South Korea moves closer to extending onshore won trading hours

SOUTH Korea will undertake another test of after-hours trading of the won as authorities prepare to extend the currency’s trading session.

Some banks will be allowed to exchange the US dollar-won pair in real-time from Thursday (Mar 14) – without predetermined factors such as prices and counterparties – even after markets close in Seoul, Kim Shinyoung, head of the FX market team at the Bank of Korea, said. The move is part of a series of test pilots being conducted ahead of the official extension of the onshore won’s trading hours slated for July.

South Korea has conducted two pilots so far, on Feb 6 and 22, during which participants exchanged currencies within a set perimeter. Thursday will be the first time trading occurs on a real-time basis without predetermined factors during the extended trial hours.

But lenders which are new to the test pilots, including KB Kookmin Bank in Singapore and KEB Hana Bank in London, will continue to trade based on conditions by the government and money brokerages, Kim said. South Korea’s eventual goal of enabling investors to trade the won around the clock is likely to boost the case for the nation’s stocks and bonds to be added to global indexes.

A total of 13 registered foreign institutions were allowed to trade the onshore won and won swaps as at Monday, according to a statement on the central bank’s website. The new additions include Mizuho Bank Tokyo, Deutsche Bank Frankfurt, Deutsche Bank London, Deutsche Bank Singapore and KEB Hana Bank London. BLOOMBERG