The Guidelines on the Foreign Exchange Affairs of Foreign Financial Institutions (FI) that regulate details for the foreign FIs participating in Korea’s domestic foreign exchange (FX) market comes into effect starting today (October 18). As the institutionalization of the participation of foreign FIs has been completed, the FX authorities officially open registration procedures. With the implementation of this regulatory framework, the registration process with the FX authorities will also commence.
Foreign FIs looking to participate in the Korean FX market can apply for the registration with the authorities by meeting the requirements stipulated in the Enforcement Decree of the Foreign Exchange Transactions Act (enforced since October 4) or the Guidelines. Registered Foreign Institution (RFI) will be able to conduct deliverable won-dollar FX spots and forwards (FX swaps and outright forwards) in the domestic FX market starting from January next year. According to the preliminary survey for major global FIs carried out by the FX authorities, more than 30 institutions expressed their intention to participate. The FX authorities plan to actively support and closely cooperate with these institutions to proceed with registration without a hitch by organizing special sessions for each institution.
In addition, enhancing the infrastructure of the domestic FX market as well as regulations and practices related to FX transactions will be promptly pursued. The FX authorities also plan to develop measures to address issues identified through hearings and discussions among FX market participants, and adopt these measures at the Foreign Exchange Soundness Committee which will be presided over by the First Vice Minister in November.
The FX authorities are committed to ensure improvement measures for FX market structure, such as the participation of foreign FIs, will be successfully settled, leading to positive effects of establishing a global level of open and competitive market structure that matches the size of the Korean economy as well as improving FX services. To this end, the authorities will meticulously monitor the implementation of the system and its impact on the market during the pilot program period while proactively addressing any issues that require further improvement and adjustments if necessary. Furthermore, in line with the extension of FX market trading hours (until 2 a.m. Seoul time on the following day) starting from July next year and the official enforcement of the structural reform-related systems, preparatory work will be ramped up including the execution of simulated trading.
 For the technical examination of IT systems and accounting-related matters and to collect opinions from market participants, the authorities may designate specific dates for an extension of the domestic FX market hours, either partially (e.g., 09:00 to 21:00) or entirely (09:00 to 02:00 the following day).
Source: Ministry of Economy & Finance, Republic of Korea (Source)