On November 26, Korea Securities Finance announced that it has launched foreign exchange (FX) swap transactions through the foreign exchange brokerage market.
Following the amendment of the Foreign Exchange Transaction Regulations in July 2023, Korea Securities Finance completed system development, obtained business approval, and registered in order to participate in the FX swap brokerage market.
A foreign exchange swap is a transaction in which two countries exchange currencies at a predetermined exchange rate after a certain period. Until now, participation in the brokerage market had been limited to the Ministry of Economy and Finance, the Bank of Korea, commercial banks, and some securities and insurance companies.
Korea Securities Finance has signed ISDA-CSA agreements with major counterparties. ISDA-CSA refers to the standard contract of the International Swaps and Derivatives Association (ISDA) and the credit support annexes related to ISDA agreements.
The FX swap transactions conducted by Korea Securities Finance in the market amounted to 20 million US dollars. The counterparties were foreign exchange banks and securities companies.
Korea Securities Finance expects that entering this market will strengthen its ability to manage foreign currency liquidity.
The company plans to gradually expand transactions with market participants to smoothly fulfill its role as a funding channel in the capital market. In addition, it will continue to enhance its capabilities in stable foreign currency liquidity management and practical operations of foreign currency funds.
Korea Securities Finance stated, "We will continue our efforts to contribute to the stability of the capital market in the foreign currency sector."
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