Korea to Open 24-Hour FX Trading and Enable Offshore Won Settlement—What Global Investors Should Expect
SEOUL/NEW YORK - South Korea will move to around-the-clock trading in the won and build an offshore settlement channel, a reform package President Lee Jae-myung unveiled to global investors in New York as the currency hovered in the 1,40x per-dollar range. The aim: fix long-criticized access frictions and strengthen Korea's bid for MSCI Developed Markets status after years of being held back by market-access rules rather than macro fundamentals. Reuters reported that a Bank of Korea-run FX network would underpin the 24-hour switch and wouldn't require parliamentary approval, while a separate track opens the door to offshore won settlement-the biggest structural gap cited by index providers.
The plan comes after step-by-step liberalization. Korea extended onshore FX hours to 2 a.m. KST last year, capturing London trading but still missing most of New York. Finance officials now say they will publish a road map within this year for full 24-hour operation and for allowing non-residents to settle won offshore, with implementation as early as next year subject to systems testing and rule changes. Bloomberg, the Korea Times and KBS World all highlight offshore accessibility as central to the MSCI case, noting that the lack of a true offshore market has long complicated foreign participation.
What would actually change
Today's market is bank-intermediated, with windows and documentation requirements that foreign funds often find cumbersome. Under the new blueprint, trades could be executed 24 hours with clearer permissions for non-resident counterparties and offshore settlement rails for bona fide investment flows. Officials have telegraphed that regulatory tweaks-handled at the ministry and central bank level-would be sufficient; no separate Diet-style vote is needed. That matters for speed and for investor confidence that the project can survive political noise.
Why now: FX stability and the MSCI lane
The timing reflects both currency-market nerves and an opportunity to reset Korea's accessibility scorecards. The won has traded with a "4-handle" in recent sessions, and policymakers argue that market plumbing-not just interest-rate differentials-now affects stability. In parallel, Seoul and Washington remain in difficult tariff talks where any large Korea-to-U.S. investment program would lift dollar demand in phases. Authorities want deeper, continuous liquidity and better transparency so those flows don't unduly pressure the currency. A 24-hour chassis and offshore settlement are meant to narrow spreads, reduce rerouting via Singapore or New York proxies, and make hedging cleaner for real-money investors.
Benefits-and the near-term risks
For global funds, 24-hour access can lower execution risk around block trades and align Korea with peers whose currencies are always open. For locals, after-hours hedging becomes practical when U.S. macro or corporate news breaks. But early phases can be bumpy: liquidity is thin until market-makers commit, and algorithmic flow may dominate at first, widening spreads outside Asia hours. That's why investors will watch for market-maker obligations, intraday transparency standards, and best-execution guidance to protect smaller corporates and retail hedgers. Officials have signaled these will be detailed in the Finance Ministry's road map.
How it feeds the MSCI case
MSCI has repeatedly flagged trading accessibility and FX convertibility-not corporate quality-as the stumbling blocks for Korea's reclassification. Easing non-resident restrictions, providing offshore settlement, and demonstrating stable 24/5 liquidity address those points head-on. If the roll-out sticks and data show sustained depth in New York hours, Korea's Developed Markets argument strengthens, potentially lifting benchmark weights and passive inflows over time.
Timeline and checklist
- This year: Finance Ministry publishes the road map (sequencing, rule text, infrastructure testing).
- Next year (target): staged go-live for 24-hour trading and pilot offshore settlement, with periodic reviews.
- Investor watch-items: market-maker frameworks; eligibility rules for non-residents; reporting/AML; settlement cut-offs; and interoperability with global custodians.
Bottom line: Korea is shifting from windows and workarounds to a continuous, globally accessible FX market. If authorities marry openness with clear safeguards, the pay-off could be lower FX friction, steadier capital, and a stronger case for MSCI Developed-while giving households and SMEs better tools to manage dollar exposure when it matters most.
