South Korea to shorten stock settlement to T+1 next year, offer interest on IPO deposits

South Korea is set to implement a T+1 settlement system for stock transactions, shortening the period from the current T+2 by the latter half of next year. This move is part of broader capital market reforms aimed at enhancing efficiency and investor convenience.

In addition to shortening the settlement cycle, the Financial Services Commission (FSC) announced plans to introduce interest payments on deposits made for public offering subscriptions. Currently, investors do not receive interest on these funds, even when held by securities firms for extended periods. The reforms will also address the interest rates on loans secured by sale proceeds, which are currently around 9% annually.

FSC Chairman Lee Bok-hyun presented these initiatives during a semi-annual business report to President Lee Jae-myung. The detailed roadmap for the T+1 settlement system is expected by October, with the actual implementation targeted for the second half of 2024. These changes are designed to streamline market operations and provide greater financial benefits to investors.