The Luxembourg Stock Exchange’s new designation allows South Korean companies to diversify issuance routes and cut financing costs. Photo: Shutterstock

The Luxembourg Stock Exchange’s new designation allows South Korean companies to diversify issuance routes and cut financing costs. Photo: Shutterstock

South Korea’s financial regulator has designated the Luxembourg Stock Exchange as a “major overseas market,” easing foreign bond issuance and expanding global market access.

South Korea’s financial markets regulator, the Financial Supervisory Service (FSS)--equivalent to the Financial Sector Supervisory Commission (CSSF) in Luxembourg--announced on 21 January 2025 the designation of the Luxembourg Stock Exchange (LuxSE) as a “major overseas market.” According to the FSS, this decision, which aligns with the EU’s markets in financial instruments directive II (Mifid II), is expected to simplify the issuance of foreign currency bonds by South Korean companies and enhance their access to global capital markets.

Designation importance

The FSS highlighted that Luxembourg holds a significant 34% share of the global bond listing market, surpassing other financial hubs such as London (14%), Ireland (10%), Paris (10%) and Singapore (5%) as of 2023. This recognition reflects the LuxSE’s prominence and supports South Korea’s broader strategy to diversify funding sources and reduce costs for domestic companies seeking international financing.

The move exempts bond issuers under this framework from the requirement to file securities registration statements, which further streamlines the issuance process. The regulator stated that this would create a more favourable environment for South Korean firms aiming to raise foreign currency capital, especially by offering diversified issuance routes and reducing associated costs.

Issuance criteria

The FSS outlined specific conditions for utilising the LuxSE for bond issuance:

-  The bonds must be issued and settled in a foreign currency.

-  At least 80% of the issue amount must be allocated to foreign investors.

-  Domestic distribution is restricted to eligible institutional investors.

The FSS stated in its press release that enabling greater access to Luxembourg as a listing venue is expected to strengthen the global market presence of South Korean companies. This move builds on recent trends, with Singapore and Frankfurt emerging as key destinations for institutional investor bond listings in 2024.

The FSS concluded that this designation would help South Korean firms diversify their funding sources while fostering long-term financial stability and global competitiveness.

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