South Koreaโs securities market institutions have outlined a plan to shorten the settlement cycle for listed shares and other exchange-traded products from two business days after a trade to one. Under the proposed T+1 system, investors selling shares would receive the proceeds on the next business day rather than waiting until T+2. The change would also apply to exchange-traded funds and exchange-traded notes.
The Korea Exchange, Korea Securities Depository, Korea Securities Finance Corporation and Koscom plan to complete an overhaul of clearing and settlement infrastructure by October 2027. Financial companies would then develop their own systems and participate in at least six months of integrated testing. The institutions are targeting implementation during 2028, but the precise launch date has not been fixed and will depend on consultations with regulators, domestic and overseas financial firms, and foreign investors.
Infrastructure work precedes the 2028 transition
The roadmap covers 22 tasks across eight areas, including revised market settlement procedures and greater automation of trading and settlement information. Procedures for foreign investors would be reduced from 12 stages to five, while computer systems would be upgraded to reduce the risk of failed settlements. Other measures would recalculate intraday trading collateral on the settlement date and allow settlement payments to be made in installments, easing liquidity demands on brokerages and custodians.
- Products covered
- Listed shares, exchange-traded funds and exchange-traded notes
- Infrastructure target
- Clearing and settlement upgrades completed by October 2027
- Testing period
- At least six months of integrated industry testing
- Target implementation
- During 2028, with the exact date still subject to consultation
Before T+1 takes effect, the institutions also plan to make proceeds from stock sales more accessible through lower-cost loans secured against pending settlement payments. Korea Securities Finance would provide funding to brokerages, which could offer the loans at rates in the mid-to-high 5 percent range. Comparable products funded directly by securities firms currently carry annual rates of about 7.5 to 10 percent.
If 12 brokerages offer the lower-rate products, the institutions estimate that investors could save about 15 billion won in annual interest costs. The interim lending plan does not itself change the legal settlement date, but it could give individual investors earlier access to cash while the market prepares for T+1. Market participants may submit opinions through December 18, after which the institutions and authorities are expected to refine the implementation schedule.