By Cynthia Kim and Yena Park

SEJONG (Reuters) -South Korea hopes its push to reform foreign money buying and selling will drive a big share of buying and selling volumes from the non-deliverable forwards market to its spot foreign money market, a senior authorities official mentioned on Tuesday.

The remarks made in an interview replicate the newest official considering after historic market reforms kicked off this yr to court docket international traders and get on international indexes, with steps similar to longer buying and selling hours and wider international participation.

“There may be hedging demand but in addition those that simply need to purchase the received, they’re compelled to go to the NDF market,” Shin Joong-beom, director basic of the finance ministry’s Worldwide Finance Bureau, instructed Reuters, referring to foreign exchange transactions.

“We hope to maneuver an enormous chunk of the NDF (to the spot deliverable market).”

Overseas traders depend on the derivatives market generally known as the non-deliverable forwards to commerce the received and handle their publicity to the foreign money offshore.

The onshore market now trades from 9 a.m. to three:30 p.m. However from July, South Korea will prolong buying and selling hours to run from 9 a.m. to 2 a.m., protecting London enterprise hours.

The transfer will permit a broader vary of world traders to take part within the interbank FX market.

Beginning this yr, the federal government additionally started permitting some international monetary establishments to take part immediately within the native interbank foreign money market.

About 20 international corporations have utilized to take part in South Korea’s native interbank, mentioned Shin, amongst them SSBT London, SSBT Hong Kong, HSBC Singapore, CA Paris, MUFG Tokyo and SC London.

“With the ability to present the greenback/received spot alternate fee through the London fixing time is among the essential components for international fund traders who comply with MSCI or WGBI,” Shin mentioned, as the worth of world funds is assessed day by day.

The reforms will positively have an effect on South Korea’s efforts to get its shares and bonds accepted into benchmark developed market indexes, Shin added, which might draw inflows of billions of {dollars} into Asia’s fourth largest economic system.

South Korea has a long-standing bid to affix the World Authorities Bond Index, and the league of developed market nations at MSCI.

Shin’s crew was in talks with securities settlement home Euroclear, aiming to spice up international traders’ entry to the received foreign money, he added.

The Brussels-based settlement home, which completes transactions in shares and bonds throughout Europe, mentioned in August final yr it will open an omnibus account for South Korean treasury bonds.

“We’re in fact in talks with them to deal with any inconveniences confronted by international traders,” Shin mentioned. “If there are, we might positively assessment to deal with them.”