South Korea's Financial Services Commission published a progress review of its March 2026 benchmark reform plan, reporting increased use of the Korea Overnight Financing Repo Rate (KOFR) in swaps and bonds and a planned KRW 1 trillion corporate loan launch. Preparations also continue for ending new KORIBOR lending in April 2027, alongside stronger checks on COFIX calculations. KOFR accounted for 12.1% of interest rate swap trading from July 2025 through June 2026, exceeding the 10% target, and provisionally reached 18.5% in the third quarter of 2026. Guidance revised in June 2026 set a 25% target for July 2026 through June 2027, rising to at least 70% by June 2030. Banks provisionally issued KRW 20.5 trillion in KOFR floating rate notes from January through September 2026, representing 32.3% of their total floating rate note issuance. The issuance target starts at 10% for July 2026 through June 2027 and rises to at least 50% by June 2031. In lending, Korea Development Bank and Industrial Bank of Korea are each scheduled to introduce KRW 500 billion in corporate loans priced using average KOFR over the preceding 30 days, with preferential rates for regional businesses. New KORIBOR lending remains scheduled to stop in principle from April 2027. Guidelines are being prepared to address new lending, renewals and conversion to alternative rates. A sectorwide survey found KRW 240.7 trillion in KORIBOR exposures at the end of March 2026, with 80.4% maturing within one year. For COFIX, the Korea Federation of Banks has added independent audit review and approval of calculations and strengthened quarterly checks to standards comparable to those for legally designated critical benchmarks. Contributing banks are scheduled to review data accuracy and internal controls in the fourth quarter of 2026, followed by a Financial Supervisory Service review. Formal designation of COFIX as a critical benchmark remains under consideration.

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