The Korean government has launched comprehensive reforms to elevate its capital market to global standards. The goal is inclusion in the MSCI Developed Markets Index.
What is the MSCI Developed Markets Index?
MSCI (Morgan Stanley Capital International) classifies global stock markets into ‘Developed’ and ‘Emerging’ categories. Global funds use this index as a benchmark for investment decisions.
- Assets tracking MSCI indices: approximately $16.5 trillion
- Korea’s current status: Economy is developed, but classified as ‘Emerging Market’
- Reasons for the gap: Insufficient market accessibility including FX market liberalization, investor registration, and dividend procedures
1. 24-Hour FX Market
The biggest issue pointed out by MSCI is the level of FX market liberalization.
| Current | From July 2026 |
|---|---|
| FX market closes at 2 AM | 24-hour operations |
Offshore KRW Settlement System
- Foreign financial institutions can hold and operate KRW accounts domestically
- Bank of Korea to establish 24-hour offshore KRW settlement network
- Enables foreigners to freely trade, hold, and procure KRW even at night
- eFX guidelines for automated overnight trading
2. Investor Registration & Settlement System Reform
Global Standard Identification (LEI) Adoption
| Before | After |
|---|---|
| Korea-only IRC number | Transition to global standard LEI |
| Thousands of documents per fund | Batch processing under Global Custodian (GC) name |
| Manual processing via fax/email | Automated systems linked to CTM and ALERT |
Omnibus Account Introduction
Previously, foreign investors had to open separate accounts for each fund. Going forward, unified management under Global Custodian (GC) names will significantly reduce account opening burden.
3. Market Practice Improvements
Short-Selling Regulation Rationalization
- Naked Short-selling Detection System (NSDS) already implemented
- NSDS participants exempted from duplicate surveillance reporting requirements
English Disclosure Expansion
- May 2026: Mandatory English disclosure for KOSPI companies with assets over 2 trillion KRW
- March 2027: Expansion to all KOSPI-listed companies
- Enhanced AI translation system and dedicated English DART infrastructure
Dividend Procedure Improvements
- Current: Dividend amount confirmed after ex-dividend date → Investors decide without knowing dividends
- Improved: Incentives for companies adopting advanced dividend procedures where investors know dividend amounts beforehand
Derivatives Accessibility Enhancement
- FTSE Korea Index futures to be listed on ICE Futures US
- Extended trading hours on Eurex and American exchanges
Implementation Timeline
| Timeline | Key Milestones |
|---|---|
| Q1 2026 | Resolve duplicate short-selling regulations, introduce LEI certificates, dividend procedure incentives |
| Feb 2026 | Simplify foreign corporation identity verification |
| Apr 2026 | Reform KSD nominee account system, enhance AI translation |
| May 2026 | English disclosure Phase 2 (KOSPI companies with assets over 2 trillion KRW) |
| Jul 2026 | 24-hour domestic FX market launch |
| Sep 2026 | Offshore KRW settlement system pilot |
| Q1 2027 | English disclosure Phase 3 (expansion to all KOSPI companies) |
| 2027 | Offshore KRW settlement system full launch |
Expected Benefits
- Long-term investment inflows: Attract stable foreign institutional capital
- Reduced market volatility: Decrease in stock price and capital flow fluctuations
- Korea Premium realization: Enhanced attractiveness and valuation of Korean capital markets
Key Takeaway: By opening the FX market 24/7, adopting global standard identification systems, and expanding English disclosures, Korea can achieve improved market accessibility and qualify for MSCI Developed Market status.
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