President Lee Sun-ho: "Active Support for WGBI Inclusion... National Bond Integrated Account to Operate in June"

From Researcher to Institution Head, Outstanding Achievements in the Past Year
Dedicated Website for Individual Investment in Government Bonds Established
Active Support for Launch and Operation of Alternative Exchange

Lee Sun-ho, President of the Korea Securities Depository (KSD), is a 'scholar' who has conducted research at the Korea Institute of Finance for 17 years. In 2021, while serving as a research fellow at the Korea Institute of Finance, he emphasized digital finance as a key factor that could determine the future of banking. Now, holding the helm at KSD, he is dedicated to digital innovation, including the development of next-generation systems.

Lee Sun-ho, President of the Korea Securities Depository, is conducting an interview with Asia Economy at the Seoul headquarters on the 16th. Photo by Hyunmin Kim kimhyun81@

Contribution to WGBI Inclusion... Established Dedicated Website for Government Bonds for Individual Investors

"We aim to contribute to the inclusion in the World Government Bond Index (WGBI) through the opening of an integrated government bond account."

Lee Sun-ho, President of KSD, said this in an interview with Asia Economy on the 16th, emphasizing, "Improved accessibility to the government bond market for foreign investors is expected to contribute to the advancement of the government bond market."

The government has designated joining the WGBI as a national agenda to expand foreign investment in government bonds. The WGBI is the world's largest bond index, including government bonds from 24 major advanced countries. The assets tracking the index are estimated to be around $2.5 trillion to $3 trillion.

Last year, President Lee traveled to Europe to sign contracts for building and operating the integrated government bond account system with Euroclear and Clearstream, international central securities depositories (ICSDs). Thanks to this contract, foreign investors can now invest more conveniently in Korean government bonds through ICSD accounts without opening individual accounts domestically. This has facilitated smoother capital and bond movements.

He likened the establishment of the integrated government bond account system to opening a highway. President Lee explained, "Just because a highway is built doesn't mean many cars will immediately speed along it, but when you decide to drive from Seoul to Busan, having a highway makes a big difference." He added, "It is difficult to predict how much foreign capital will flow into Korea depending on changes in the investment environment, but if the Korean government bond market is advanced, the integrated government bond account will play a significant role."

Currently, KSD is developing and testing the system for a planned launch at the end of June. President Lee said, "We are doing our best to build a high-quality system through thorough linkage tests with domestic and international participating institutions such as ICSDs." He added, "Currently, only domestic trading of government bonds is possible, but in the future, trading will be possible in offshore markets through ICSDs, which is expected to enhance the collateral utilization of government bonds."

He also sees that the large inflow of foreign currency into the domestic market can contribute to exchange rate stability and domestic market interest rate stabilization. He predicted, "As foreign currency flows into the domestic market, it stabilizes the foreign exchange market and reduces exchange rate volatility. If the number of investors increases, the government bond borrowing rate will decrease, leading to a decline in market interest rates."

KSD plans to establish a dedicated website for government bonds for individual investors in the second half of this year. Government bonds for individual investors are savings-type products that provide incentives if held until maturity for long-term asset formation. Mirae Asset Securities has been selected as the sole sales agency for these bonds. The annual purchase limit is 100 million KRW, and about 1 trillion KRW worth will be issued this year.

President Lee stated, "The establishment of a dedicated website for government bonds for individual investors is expected to not only share investor information but also promote government bond investment and contribute to long-term asset formation." He added, "We plan to build the dedicated website within this year and, in the long term, use it as an information-sharing channel for individual investors in government bonds."

Continuing Token Securities-Related Projects... Supporting ATS Launch

He expressed determination to continuously promote projects to create a token securities ecosystem. Currently, the legalization of token securities is at a standstill after Yoon Chang-hyun, former People Power Party lawmaker who had introduced amendments to the Electronic Securities Act and Capital Markets Act, lost in the April 10 general election. Regarding this, President Lee said, "Both major parties include token securities-related content in their pledges." He added, "We are monitoring the legislative discussions in the National Assembly and are carrying out necessary preparations to ensure the electronic registration agency can perform its role smoothly when the system is implemented."

He continued, "For the market to settle and to protect investors, smooth operations between KSD's own system and distributed ledgers of account management institutions are important." He further explained, "The scope of KSD's work and operational methods regarding token securities will be specified during the future legalization process."

Supporting the successful launch of Alternative Trading Systems (ATS) is also one of KSD's key tasks. When NextTrade was established in November 2022, KSD invested 3 billion KRW (2.05% stake).

President Lee said, "As the settlement institution of the capital market, KSD plans to provide securities and payment settlement services for ATS market trades." He added, "Once NextTrade's ATS operation plans regarding trading systems and clearing and settlement methods are finalized, we will cooperate with the Korea Exchange and others to prepare and build systems to accommodate settlement operations without disruption." He also noted, "Currently, ATS operating hours are scheduled until 8 p.m., but if operating hours are adjusted in the future, we will respond accordingly."

Lee Sun-ho, President of the Korea Securities Depository. Photo by Hyunmin Kim kimhyun81@

KSD Celebrates 50th Anniversary... Emphasizing 'Trust' and 'Innovation' as Keywords

KSD, which has grown alongside the Korean capital market, celebrates its 50th anniversary this year. To commemorate this, KSD plans to hold international seminars and anniversary events in Seoul and Busan, respectively.

President Lee presented 'trust' and 'innovation' as keywords representing KSD's role and direction this year. He diagnosed, "The financial industry landscape is rapidly changing due to accelerated digital transformation, the blurring of boundaries between industries caused by big blur phenomena, and the entry of new players such as fintech and big tech into the financial industry." He pledged, "Our duty will be to achieve service innovation to respond to the rapid changes in financial markets and technological environments going forward."

He pays particular attention to the IT system. President Lee said, "The IT system overall feels somewhat behind market changes," and added, "Improving the IT system can contribute to enhancing market efficiency."

With 14 million individual investors, one in four Koreans invests in stocks, yet most are unaware of KSD's existence or role, which manages over 6000 trillion KRW in national assets. President Lee quietly leads KSD, which is unfamiliar to many investors. Since his inauguration, he has relentlessly pushed forward tasks such as the ICSD-linked foreigner integrated government bond account service, starting administrative work for government bonds for individual investors, and managing electronic shareholder meetings.

Reflecting on his past year living as a researcher turned institution head, he said, "Policy research, unlike academic research, must consider feasibility alongside consistency." He added, "If policy research remains at the point of considering feasibility alongside consistency, the institution head must elevate given tasks from review to execution stages and coordinate among stakeholders."