SEOUL, June 27 (Reuters) - South Korea will extend the trading hours for the dollar-won onshore market from Monday to try to improve access for foreign investors as part of a push to include the government's bonds in a major global index.
Trading hours from Monday will be 9 a.m. to 2 a.m. (0000 GMT to 1700 GMT) compared with 9 a.m. to 3:30 p.m. (0000 GMT to 0630 GMT) currently.
The change marks the biggest reform in domestic currency management in decades as President Yoon Suk Yeol makes a broader effort to boost the odds of including the nation's government bonds in the FTSE Russell’s World Government Bond Index later this year, which could attract portfolio investment.
South Korea has given permits to dozens of foreign banks to participate in the local interbank market for the first time so that foreign investors have access to a wider pool of banks.
"Investors based in London, for instance, can go to their local bank to trade the won during business hours there, and that would be new as the won currently is open only when Korean banks are open," said Lew Chang-beom, head of the sales and trading division at KB Kookmin Bank in Seoul said.
For those who trade Korea Treasury Bonds on Euroclear Bank SA, operator of the world's biggest bond settlement system, investors will be able to trade Korean notes and the won without reporting to regulators, according to the finance ministry.
Any banks with permits to participate in the dollar-won market can take orders from international investors to buy or sell the won using their nostro account in Seoul and deliver the won to the investor's bank account in South Korea.
Most large South Korean banks are adjusting staff to meet the new market hours.
Shinhan Bank will locate two currency dealers in London to cover the extended trading hours, and at least one dealer in its Seoul trading room will cover the latter hours of the market.
KB Kookmin Bank plans similar arrangements. (Additional reporting by Yena Park; Editing by Neil Fullick)
