This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:38 p.m. on Jun. 23, 2026.
Korea Exchange (KRX) and the Korea Securities Depository will begin work in earnest to shorten the domestic securities market settlement cycle from the current T+2 (settlement two business days after the transaction date) to T+1 (settlement in one business day). The move comes amid a growing need to ensure global alignment as the United States has already shifted to T+1 and Europe and Hong Kong are pushing adoption.
According to the financial investment industry on the 23rd, the exchange and the depository will proceed with selecting a consulting firm to shorten the securities market settlement cycle (T+1). They plan to send a request for proposal (RFP) to major consulting firms this week. They aim to select a preferred bidder in July, start the consulting, and receive the final report in December.
The core of this consulting is to prepare a standard operating model for introducing a T+1 settlement system to the domestic securities market and standard business guidelines by sector. Based on the consulting results, the exchange and the depository are expected to flesh out the detailed transition roadmap and the direction of system reforms.
Currently, the domestic securities market operates a T+2 system in which securities and funds are finally settled two business days after a transaction is executed. By contrast, the United States completed its transition to T+1 in May last year, and the European Union (EU) and the United Kingdom are preparing for adoption in Oct. 2027. Hong Kong has also recently formalized plans to move to T+1, making shorter settlement cycles the global standard in major capital markets.
In Korea, discussions on shortening the settlement cycle are also gaining speed. After the Korea Capital Market Institute conducted related research in 2023, the exchange and the depository launched a joint industry working group last year. This year, they have continued preparatory work for the system's introduction by visiting major clearing and settlement institutions in the United States and Europe for on-site studies and by holding public forums.
Shortening the settlement cycle goes beyond investors receiving sale proceeds a day earlier; it is viewed as a matter tied to the market's overall risk management framework. The shorter the time to settlement, the lower the counterparty default risk and the size of open positions, and the smaller the margin burden on clearinghouses.
It is also seen as meaningful for attracting global investors. If Korea alone keeps T+2 while major overseas markets switch to T+1, additional expenses could arise in global fund operations, a concern that has been raised consistently. The industry also sees the need to shorten the settlement cycle growing in tandem with capital market advancement policies such as pursuing inclusion in the Morgan Stanley Capital International (MSCI) developed markets index.
Still, addressing foreign investors remains a key task. Overseas institutional investors must go through procedures such as post-transaction settlement approval, foreign exchange transactions, and securities lending, and if the settlement cycle is shortened by a day, they must handle related work in a much shorter time. In the United States as well, the transition to T+1 required considerable expense and time to automate inter-institutional trade confirmation procedures and improve pre-settlement processes.
Accordingly, through this consulting, the exchange and the depository plan to conduct interviews with foreign investors, global custodian banks, securities firms, and asset managers to identify system improvement tasks. Shortening foreign exchange transaction procedures, introducing an automatic securities lending system, adjusting ETF creation and redemption cycles, and refining the framework for handling settlement fails are also among the key review items.
The market views this consulting as effectively the first execution phase for the domestic securities market's transition to T+1. However, a considerable preparation period is expected, as introducing the system in practice will require system overhauls by market participants such as the exchange, the depository, securities firms, asset managers, and custodian banks, along with updates to relevant laws and rules.