South Korean capital markets become Euroclearable 28 June 2024South Korea Reporter: Carmella Haswell
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Euroclear Bank and the Korean Securities Depository (KSD), in collaboration with the South Korean Ministry of Finance, have opened an omnibus account for Korean treasury bonds (KTBs) and monetary stabilisation bonds (MSBs).
For the first time, KTBs and MSBs will be able to be settled via the Euroclearable link allowing international investors post-trade access to the market.
According to the Brussels-based international central securities depository (ICSD), the link will also allow KTBs and MSBs to be eligible on Euroclear’s triparty platform, enabling integration onto Euroclear’s Collateral Highway for repo and pledge activities.
The Collateral Highway is a neutral, open infrastructure for collateral management.
Through the use of Euroclearability, foreign investors may access the local market in a more secure and standardised way.
In addition, local issuers will have enhanced access to wider liquidity pools and can realise a potential reduction in the overall volatility of borrowing costs, says Euroclear Bank.
Commenting on the milestone, Choi Sang-mok, South Korea’s Deputy Prime Minister and the Minister of Economy and Finance, says: “The Korean government has been committed to improving foreign investors’ accessibility to the KTB markets as a top policy priority.
“This policy direction will be consistently maintained as we believe it is crucial for sustainable progress and continued development of the Korean economy. The government is actively engaged in dialogue with global financial markets, seeking opportunities to improve foreign investment proximity and accessibility.”
Soonho Lee, chairman and CEO of the Korea Securities Depository, adds: “Following extensive discussions with Euroclear, we have opened the system in a relatively short implementation period of 18 months.
“We expect this system to open new horizons for global investors in Korean government bonds and we are committed to fully supporting the seamless internationalisation of the Korean government bond market.”
Euroclear Bank aims to provide a seamless, efficient and secure infrastructure for international investors to access and utilise Korean government bonds, says the bank’s CEO Peter Sneyers.
He indicates that the partnership between the three entities creates new opportunities for Euroclear Bank’s Collateral Highway.
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