Korean Stock Market Pushes for T+1 Settlement System Transition by 2028

The Korean stock market is pushing for a transition from the T+2 settlement system to T+1 by 2028. Upon transition, investors selling stocks will receive their sale proceeds on the next trading day, one day earlier than currently. The Korea Exchange and related institutions have announced a draft of the 'Securities Market Settlement Cycle Reduction Roadmap.' Korea has maintained the T+2 system since its introduction in 1972 for over 50 years. The United States plans to transition to T+1 in May 2024, while the EU and the UK are aiming for a transition in October 2027. According to the roadmap, the settlement cycle for stocks, ETFs, and ETNs will be uniformly transitioned to T+1, and the settlement approval deadline for foreign investors will also be moved up to 9 AM on T+1. Individual investors will receive their sale proceeds one day earlier, and margin traders will need to pay for their purchases by T+1. Relevant institutions plan to lower the loan interest rates on sale proceeds to benefit individual investors. However, the burden of settlement work for foreign investors has been pointed out as a variable, with 84.4% expressing a preference for the transition to occur after the second half of 2028. The exchange and the Korea Securities Depository plan to complete infrastructure upgrades by October 2027 and finish IT development by the first quarter of 2028.

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