Detailed T+1 settlement plan due by October

After-market trading set for September, pre-market for 2027

AI investment agents and market surveillance upgrade on agenda

The capital market infrastructure innovation roadmap presented by the Financial Services Commission. [Provided by the Financial Services Commission]
The capital market infrastructure innovation roadmap presented by the Financial Services Commission. [Provided by the Financial Services Commission]

South Korea's financial authorities are moving to accelerate a sweeping overhaul of capital market infrastructure, including a shift to T+1 stock settlement, extended trading hours and expanded use of AI. The push aims to modernize the domestic market's trading and settlement systems and speed up digital transformation to strengthen global competitiveness.

The Financial Services Commission held a "Capital Market Infrastructure Innovation Review Meeting" chaired by Vice Chairman Kwon Dae-young on Tuesday, discussing the modernization of trading and settlement systems and the financial investment industry's transition to AI. Attendees included Seo Jae-wan, deputy governor of the Financial Supervisory Service; Kim Hong-sik and Song Gi-myeong, executive directors at Korea Exchange; Choi Hang-jin, an executive director at the Korea Securities Depository; Kim Sung-hwan, executive managing director at Koscom; Cheon Seong-dae and Han Jae-young, executive directors at the Korea Financial Investment Association; and Noh Seong-ho and Jeong Su-min, researchers at the Korea Capital Market Institute.

The meeting reviewed progress and future plans for key initiatives, including the move to T+1 settlement, extended trading hours and the construction of clearing and settlement infrastructure for over-the-counter transactions in unlisted shares and fractional investment products.

The FSC plans to finalize a detailed roadmap for the T+1 settlement transition by October. South Korea's stock market currently operates on a T+2 basis, meaning trades are settled two business days after execution. The FSC expects the shorter settlement cycle to reduce risk between trading and settlement and improve capital management efficiency.

The push to shorten the settlement cycle gained momentum in March, when President Lee Jae-myung raised the issue at a capital market revitalization forum, questioning why proceeds from a stock sale on a Tuesday were not available until Thursday. Korea Exchange Chairman Jeong Eun-bo said at the time that the United States had switched to T+1 last year and that Europe was targeting a 2027 transition, adding that the domestic market would prepare accordingly.

Trading hours will also be extended in stages. Korea Exchange plans to launch an after-market session — running from 4 p.m. to 8 p.m. — on Sept. 14, with a pre-market session to follow by the end of 2027. The FSC said the extended hours are intended to improve access for global investors and help the exchange compete for liquidity against overseas rivals.

Infrastructure for unlisted shares and fractional investment markets will also be upgraded. The Korea Securities Depository plans to build an OTC settlement infrastructure for unlisted shares and fractional investment products by the end of this year and introduce a settlement cycle of within T+1. The FSC said it will also advance work on infrastructure for security token offerings in coordination with a public-private consultative body.

Tuesday's meeting also addressed plans to upgrade AI-based market surveillance and expand AI use across the financial investment industry. Korea Exchange said it would strengthen its capacity to detect increasingly sophisticated unfair trading practices using AI, while the financial investment sector agreed to examine the use of "AI investment agents" — hyper-personalized asset management services tailored to individual investors' risk profiles and financial goals.

"If the shortening of settlement cycles, extended trading hours and the AI transition combine with blockchain-based stablecoins and real-world asset tokenization, capital market infrastructure will integrate and advance to an entirely new level," Vice Chairman Kwon said. "I look forward to a new capital market where diverse assets — shares, bonds, funds, real estate and intangible assets — are traded digitally around the clock."

He added that overcoming technological and regulatory constraints and improving awareness among market participants would require sustained, long-term preparation, and that the review meetings would work through pressing issues one step at a time.


hajun825@heraldcorp.com