South Korea’s Ministry of Economy and Finance reviews market risks and draft T+1 equity settlement roadmap

South Korea’s Ministry of Economy and Finance reviewed financial market volatility and pressure on vulnerable borrowers after the U.S. Federal Reserve held its policy rate at 3.75%-4.00%. At an expanded macroeconomic and financial meeting chaired by Deputy Prime Minister and Minister of Economy and Finance Lee Hyoung-il, officials also discussed a draft roadmap to shorten equity settlement from two business days after trading, T+2, to one business day, T+1. Domestic shares have experienced sharp falls and rebounds amid changing global interest rate expectations, Middle East tensions and concerns over artificial intelligence investment returns and the semiconductor outlook. Authorities will review November government bond issuance volumes and may conduct emergency buybacks if needed, with U.S. election uncertainty and French fiscal risks among the potential sources of market disruption. Rising lending rates are also increasing vulnerable borrowers’ repayment burdens. The government will implement support measures announced on Aug. 28 and prepare additional measures. The proposed settlement change would reduce settlement risk and improve the efficiency of fund use. The Korea Exchange and Korea Securities Depository will seek feedback on the draft roadmap from financial investment firms and domestic and overseas investors. Transition planning will consider participants’ readiness, settlement and foreign exchange liquidity, and system stability, alongside developments in other major Asian markets.