South Korea Extends Forex Market Hours to 2 AM to Boost Global Competitiveness

Starting from July 1, the closing time of the foreign exchange market in South Korea will be extended from 3:30 PM to 2 AM the next day. This significant change aims to enhance the accessibility and efficiency of currency trading for foreign investors, allowing them to exchange US dollars for Korean won in real-time through domestic financial companies or foreign financial institutions until 2 AM Korean time.

Foreign financial institutions not located in South Korea can also participate directly in the Korean foreign exchange market if they qualify as a foreign exchange business handling institution (RFI). This move is expected to increase the participation of global financial players in the Korean market, potentially boosting liquidity and market depth.

The Financial Supervisory Service (FSS) has established guidelines to account for foreign exchange transactions occurring between midnight and 2 AM on the same day due to the extended won-dollar trading hours. On the settlement date, foreign exchange transactions after midnight will be recognized as transactions of the following day.

The trading hours for transactions between the Korean won and other foreign currencies will remain unchanged, ensuring stability and continuity in the broader foreign exchange market.

The extension of trading hours is expected to have a significant impact on the South Korean financial market. By allowing foreign investors to trade for a longer period, the market aims to attract more international capital and enhance its global competitiveness. This change is also anticipated to provide greater flexibility and convenience for investors operating in different time zones.

The Financial Supervisory Service has been proactive in preparing for this transition, ensuring that the necessary regulatory frameworks and technological infrastructures are in place to support the extended trading hours. This includes updating settlement procedures to accommodate transactions occurring late at night.

The move to extend trading hours is part of a broader effort to modernize and globalize South Korea’s financial market. By aligning its trading hours more closely with those of major global financial centers, South Korea aims to position itself as a more attractive destination for foreign investment.

As the new trading hours come into effect, market participants will be closely monitoring the impact on trading volumes, liquidity, and overall market dynamics. The extended hours are expected to provide new opportunities for both domestic and international investors, potentially leading to increased market activity and economic growth.