“SEOUL: “South Korea Eases Rules to Boost Foreign FX Market Participation”, South Korea will relax registration and reporting requirements for foreign firms to facilitate easier trading in the onshore foreign exchange market, according to the finance ministry on Wednesday (Jul 7). The move aims to enhance foreign participation and liquidity in the FX market.”
Foreign exchange authorities plan to allow foreign financial institutions to utilise credit lines from domestic institutions or other foreign firms when they register with authorities for trading, the ministry said.
Currently, it takes two or three years for foreign firms to enter the market as they are required to set up credit lines with at least 10 domestic firms to register as a participant, according to the ministry.
The ministry also said it has decided to no longer require foreign firms to report daily borrowings, positions and trades.
For local financial institutions, authorities are allowing them to hand over foreign exchange transactions of domestic residents, such as major exporting companies, to their overseas branches.
The ministry said it would offer more incentives for local firms to trade during nighttime hours, as there was a need to boost liquidity after 11pm local time, although trading during extended hours had been largely stable.
South Korea’s onshore currency market has been open to registered foreign institutions since July with trading hours extended from 9.30am – 3.30pm local time to 2am the next day to cover London trading hours.
With the ongoing currency market reforms, the government is seeking for its stock and bond markets to be included in major global indexes to attract foreign inflows.
