© Reuters. FILE PHOTO: Currency dealers work in front of electronic boards showing the Korean Composite Stock Price Index (KOSPI) and the exchange rate between the U.S. dollar and South Korean won at a dealing room of a bank, in Seoul, South Korea, March 16, 2023.
SEOUL (Reuters) - South Korea said on Tuesday it will begin accepting applications starting Oct. 18 from foreign financial institutions for permits to participate in the onshore dollar-won interbank market.
The finance ministry said in a statement the government plans to enable qualifying foreign companies to participate in the onshore market from 2024 to open up the foreign exchange market and boost trading.
Currently, the Korean won can only be directly traded with the dollar through local banks, for just six-and-a-half hours a day between 9 a.m. (0000 GMT) and 3:30 p.m.
The plan is to extend onshore trading hours until 2 a.m., or the closing of London business hours, in the second half of next year as the country kicks off its regulatory overhaul to encourage more foreign participation in the currency market.
To qualify for the permit, the financial institutions will need to meet capital and liquidity requirements of Basel III and be licensed banks or brokerages in the country where they are headquartered, according to the ministry.
The financial institutions will be able to participate in the dollar-won spot market and FX swap trading.
