MSCI points out obstacles facing the South Korean market ahead of a key review

In its annual assessment released on Friday, MSCI acknowledged that South Korea has made progress on reforms, including plans to launch a 24-hour foreign exchange market and introducing broader measures to improve investor access. However, the New York-based index provider noted that accessibility to the Korean market remains hindered by the absence of a fully deliverable offshore Korean won market and persistent inefficiencies in the settlement process for short selling. Although South Korea lifted its ban on short selling at the beginning of 2025, “frictions have already emerged in practice, as the related operational procedures and infrastructure are still being refined.” The report also mentioned that “the method for calculating financing amounts remains unclear, resulting in an inefficient settlement process.”