Korea Exchange Targets 2028 for T+1 Settlement Shift

Korea Exchange (KRX) T+1 Roadmap: What Changes for Investors

The Korea Exchange (KRX), Korea Securities Depository, Korea Securities Finance Corporation and Korea Financial Investment Association released a draft roadmap on November 2, 2026, to shorten settlement in Korea’s securities market from two business days to one. As reported by Newsis, the implications for investors extend beyond receiving cash one day sooner. The entire market timetable will accelerate, from retail investors’ access to sale proceeds to foreign investors’ foreign-exchange and approval processes.

T+1 settlement is a system under which securities and cash are exchanged on the business day after a trade is executed. The transition will apply not only to shares but also to exchange-traded funds (ETFs) and exchange-traded notes (ETNs). Given that the initiative will replace the current T+2 framework introduced in 1972, operational stability will matter more than the announcement itself.

The Timing of Funds Matters More Than a One-Day Cut

Retail investors will wait one fewer business day before they can use the proceeds from stock sales. What is clear now is that funds will be recovered sooner; what remains unknown is how investor behavior will change after implementation. There is therefore no basis yet for directly equating the roadmap with higher trading activity or improved brokerage earnings.

Before the transition, authorities plan to reduce the interest burden on loans secured by stock-sale proceeds. According to Newsis, annual rates on these loans stood at 7.5~10% as of the end of June this year, while products funded by Korea Securities Finance Corporation are planned for launch at annual rates in the mid-to-high 5% range. If adoption expands, interest costs are estimated to fall by 25% per investor and by 15 billion won annually across all investors.

Bottlenecks Korea Securities Depository and DTCC Must Resolve

Foreign-investor settlement warrants the closest scrutiny. Korea Securities Depository plans to connect its own network with DTCC’s CTM, reducing foreign investors’ settlement process from 12→5 steps under the draft roadmap. If the streamlined process works as intended, it will provide the automation needed to accommodate shorter approval windows.

Time constraints will tighten further. The settlement approval deadline for foreign investors is expected to move from 3 p.m. on T+2 to 9 a.m. on T+1, while the deadline for funds and other institutional investors will shift from 4 p.m. on T+1 to 10 p.m. on T. Park Sang-wook explained via biz.chosun.com that shortening settlement to T+1 would effectively require all procedures, including currency conversion, to be completed on the trade date, creating a tight schedule.

Foreign-Investor Survey Highlights the Downside Scenario

Automation plans alone will not eliminate the preparation burden. In a Korea Exchange (KRX) survey cited by mt.co.kr, 33.3% of respondents said they could reduce their allocation to the Korean market if T+1 were introduced before adequate preparations were in place. Another 27 respondents, or 84.4%, preferred a transition in the second half of 2028 or later.

These figures underscore that confidence matters more than speed. Even if procedural steps are reduced, foreign investors will still face settlement burdens unless system development and overnight operating arrangements work together. If preparations remain inadequate, operational risks could come to the fore before retail investors realize the benefit of recovering funds sooner.

Direct Implications for Mirae Asset Securities and Kiwoom Securities

• Mirae Asset Securities: It was identified as one of the first brokerages to offer low- to mid-interest-rate loans secured by stock-sale proceeds. Under the structure, Korea Securities Finance Corporation supplies low-cost funding and the brokerage lends to investors, making the specific rates on the products at launch the key item to verify.
• Kiwoom Securities: It was named alongside Mirae Asset Securities as an initial provider. The FACT_SHEET does not specify expected usage levels or the profit impact from broader product availability, so it is too early to quantify the potential benefit.
• Brokerage industry overall: Brokerages are directly responsible for adapting to revised settlement approval deadlines and upgrading their systems. The framework for correcting erroneous trades, ex-dividend dates, securities transaction tax collection and short selling oversight will also be updated.

Milestones and Variables to Watch Through the 2028 Target

• After market-participant feedback is collected through December 18, investors should watch whether a detailed timetable is established.
• Watch whether a task force of relevant institutions and a PMO are launched in the first quarter of 2027 to centrally manage development and testing schedules.
• Financial companies and foreign investors are expected to complete system development and overnight operating arrangements by the first quarter of 2028.
• Market-wide integrated testing is planned for at least six months before the official transition. Test results are not yet available.

T+1 Will Be Judged by Readiness, Not the Launch Date

In the optimistic scenario, automation of foreign-investor settlement and market-wide integrated testing proceed as planned, while retail investors receive stock-sale proceeds one business day sooner. The U.S. implemented T+1 in May 2024, the EU and U.K. are targeting October 2027, and Hong Kong is aiming for the second half of 2028, placing Korea’s roadmap within the same global trend.

The downside condition is clear. If system development and overnight operating arrangements are not completed by the first quarter of 2028, the timetable for the official launch will need to be reconsidered. The final T+1 implementation date, integrated-test results and definitive list of participating brokerages have not yet been determined. Rather than whether share prices have already priced in the change, investors should next monitor the detailed schedule to be finalized after December 18 and the stability demonstrated through at least six months of integrated testing.

This article was automatically summarized and analyzed from the original news report. View original article (Chosun Ilbo)