South Korea to implement KOFR in derivatives market in 2025

Target share is 10% in 2025, and 50% in 2030.

South Korea is implementing the use of the Korea Overnight Financing Repo Rate (KOFR) in the derivatives market in 2025.

The target KOFR-based transaction share in interest rate swap transitions is 10% in 2025 and will be raised to 50% in 2030.

Starting July 2025, the target percentage of KOFR utilization will be managed in collaboration with major market participants in the interest rate swap market, the Bank of Korea (BOK) said in a statement posted on its website.

BOK will also expand the issuance of KOFR-based floating rate notes (FRNs) by public financial institutions and commercial banks.

A total of 10% of the FRNs issued next year will be funded on a KOFR basis.

The Korea Development Bank, Industrial Bank of Korea, and the Export-Import Bank of Korea will issue KRW1.8t of FRNs in 2025. The commercial banking sector is also expected to participate in the issuance.

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