Measures to Improve Interbank FX Market Practices and Infrastructure
The Ministry of Economy and Finance and the Bank of Korea announced the Measures to Improve Interbank Foreign Exchange (FX) Market Practices and Infrastructure after collecting opinions from relevant ministries and the market through the Consultative Council of Foreign Exchange Soundness meeting and the Seoul Foreign Exchange Market Operation Council meeting held on November 7.
The measures are devised to achieve a successful implementation of the Improvement Measures for Foreign Exchange Market Structure released last February.
The FX authorities are currently accepting registrations from October 18, 2023 for the Registered Foreign Institutions (RFI) from those who are seeking to trade in Korea’s FX market starting. A pilot operation is scheduled to commence from January 2024, and the official implementation is planned to take place from July 2024, with the FX market trading hours extended until 2 a.m. (Seoul time) the following day.
In response to these changes, the measures have been prepared aiming to proactively review and improve the onshore FX market’s practices and infrastructures that have been maintained in a closed and restrictive environment. The key content of the measures are as follows:
(1) Launch a code of conduct compliance committee composed of market participants for the establishment of market order in line with global practices.
(2) Reform the criteria for selecting leading banks in an effort to promote active KRW/USD trading during the extended market hours. When selecting leading banks, priority will be given to market making trading, and trading during extended market hours, while excluding trades suspected of market disruption.
(3) Introduce service agencies to improve trading convenience for RFIs and strengthen the role of domestic banks. Among the qualified service agencies under the RFI guidelines, those that have entered into an agreement with RFIs will be selected as agency institutions, and special privileges will be granted.
Please refer to the attached files.
