The government will provide incentives to foreign financial institutions (RFI) and domestic financial institutions where foreign exchange transactions are active. This is to encourage foreign exchange transactions during the late-night hours allowed since the second half of last year from '3:30 p.m. to 2 a.m. the next day' and to promote the inflow of RFIs into the domestic foreign exchange market.
On the 31st, the Ministry of Economy and Finance and the Bank of Korea held a general meeting of the Seoul Foreign Exchange Market Operation Council and announced the plan to introduce a 'league table.' The league table will announce the top seven institutions by transaction volume in categories such as the spot foreign exchange market, foreign exchange swap market, and overall market for financial institutions participating in the foreign exchange market on a yearly basis starting in July.
At this time, the proportions of transactions during the week (9 a.m. to 3:30 p.m.) and the extended hours (3:30 p.m. to 2 a.m. the next day) will also be disclosed. The transaction amounts themselves will not be disclosed separately. The top three institutions by overall transaction volume and the institution with the largest increase in transaction performance from the previous year will receive joint commendations from the Ministry of Economy and Finance, the Bank of Korea, and the Financial Supervisory Service at the end of the year.
Additionally, starting this year, three RFIs with excellent transaction performance will be designated as 'leading RFIs' every July. The selected institutions will be granted the qualification to participate in the Seoul Foreign Exchange Market Council and its operational committee. Benefits, such as exemption from penalties for violations of reporting obligations (not including intentional or gross negligence), will also be provided.
The government has allowed RFIs to conduct all transactions, including current account transactions, in addition to simple foreign currency exchange for securities investors.
A Ministry of Economy and Finance official noted, 'With this system improvement, foreign corporations and individuals trading with domestic corporations and individuals can make payments for trade, services, direct investment, and loans directly to domestic corporations and individuals through RFIs without separate opening of a won account at domestic banks,' adding that 'the convenience of payments for cross-border transactions will be greatly enhanced.'
Meanwhile, this measure is a follow-up action to the 'plan to activate foreign exchange market extended hours transactions' announced in January.