(LEAD) Korea Exchange-trade settlement

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SEOUL, Nov. 2 (Yonhap) -- The Korea Exchange (KRX) on Monday unveiled a plan to shorten a cycle for stock settlement, in what could be a major overhaul to improve efficiency for the equity market.

Since 1972, South Korea has adopted a stock settlement system that allows investors to settle their transactions two business days after their trades. Under the envisioned plan, investors would be allowed to settle their transactions one business day afterward, the KRX said in a statement.

Relevant authorities plan to complete building infrastructure to shorten the cycle for stock settlement by October 2027, it said.

The plan is aimed at "advancing the settlement cycle by one day and reducing settlement risks in the securities market," the KRX stressed.

It added the change will enable "investors who sold stocks to receive the proceeds the following day" while reducing risks and workload by promoting industry automation and standardization, it said.

When the infrastructure is set up, about six months of tests for the shorter settlement will be required, the KRX said.

Still, no specific date has been fixed for the implementation of the shorter stock trading settlement, although if everything goes smoothly, the shorter settlement system could be implemented in 2028.

Meanwhile, for the proposed overhaul, the KRX said consultations will be held with financial authorities, local and foreign financial firms as well as overseas investors.

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