Korea Securities Depository signs first contract for 'KSD One-Stop Financing Service'

Korea Securities Depository announced Friday that it signed the first contract for its "KSD One-Stop Financing Service" on Aug. 7. The deal marks the first time the depository has acted as a central securities depository (CSD) agent for a foreign investor to support domestic collateral transactions.

The one-stop financing service lets the depository carry out securities financing on behalf of foreign investors in its capacity as their custodian and standing proxy, linked to the integrated government bond account.

The contract was concluded after consultations on the scope of services and the details and methods of securities financing instructions.

The depository overhauled its related infrastructure last October to support domestic collateral transactions and boost investment in government bonds.

Foreign investors can now handle both securities custody and financing transactions through a single account opened with the depository, without needing to open a separate customer account at a custodian bank. Previously, foreign investors who used only the integrated government bond account without a domestic standing proxy faced difficulties opening accounts required for securities financing transactions and participating in such trades.

The service is part of the government's foreign investor government bond infrastructure expansion project, one of its economic policy priorities last year. In January last year, the Ministry of Economy and Finance, the Financial Services Commission, the Bank of Korea, the Financial Supervisory Service and the depository jointly announced a plan to overhaul investment procedures for foreign investors in Korean government bonds to align them with global standards, under the World Government Bond Index (WGBI) investment infrastructure improvement initiative.

"Building on this first case, we expect to further improve foreign investors' access to the domestic bond market and the convenience of their transactions," Korea Securities Depository President Lee Yun-su said. "We will actively support foreign investors' participation in both domestic and cross-border collateral transactions and contribute to revitalizing the government bond market by expanding use of the service."