On June 23, the Financial Services Commission (FSC) of South Korea announced that a detailed roadmap for shortening the stock settlement cycle will be published before October. The goal is to shorten the time for stock sale proceeds to be credited from the current T+2 to T+1 (the first business day). The Korea Exchange (KRX) will extend trading hours in September.
Policy Statement by FSC Vice Chairman: T+1 Reform Goals and Roadmap Timeline
Based on remarks by FSC Vice Chairman Kwon Dae-young during the meeting, the policy details for shortening the settlement cycle are as follows: “Shortening the settlement cycle is a key reform task. It can reduce risks between trading and settlement, release liquidity tied up during the settlement waiting period, and thereby improve market efficiency. We will prepare a detailed roadmap before October to increase the predictability of policy implementation.”
He also added: “In the past, markets offering higher returns had an advantage. But now, the speed and convenience of trading and settlement, as well as the number of asset types available for access, are also important criteria when choosing a market.”
KSD Pilot and Task Force: Advancing Infrastructure Readiness for T+1
According to an FSC announcement, the progress of infrastructure preparations for T+1 is as follows:
KSD pilot: KSD is trialing the establishment of settlement infrastructure for over-the-counter trades in unlisted stocks and fractional investments, aiming to complete settlement within T+1. The pilot is planned to be completed by the end of 2026.
Settlement Cycle Shortening Task Force: Comprised of KRX, KSD, and the Korea Financial Investment Association. The task is to present the prerequisites needed to shorten the settlement cycle before October 2026 and to develop a detailed roadmap.
Kwon Dae-young commented on the KSD pilot: “This will be a meaningful starting point, allowing settlement innovations to be tested in advance in an environment independent of existing clearing and settlement infrastructure.”
Other Capital Market Reform Measures Discussed Alongside
According to the meeting minutes of the FSC, in addition to T+1 settlement, the following plans already announced were also discussed:
KRX Trading Hours Extension Schedule
After-hours trading: Launch on September 14, 2026
Pre-market trading: Launch by the end of 2027
AI market surveillance: The meeting explored efforts to promote an AI-based market surveillance system and to build a surveillance framework capable of detecting signs of new forms of abnormal trading and unfair trading.
Investor protection: Kwon Dae-young said, “If we cannot ensure market stability and trust, innovation is like a sandcastle,” urging relevant institutions and industry groups to cooperate in addressing new risks arising from the widespread adoption of AI and changes to market structure.
Frequently Asked Questions
Does the publication of the roadmap before October mean that T+1 settlement is confirmed for implementation?
No. The FSC announced that it will “formulate and publish” a detailed roadmap before October. The task force also needs to present the “prerequisites” required to advance the plan before October, meaning the prerequisite conditions in terms of technology and regulations are still to be clarified. As of the meeting on June 23, 2026, the specific T+1 implementation date has not been announced.
How exactly does South Korea’s current T+2 settlement system work?
South Korea’s current stock settlement system is T+2, meaning funds can only be withdrawn on the second business day after the trade date (e.g., sell on Monday, earliest credited on Wednesday). The goal of T+1 is to shorten this to the first business day (e.g., sell on Monday, credited on Tuesday), the same as the T+1 system implemented in the United States in 2024.
What is the difference between KSD’s T+1 pilot and the full-market T+1 reform?
KSD’s pilot targets over-the-counter trades in unlisted stocks and fractional investments. It is an independent test environment outside existing clearing and settlement infrastructure, and is planned to be completed by the end of 2026. The full-market T+1 reform targets KRX-listed stocks and is another broader plan; the detailed roadmap will be published only in October.
