The Financial Services Commission launched a taskforce and held a kickoff meeting on seeking innovation in the capital market infrastructure on June 23. The taskforce aims to bring about improvements to the securities transactions and settlements infrastructure and facilitate a seamless digital transition and adoption of AI and blockchain technologies in the financial investment sector to boost the global competitiveness of Korea’s capital markets. At the kickoff meeting, FSC Vice Chairman Kwon Dae-young delivered opening remarks underscoring the need to upgrade the capital market infrastructure and outlining key measures to achieve that goal.
A Summary of Remarks by FSC Vice Chairman
The taskforce will seek innovation in the capital market infrastructure with four basic principles centered on trust, shareholder protection, innovation, and market access. Today, market infrastructure has become more important than ever as it offers new experience for investors and provides a new impetus for market growth. In this regard, artificial intelligence (AI) and blockchain technologies are rapidly making these changes. Therefore, this taskforce will make use of the collective capacity and efforts of the government, private sector, and academia to thoroughly examine the risks and opportunities of seeking innovation in the capital market infrastructure.
First, the taskforce will seek to design a globally leading capital market infrastructure and investment environment. Authorities will aim to draw up a roadmap for the shortening of the settlement period as early as October this year to ensure predictability in policy implementation. The shortening of the settlement period will free up tied-up liquidity, which will help to boost market efficiency. Additionally, the Korea Exchange (KRX) plans to gradually extend the trading hours with the opening of an after-market from September 14 and a pre-market potentially from the end of 2027. Along this line, the Korea Securities Depository (KSD) is currently working to establish by the end of this year a T+1 settlement infrastructure for over-the-counter (OTC) transactions of unlisted securities and fractional investment products. This will provide a meaningful experience into settlement innovation independent from the existing clearing and settlement infrastructure.
Second, the taskforce will push for an AI and digital transformation in the capital markets. Authorities will work to upgrade the market surveillance system with the adoption of AI to more effectively detect and identify suspicious transactions and unfair trading activities. Moreover, authorities will seek to swiftly remove regulatory barriers standing in the way of making use of AI to promote the adoption of AI agents in personal asset management services and other areas to drive innovation in the financial investment sector.
Third, the taskforce will seek to ensure system stability and investor protection. Innovation must be built upon market stability and trust. Therefore, relevant organizations and IT departments in the industry should work as one team to perform risk management and preemptively respond to AI-related risks and cyber threats to ensure the establishment of sufficient protections for investors.
The measures being discussed at this kickoff meeting will help to prepare a blueprint for the future of our capital markets and ultimately help to build a better capital market infrastructure for the future.
Further Plan
The government and related organizations will regularly hold taskforce meetings to examine key measures to seek innovation in the capital market infrastructure and review areas to help remove any regulatory hurdles standing in the way of financial investment businesses making use of AI. The taskforce will also discuss other areas and relevant issues as deemed necessary.
* Please refer to the attached PDF for details.