For years, foreign investors could only trade the South Korean won during a limited window during Seoul's business day. Starting next week, that window swings wide open - but banks now face a new problem: keeping their trading desks staffed while the rest of the country sleeps. The reform is central to South Korea's long-standing efforts to boost foreign participation and achieve a spot on MSCI Inc.'s developed-market list, which has been elusive partly due to access barriers.
The timing is tricky. This has already compelled authorities to adopt aggressive actions, such as a clampdown on speculative forex trading last month.
Now banks must handle continuous trading just as volatility is high. The banks' primary difficulty is ensuring they have personnel on hand during overnight hours when liquidity dries up and critical US economic data is released while Seoul is dark. Their strategies differ, with some expanding their London presence and others strengthening their Seoul operations.
The shift to 24-hour trading marks a significant departure from the previous system, which restricted offshore participation to a window that ended at 2 a.m. Seoul time. For decades, foreign investors had to plan their won trades around Korean business hours, often missing key global market moves. The extension aims to align South Korea's currency market with major global peers and remove a long-standing obstacle to MSCI's developed-market classification.
Banks Pick Their Strategies: London or Seoul
Each bank is handling the overnight gap differently. Some are building up a London hub to cover the hours when Seoul is dark. Others are adding shifts and dealers in Seoul itself.
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Woori Bank dispatched eight workers to its London branch, five of whom are traders covering foreign exchange, derivatives and bonds, "ahead of securing UK regulatory approval in May," said Kang Ju Hwan, who serves as the bank's public relations department manager. He added that the bank's license for client derivatives and securities investments allows it to facilitate won-related investments and hedging beyond regular Korean market hours. The bank's new London trading hub, established by enlarging its existing branch, began operations in June.
Shinhan Bank will add a third FX dealer in London in July, up from two currently, as it builds a response framework centered on its London desk, said Lee Ji Min, a manager in the bank's public relations department.
Hana Bank took a different approach, adding three dealers in Seoul and implementing a three-shift rotation for round-the-clock coverage, according to Jung Hyun-seok, senior manager in the bank's public relations department.
KB Kookmin Bank, part of KB Financial Group Inc., recently upgraded its internal IT systems to operate 24 hours and is planning to increase staff, said Park Junhwan, who oversees the bank's brand and PR department.
The won's slide has also prompted the government to take a more active role in currency markets.
What to Watch
The real test will come during overnight sessions, especially when critical US economic reports land while Seoul is asleep. Banks with slim London teams may struggle if volatility spikes. Woori's new London desk has a head start, but Shinhan and Kookmin are still catching up.
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