South Korea to Announce T+1 Stock Settlement Roadmap in October

South Korea is set to unveil a detailed roadmap in October for shortening the stock settlement cycle to one business day after the trade date (T+1). This move is part of a broader initiative to innovate the capital market infrastructure.

The Financial Services Commission (FSC) held a meeting to review advancements in securities trading and settlement systems. Discussions also covered extending trading hours and establishing infrastructure for Security Token Offerings (STOs). FSC Vice Chairman Kwon Dae-young highlighted that beyond high returns, the speed and convenience of trading and settlement, along with access to diverse assets, are now crucial factors for market competitiveness.

Kwon emphasized that shortening the settlement cycle is a key reform to reduce risks between trading and settlement, unlock tied-up liquidity, and boost market efficiency. The Korea Exchange (KRX), Korea Securities Depository (KSD), and Korea Financial Investment Association (KFIA) are currently operating a working group to design the T+1 settlement system, targeting its implementation by October next year.

Additionally, the meeting addressed plans to enhance the market surveillance system using artificial intelligence (AI) to improve monitoring capabilities against sophisticated illicit trading activities. The Korea Capital Market Institute and KFIA shared insights on AI adoption trends, best practices, and potential risks within the domestic and international financial investment industry, including AI investment agents.