The Securities and Exchange Act is the basic law governing bond issuance, trading, clearance, settlement, and access to systems and risk control arrangements. Practical operations of the Act are delegated to self-regulatory institutions and settlements system operators such as the Korea Exchange (KRX) through its Stock Market Division, the Korea Financial Investment Association (KOFIA), and the Korea Securities Depository (KSD). Under the Act, KSD is given the sole right of settling securities on a book-entry transfer basis. The relevant website links are provided below.

Bonds traded through the over-the-counter (OTC) market are settled either on a delivery-versus-payment or on a free-of-payment delivery basis. The delivery-versus-payment system functions on a direct link between the securities settlement system of the KSD and Bank of Korea (BOK) Wire. This allows real time and simultaneous settlement on a gross, trade-by-trade basis. Under the free-of-payment delivery scheme, the securities leg is settled through the KSD book-entry, and the cash leg through the BOK or commercial banks. Details of the BOK’s Securities Settlement System are provided below.