to KOSPI-listed companies with assets of more than 10 trillion won from the beginning of next year and assets of more than 2 trillion won in 2026.

The finance minister also mentioned improving the dividend system to ensure long-term investment and implement it from next year.

The government will guide listed firms to announce the amount of dividends before they confirm the shareholder's list at the end of the year.

"The current system has a problem in that shareholders can hardly predict the expected amount of dividends as the list of shareholders is determined first at the end of December the previous year, and the dividend amount is determined in mid-March," he said.

Choo also said that the government will continuously improve investment environments so that Korea can be included in the World Government Bond Index (WGBI)  and MSCI Developed Market Index.

Write to Jung-hwan Hwang at jung@hankyung.com