Korea to Unveil Plan to Shorten Stock Settlement Cycle to T+1 in October

A plan to shorten the settlement period for stock sales from two days after trading (T+2) to one day after trading (T+1) is being pursued. Previously, it took two days to receive funds after selling stocks, but this reform will allow investors to utilize funds more quickly.

Financial authorities plan to reveal measures to improve securities trading and settlement systems in October, aiming to boost efficiency through capital market innovation. Vice Chairman Kwon Dae-young explained that shortening the settlement cycle is a measure to reduce risks between trading and settlement, free up liquidity, and enhance market efficiency.

Financial authorities aim to shorten the settlement cycle for all stocks to T+1. The Korea Securities Depository will begin a pilot construction of the T+1 settlement infrastructure for unlisted stocks and fractional investment over-the-counter trades by the end of this year. The Korea Exchange has confirmed plans to launch an after-market on September 14th and establish a pre-market by the end of next year. Measures to upgrade the AI-based market surveillance system were also discussed.

Vice Chairman Kwon stated that while markets offering higher returns were once competitive, now the speed and convenience of trading and settlement, as well as access to a diverse range of assets, are crucial criteria for market selection. These measures are expected to enhance the competitiveness of Korea's capital market and provide a more attractive investment environment for investors.