Korea’s FX Market Paves the Way to Include Offshore Firms in New Regulation

<p>South Korea has opened its doors to offshore firms, granting
them access to its foreign exchange market. The Cabinet recently approved an
amended enforcement decree for the Foreign Exchange Transaction Act, paving the
way for the change. Effective October 4, the revised regulations will break
down barriers that previously restricted market participation to local
financial institutions and overseas entities with branches in the country.</p><p>Instead, the new policy welcomes registered foreign
institutions (RFIs), including global banks and esteemed brokerage houses.
Oversight of these entities' activities will fall under the purview of the Bank
of Korea, as stated by the finance ministry today (Monday). </p><p>Opening Doors to Global Firms</p><p>Under the revised regulations set to take effect on October
4, the <a href="https://www.financemagnates.com/terms/f/forex/">forex</a> market will no longer be an exclusive domain for local financial
institutions or foreign entities with a physical presence within South Korea.
Instead, it will open its doors to RFIs. This
policy shift is expected to encourage participation from global banking giants
and reputable brokerage firms, stimulating greater <a href="https://www.financemagnates.com/terms/l/liquidity/">liquidity</a> and diversity in
the market.</p><p>Beyond the policy shift, South Korea is also gearing up for
a significant change in its forex market operations. Currently running for 6
1/2 hours from 9 a.m. to 3:30 p.m., the market is set to extend its trading
hours to a remarkable 17 hours, closing at 2 a.m. the following day. This
expansion is expected to take place as early as the second half of 2024,
following a six-month pilot run, Yonhap reported.</p><p>During a seminar held in February in Seoul, the Ministry of
Economy and Finance, along with the Bank of Korea, <a href="https://www.financemagnates.com/institutional-forex/south-korea-to-allow-offshore-firms-to-participate-in-fx-markets/" target="_blank" rel="follow">unveiled
the plan</a> to welcome offshore firms into South Korea's forex markets. These
measures aim to elevate the nation's status in the global financial arena.
Previously, only 54 certified local financial institutions, including banks and
securities firms, had access to the interbank forex market. </p><p>South Korea's CFDs Market Resurgence</p><p>Meanwhile, South Korea made a significant <a href="https://www.financemagnates.com/forex/south-korea-reintroduces-cfds-trading-after-77m-stock-scandal/" target="_blank" rel="follow">comeback
in the world of Contracts for Difference (CFDs)</a> trading this month,
following a tumultuous period that saw a $77 million stock manipulation
scandal. Most domestic brokerage houses are reintroducing CFD trading as they
recognize the potential to diversify their revenue streams. This decision comes
after a temporary suspension of CFD trading in April due to concerns
surrounding stock manipulators exploiting market vulnerabilities.</p><p>In addition, the Bank of Korea has issued a <a href="https://www.financemagnates.com/cryptocurrency/regulation/bank-of-korea-preaches-legacy-financial-regulation-for-crypto-market/" target="_blank" rel="follow">compelling
call for the cryptocurrency market</a> to be subject to regulatory standards
that parallel those governing traditional banks. In a recent report by Finance
Magnates, the central bank not only underlined the potential risks tied to
crypto trading but also warned that any financial turmoil arising from this
sector could exert substantial harm on the real economy. </p>

This article was written by Jared Kirui at www.financemagnates.com.