(Bloomberg) -- South Korea will allow foreign investors to tap a wider pool of banks for the best won quotes to be used in their stocks and bond transactions to lure inflows.

It will permit temporary won overdrafts for global investors to settle stock and bond trades, reducing the burden of potential settlement failure resulting from delayed foreign exchange procedures, according to a finance ministry statement Wednesday. 

Regulations will be changed in the first quarter so as to reduce foreign exchange costs for global investors, it said.

The authorities would like to reduce the misunderstanding that it’s difficult to get good quotes for the won or that the volume of foreign exchange hedging is limited, Cho Hyeun Myeong, economist of the FX market team at Bank of Korea, said in Korean at a briefing.

Korean authorities have bolstered efforts in recent years to court foreign investors and improve market access, as the country also makes a push to get its stocks and bonds added to global developed market indexes.

The government has abolished the requirement for foreign investors to pre-register before investing in Korean equities, and made it a mandate for local companies to post English filings. 

It let some foreign banks participate in the local interbank market, and plans to extend trading hours for the onshore won starting July. Besides, it also lifted the requirement for foreign investors to set up an account at every local bank they trade with.

The risk of settlement failure hindered global investors from actively taking part in FX trading with local banks, the statement said. The government aims to improve convenience for international investors in line with global practices, it said.

--With assistance from Youkyung Lee.

(Updates with details in last paragraph. An earlier version of the story corrected attribution and content of the comment in fourth paragraph)

©2024 Bloomberg L.P.