(Bloomberg) -- South Korea will allow offshore companies to apply for the right to trade in the local currency market from next month, taking another step forward in its effort for won securities to be included in major indexes.

The government of President Yoon Suk Yeol approved the decision at a cabinet meeting this week, with the change to foreign exchange regulations taking effect on Oct. 18, according to statements released from the Finance Ministry.

Korea has been rethinking its onshore trading restrictions and is seeking to reduce them in a bid for won-denominated assets to become part of developed-market indexes and lure more foreign funds into the local economy.

The so-called registered foreign institutions would be able to trade in the domestic market through FX brokerage companies. They will also be asked to prove their financial soundness and ensure they have sufficient credit extension agreements with existing market participants among other requirements, the ministry said. 

The won at present is traded through local banks between 9 a.m. and 3:30 p.m in Seoul. Authorities are ultimately aiming to keep the onshore won market open for 24 hours after extending it to 2 a.m. next year.

The won fell 0.9% against the dollar Tuesday to around the 1,348 level. It is down about 6% this year.

--With assistance from Shinhye Kang.

©2023 Bloomberg L.P.