Korea Securities Depository (KSD) will build a dedicated clearing and settlement infrastructure for over-the-counter transactions of unlisted stocks and fractional investments. The core is to enable transactions between investors using accounts at different securities firms and to proactively apply next-day settlement (T+1).
The depository said on the 7th that it began work this month to build the related infrastructure to support the Financial Services Commission's policy of bringing over-the-counter markets for unlisted stocks and fractional investments into the institutional framework.
Earlier, on the 27th of last month, the depository held a briefing session for more than 90 people, including settlement staff from 23 securities firms and officials from Naver Pay Unlisted, Seoul Exchange Unlisted, the KDX consortium, the NXT consortium, and the Korea Financial Investment Association.
The new infrastructure will be based on electronic securities to accommodate unlisted stocks and fractional investment products and will apply a T+1 method that shortens the settlement cycle by one day compared with the current regular securities market. It is expected to both increase investors' use of funds and serve as a test bed ahead of a broader shift to T+1 settlement across Korea's securities market.
It will be built as a standalone system separate from the existing stock market or K-OTC clearing and settlement networks. The plan is to secure scalability so it can accommodate new types of assets that may enter the institutional framework in the future, such as security token offerings (STOs).
Investor transaction constraints are also expected to ease. Under the existing regulatory sandbox, buyers and sellers had to hold linked accounts at the same securities firm for a transaction to be possible. Going forward, once inter-securities-firm clearing and settlement through the depository becomes available, transactions will be possible even when using accounts at different securities firms.
The depository plans to run a mock market test in Oct.–Nov. and complete the infrastructure build by Dec.
A depository official said, "To help the over-the-counter exchange market take root early, we plan to push ahead without a hitch with the infrastructure build within this year in line with each over-the-counter exchange's investment brokerage licensing and business launch schedules."