South Korea must show its market reforms are working before MSCI can consider a possible reclassification consultation or developed-market upgrade, MSCI Chairman and CEO Henry Fernandez said at a Seoul conference on Nov. 6, Reuters reported.
“But we need to see that in practice,” Fernandez said, according to Reuters. MSCI's June review said it would consider a consultation after South Korea resolves the cited concerns and completes the reforms, once investors have had time to judge whether the changes endure.
South Korea began round-the-clock foreign exchange trading on July 6. The Ministry of Finance and Economy (MOFE) said 30 of 39 measures in its market-reform roadmap, or 77%, were complete as of Aug. 14, with three more planned by the end of 2026. The ministry also reported a 10.1% increase in average daily interbank spot trading volume, from $17.39 billion in the first half of 2026 to $19.14 billion after the trading-hours extension. Late-night activity was growing gradually, it said.
MSCI's June assessment focused on whether investors could trade and settle efficiently. It said won transactions could not be delivered offshore and that liquidity during Korea's longer onshore trading session was too limited for execution at developed-market standards. The review also pointed to limited uptake of omnibus accounts and in-kind transfers, along with operational burdens tied to short-selling compliance and funding trades before settlement.
MOFE outlined a planned Bank of Korea (BOK) system that would let foreign financial institutions hold, transfer and settle won overseas. MSCI said investors would need time to assess whether the reforms produced sustained improvements.
In its June review, MSCI kept South Korea in the emerging-market category and left it off the developed-market watchlist. The provider says its classifications take account of economic development, market size and liquidity, and accessibility for international institutional investors; they also inform MSCI index construction. Its framework sets an annual review cycle in June, making June 2027 the next expected regular review. MSCI has not announced a Korea-specific decision date.
