2024-05-12-亚开行-大韩民国债券市场_东盟+3债券市场指南更新（英）_66页_1005kb

Korean Bond Market Analysis and Summary

This report updates the state of the Korean bond market, highlighting key regulatory changes, sustainable finance initiatives, and future directions as of May 2024.

Market Overview and Regulatory Updates

• Significant reforms have improved market accessibility, including the replacement of the Investor Registration Certificate (IRC) with the Legal Entity Identifier (LEI) for foreign investors, effective December 2023.
• Policies to liberalize the foreign exchange market, permit indirect market access via International Central Securities Depositories (ICSDs), and eliminate withholding tax on Korean government bonds (KTBs and MSBs) for foreign investors enhance investor-friendliness.
• Mandatory English disclosures for listed companies (starting January 2024) aim to support foreign investor participation by improving transparency.

Sustainable Finance Development

• The K-Taxonomy (Green New Deal-aligned framework) and related guidelines define sustainable activities, supporting green bond issuance.
• Sustainable finance instruments (ESG/SRI bonds) have seen substantial growth, with incentives such as interest subsidies and exemptions for issuers under certain conditions.
• Korea is establishing a dedicated digital assets legal framework, including defining virtual assets and launching regulations like the Act on the Protection of Virtual Asset Users (effective July 2024).

Market Infrastructure and Product Innovations

• The introduction of 30-year KTB futures on KRX (February 2024) addresses long-term hedging needs and aligns with growing demand for longer-duration instruments.
• KOFR (Korea Overnight Financing Repo Rate) and the CD rate are critical benchmark rates managed by KSD and KOFIA, respectively.
• Digital asset integration and electronic securities systems (under the Electronic Securities Act 2019) form the basis for future innovation, including tokenization and dematerialization.

Key Future Developments

• Foreign Exchange Market Liberalization: Full implementation of reforms targeting mid-2024.
• Index Inclusion: Anticipation of Korean government bonds’ inclusion in global bond indices, expected to boost foreign investment.
• Expansion of English Disclosures: Ongoing requirements for listed companies by 2026 to improve foreign accessibility.
• Korean Capital Market Modernization: Focus on digital assets, AI-driven services, and further market integration.

Conclusion

The Korean bond market is undergoing rapid transformation, balancing the demands of international integration and domestic sustainable growth. Key initiatives—such as regulatory simplification, green finance frameworks, and technological adoption—are expected to solidify Korea’s position in global bond markets.