South Korea is gearing up to extend the trading hours of its currency exchange market starting this July, with the recent inclusion of 15 Registered Foreign Institutions (RFIs), marking a doubling of participation within a month.
The current foreign exchange market in South Korea operates from 9:30 a.m. to 3:30 p.m., but as of July, it will extend its operations until 2 a.m., with the ultimate objective of transitioning to a 24-hour market.
In March, seven institutions, including Mizuho Bank’s Tokyo branch and Deutsche Bank’s branches in Frankfurt, London, and Singapore, as well as Hana Bank’s London branch, Bank of New York Mellon, and Bank of America, were granted RFI authorization, as reported by a government official on April 9.
This followed February’s authorization of eight institutions, which included SSBT’s Hong Kong and London branches, HSBC’s Singapore branch, Crédit Agricole Corporate and Investment Bank’s Paris branch, Mitsubishi UFJ Bank’s Tokyo branch, Standard Chartered Bank’s London branch, and Kookmin Bank’s branches in Singapore and London.
However, despite the significant expansion, some analysts note the absence of major players like JPMorgan Chase, Citibank, Goldman Sachs, and Barclays, known for their extensive forex trading activities.
The hesitation of these banks to enter the Korean market is attributed to concerns about the stability of the country’s forex trading system, particularly regarding potential payment errors due to time zone differences. Additionally, alternative routes such as direct entry through local banks rather than participation as RFIs are being explored.
An industry insider pointed out that some perceive the size of the Korean forex market as insufficiently appealing. Nonetheless, discussions are ongoing with financial institutions like Goldman Sachs, with plans for finalizing the list of RFI participants by the end of this month to conduct trial runs and testing until July, according to an official from the Bank of Korea.
“We have already granted early authorizations to RFIs participating in the trial runs scheduled for May and June, and we expect more institutions to join as RFIs by the end of April,” added a Ministry of Finance official.
