KSD Begins Building Clearing and Settlement Infrastructure for OTC Trading of Unlisted Stocks and Fractional Investments

The Korea Securities Depository has begun building clearing and settlement infrastructure for over-the-counter trading of unlisted stocks and fractional investments.

According to the KSD on August 7, the over-the-counter clearing and settlement infrastructure will focus on an electronic securities-based framework, proactive implementation of a T+1 day settlement cycle, and the establishment of an independent system with scalability in mind.

The new OTC clearing and settlement infrastructure targets the current electronic securities-based markets for unlisted stocks and fractional investments, including deposited securities. Regarding distribution and settlement of token securities, KSD plans to monitor future government policies before reviewing any related actions.

To promote the development of OTC markets, the settlement cycle will be shortened by one day compared to the legacy securities market, improving investor convenience and capital liquidity. This will serve as a testbed for analyzing market and system impact ahead of the broader transition to a T+1 day settlement cycle in the securities market.

The infrastructure will be developed as an independent system (module), separate from existing clearing and settlement infrastructures for stock markets, institutional settlements, and K-OTC settlements. Apart from securing stability for clearing and settlement, the new foundation is also expected to support a variety of products, such as token securities, in the future.

Under the current sandbox system, buyers and sellers could only complete trades if their settlement-linked accounts were opened with the same securities company. Once the KSD enables inter-broker settlements, trades will be possible even if buyers and sellers use linked accounts at different securities companies. This is expected to enhance market efficiency through improved transaction convenience and liquidity concentration.

The KSD stated, "By establishing a stable and efficient clearing and settlement infrastructure, we will faithfully implement the policies of the Financial Services Commission and strive to contribute to market revitalization."

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