Korea Exchange sets up plan for shorter settlement for stock trading

On Monday, the Korea Exchange (KRX) revealed a plan to decrease the duration of stock settlement, potentially marking a significant improvement in the efficiency of the equity market. Currently, the country has been utilizing a stock settlement system since 1972, which grants investors the ability to settle their transactions two business days after executing trades.

According to the KRX, relevant authorities intend to complete the construction of infrastructure needed to shorten the cycle for stock settlement by October 2027. If executed without issues, the shorter settlement system is projected to be fully implemented in 2028.

The primary objective of this plan is to shorten the settlement cycle by one day and mitigate settlement risks within the securities market. The KRX emphasized that this alteration will enable investors who have sold stocks to receive their proceeds the following day, while simultaneously reducing risks and workload through the promotion of industry automation and standardization.