KSD Eases Korea Bond Access for Foreign Investors With One-Stop Financing Service
A new integrated financial service that allows foreign investors to both hold South Korean government bonds in custody and obtain financing has officially begun operations. The Korea Securities Depository (KSD) said on Aug. 21 that it signed its first agreement with a foreign investor to provide its
On August 21, the Korea Securities Depository (KSD) commenced operations for a new integrated financial service that enables foreign investors to simultaneously hold and finance South Korean government bonds. The service, dubbed "KSD One-Stop Financing Service," was officially launched following three months of negotiations that commenced in April. This marks the inaugural instance of KSD supporting domestic collateral transactions as a central securities depository agent for a foreign investor.
The KSD One-Stop Financing Service positions KSD as both the foreign investor’s custodian and standing agent, streamlining securities financing in conjunction with the Integrated Account for Government Bonds. This encompasses repurchase agreements (Repo), collateral transactions involving over-the-counter derivatives, and securities lending and borrowing (SLB).
Prior to this service, foreign investors utilizing the Integrated Account for Government Bonds without appointing a standing agent in Korea encountered significant obstacles when establishing accounts for securities-financing transactions. Existing procedures required investors with local custodians to maintain separate accounts for securities custody and financing, thereby introducing extra administrative complexities.
KSD’s implementation of the new service aims to simplify investment infrastructure and reduce barriers to entry for foreign capital seeking access to South Korea’s financial markets. The overhaul of related infrastructure took place in October of the previous year, as part of the government’s “Project to Expand Infrastructure for Foreign Investment in Government Bonds,” which is outlined in the 2025 economic policy agenda.
KSD Chairman Lee Yoon-soo expressed optimism regarding the impact of the service, stating that he anticipates it to further enhance foreign investors' access to and convenience within Korea’s bond market. Lee also highlighted that KSD intends to actively facilitate foreign investors' participation in domestic and cross-border collateral transactions, thereby contributing to the growth of the government bond market.
Plans are underway to expand the pool of eligible investors using the service following the signing of the initial agreement, aligning with the government’s broader efforts to bolster infrastructure for foreign investment in government bonds.
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