Seven Leading Banks Selected for Won-Dollar Market... NongHyup and Korea Standard Chartered Bank Added

Up to 60% Reduction in FX Soundness Charge for Selected Banks
Selection Criteria Changed to Encourage Active Participation in Extended Hours Trading

The Bank of Korea and the Ministry of Economy and Finance announced on the 30th that they have selected seven foreign exchange banks as FX Leading Banks in the won-dollar market for 2025: Kookmin Bank, NongHyup Bank, Korea Development Bank, Shinhan Bank, Woori Bank, Hana Bank, and Korea Standard Chartered Bank (in alphabetical order). This year, NongHyup Bank and Korea Standard Chartered Bank were newly selected. JP Morgan Chase Bank and Credit Agricole Bank, which were leading banks last year, were excluded.

Yonhap News

Leading banks are foreign exchange banks with sound financial health and creditworthiness, and excellent performance in won-dollar spot and foreign exchange swap transactions, selected on an annual basis. Upon selection, the foreign exchange soundness charge is reduced by up to 60%.

The 'Foreign Exchange Market Structural Improvement Plan' has been progressing smoothly since its official implementation in July last year. The average daily trading volume in the second half of last year (July to December) increased by 8.6% compared to the previous year. Compared to the average of the past five years, it increased by 36%. However, the foreign exchange authorities view that to secure a stable and continuous level of liquidity during extended hours, the active trading and market-making roles of leading banks are even more important, and thus have applied changes to the selection criteria for leading banks. In calculating trading performance for this year's leading bank selection, different weights were applied by time slot. Transactions concluded between 6 p.m. and 10 p.m. were weighted twice as much as those between 9 a.m. and 6 p.m., and transactions concluded between 10 p.m. and 2 a.m. the next day were weighted three times, encouraging banks to participate more actively during nighttime hours.

The foreign exchange authorities are also planning some adjustments to the foreign exchange soundness charge deduction system applied to leading banks. The foreign exchange soundness charge is imposed on the short-term foreign currency liabilities balance (0.1% of the balance) of banks and others to mitigate capital inflow and outflow volatility. From 2026 onwards, the deduction amount for leading banks will be calculated based on 'market-making' transaction performance, i.e., transactions concluded by quoting bid and ask prices, rather than on two-way trading performance. Accordingly, if selected as a leading bank in 2026, a bank’s foreign exchange soundness charge for the 2025 fiscal year will be reduced based on its quoted transaction performance (market-making transaction performance) in 2025. The deduction limit for this item will also be expanded from at least 10% to at least 15% of the amount subject to the charge. The amendment to the 'Foreign Exchange Transaction Regulations' containing these details has recently completed administrative notice and is scheduled to be applied from next year.

The Bank of Korea and the Ministry of Economy and Finance stated that they will continue to provide policy support so that leading banks actively participate in market-making and the activation of trading during extended hours, thereby contributing to the expansion of the breadth and depth of Korea’s foreign exchange market.

This content was produced with the assistance of AI translation services.