Although South Korea is one of the more developed financial markets, the operating hours for its foreign exchange (FX) market have been quite limited. Until now, the Korean won trading has only been active for 6.5 hours, but it will soon be significantly prolonged. This change will be groundbreaking, extending the official session to 17 hours.

South Korean FX Market to Operate for 17 Hours

According to South Korea's Yonhap News Agency, FX authorities are ready to substantially extend the time for official quotations as part of the currency market's deregulation process.

From the current duration of just under 7 hours, shorter than most stock exchange sessions around the world, the trading hours are set to extend to 17, closing at 2 AM the following day.

If everything goes according to the plan of regulators and the central bank, the changes should take effect from the beginning of July. South Korea has well-prepared for this transition, having conducted eight test runs so far, involving 27 institutions.

Among them were companies from the FX sector, including registered foreign institutions (RFI). These tests evaluated the effectiveness and liquidity of transactions in the spot and swap markets.

Opening Up to Foreign Investors

The goal of deregulation is primarily to attract more foreign capital. Thanks to the extended trading hours, won trading will be available until 5 PM in London and 12 PM in New York.

Initial steps to increase foreign investors' investments in the local market were taken last year and became effective at the beginning of October 2023. The amended regulations have lifted barriers that previously limited market participation to local financial institutions and foreign entities with branches in the country.

The intention to introduce extended trading hours for the local FX market, especially for the Korean won, was first announced in February 2024.

Also, South Korea recently joined a global project that includes central banks and commercial lenders from seven countries, aimed at investigating the tokenization of cross-border payments. This initiative, in collaboration with the Bank for International Settlements (BIS), represents a notable achievement for Korea, underscoring its commitment to the development of a central bank digital currency.