By Nam Hyun-woo
The government is seeking to extend the deadline for the foreign exchange market by 30 minutes, in a bid to join Morgan Stanley Capital International's (MSCI) index for developed markets.
At a press conference on the sidelines of the G20 finance ministers' meeting in Washington, Friday (local time), Finance Minister Yoo Il-ho said, "the government is seeking to extend the deadline for the local stock market by 30 minutes, and will also expand the foreign exchange market deadline."
The statement came after the government made joining the MSCI World Index one of its key policy targets.
MSCI's All Country World Index (ACWI) is a key barometer for investors around the world. It is comprised of World and Emerging Markets Indices. Currently, Korea is on the Emerging Markets Index and is seeking to join the 23 countries on the World Index. Since China's domestic-only "A shares" is likely to join the Emerging Markets Index, the government believes joining the World Index will avoid competition with China in the same group.
Currently, Korea's bourse operator, Korea Exchange (KRX), operates stock markets from 9 a.m. to 3 p.m. The Financial Services Commission and the KRX want to extend the operation time until 3:30 p.m., as they see the country's trading as weak compared to other countries, such as Singapore or the United States, who keep their markets open longer.
If this is done, the foreign exchange market should also be extended, because foreign investors have to exchange their currency into won. Currently, internal spot market operates from 9 a.m. to 3 p.m., after being reduced from 4 p.m. in 2005. The offshore non-deliverable forwards market is operational for 24 hours.
Reportedly, one of the preconditions for Korea's joining of the MSCI World Index is increasing the trading volume of the won. Opening an offshore market for exchange was deemed one of the solutions because foreign investors can change the won into their currencies more easily. The government feels that while extending operations will not fully satisfy conditions, but will likely give a positive sign to the MSCI.
However, dealers here are tepid over the move, saying "a 30 minute extension will not have a huge impact, while the workload for dealers will increase."
The government is seeking to extend the deadline for the foreign exchange market by 30 minutes, in a bid to join Morgan Stanley Capital International's (MSCI) index for developed markets.
At a press conference on the sidelines of the G20 finance ministers' meeting in Washington, Friday (local time), Finance Minister Yoo Il-ho said, "the government is seeking to extend the deadline for the local stock market by 30 minutes, and will also expand the foreign exchange market deadline."
The statement came after the government made joining the MSCI World Index one of its key policy targets.
MSCI's All Country World Index (ACWI) is a key barometer for investors around the world. It is comprised of World and Emerging Markets Indices. Currently, Korea is on the Emerging Markets Index and is seeking to join the 23 countries on the World Index. Since China's domestic-only "A shares" is likely to join the Emerging Markets Index, the government believes joining the World Index will avoid competition with China in the same group.
Currently, Korea's bourse operator, Korea Exchange (KRX), operates stock markets from 9 a.m. to 3 p.m. The Financial Services Commission and the KRX want to extend the operation time until 3:30 p.m., as they see the country's trading as weak compared to other countries, such as Singapore or the United States, who keep their markets open longer.
If this is done, the foreign exchange market should also be extended, because foreign investors have to exchange their currency into won. Currently, internal spot market operates from 9 a.m. to 3 p.m., after being reduced from 4 p.m. in 2005. The offshore non-deliverable forwards market is operational for 24 hours.
Reportedly, one of the preconditions for Korea's joining of the MSCI World Index is increasing the trading volume of the won. Opening an offshore market for exchange was deemed one of the solutions because foreign investors can change the won into their currencies more easily. The government feels that while extending operations will not fully satisfy conditions, but will likely give a positive sign to the MSCI.
However, dealers here are tepid over the move, saying "a 30 minute extension will not have a huge impact, while the workload for dealers will increase."
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