Clearstream Intoduces Direct Link to South Korea to Facilitate Market Access for Foreign Investors

On 1 July 2024, Clearstream introduced a direct link to South Korea with the Korea Securities Depository (KSD).

This innovative link is expected to provide clients “with seamless market access to settle and safe keep Korean government bonds, including Korean Treasury Bonds (KTBs) and Monetary Stabilisation Bonds (MSBs), through a unique omnibus account structure.”

Clients will benefit from Clearstream’s usual “range of value-added services, including access to collateral management services, incorporating triparty repo and pledge. Korean Won (KRW) will be supported for FX services.”

This major milestone is reportedly “the result of joint efforts to establish a cross-border link between Clearstream and the Korean CSD via a streamlined omnibus account operating model in line with global standards, following the signing of an agency agreement with Clearstream in August 2023.”

With the omnibus account, eligible foreign investors “no longer need to open segregated accounts with a local custodian in South Korea but can instead settle and safekeep KTBs and MSBs directly through their existing Clearstream accounts.”

  • Enhanced flexibility for investing in KTBs and MSBs
  • Increased liquidity in financing and collateral markets
  • Internal settlement against any eligible Clearstream currency (except KRW) is allowed
  • Streamlined access through an existing Clearstream account
  • Tax exemption, subject to meeting eligibility criteria

As noted in the update, Clearstream has been “the only ICSD offering access to the Korean market via the traditional investment route, which requires foreign investors to apply for an Investor Registration Certificate (IRC) and open segregated cash and securities accounts locally for over a decade.”

Clearstream continues to support clients wishing “to safekeep Korean equities and corporate debt instruments via this segregated route.”

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