In the domestic foreign exchange market, won-dollar transactions will become possible 24 hours a day. Until now, won-dollar transactions were possible from 9 a.m. to 2 a.m. the next day. The limited trading hours in the domestic foreign exchange market have long been cited as an obstacle to inclusion in the MSCI developed markets index.
The Seoul Foreign Exchange Market Committee (SFE) said on the 29th that it held a general meeting and revised the "Seoul Foreign Exchange Market Code of Conduct" so that, starting July 6, won-dollar transactions through brokerage firms will shift to a 24-hour, non-stop format.
Starting July 6, won-dollar transactions will be possible on all dates except weekends and Jan. 1. However, the first business day of each year (Jan. 2) will open at 9 a.m., and the last business day (Dec. 31) will close at 12 a.m. While won-dollar transactions may be conducted freely even on public holidays, settlement will be processed on bank business days in line with general market practice.
When the foreign exchange market opens 24 hours, a time-weighted average price (TWAP) will be provided on the hour for the period from 6 a.m. to 6 a.m. the next day. This will be calculated by taking a simple average of prices (exchange rates) near the calculation time from spot FX brokerage firms. Open, high and low exchange rates will be provided on the same time basis, and the 3:30 p.m. Seoul closing exchange rate and the mid-rate (MAR) will, for the time being, remain based on current standards.
At this general meeting, a plan was also discussed to change the calculation method of the mid-rate to TWAP in line with global practices. However, to minimize market confusion, it was decided to apply the revised mid-rate after an appropriate grace period, and the foreign exchange authorities plan to amend related Foreign Exchange Transactions Regulations, including changes to the mid-rate, in June after gathering opinions from market participants such as at the SFE general meeting.
Limited foreign exchange transaction hours made it difficult for overseas investors, including those in the United States, to exchange won during regular hours, acting as a stumbling block to entering the MSCI developed markets index. The SFE said, "(Through this revision) the elimination of gaps in foreign exchange transaction hours, improved convenience in currency exchange for domestic and overseas investors and import-export companies, and reduced transaction costs are expected."