* Around-the-clock market starts on July 6, trial run from

Monday

* S. Korea needs FX reforms to win MSCI 'developed market'

status

* Won vulnerable at 17-year lows, even as KOSPI rally tops

world

(Updates headline; no change to text)

By Cynthia Kim and Yena Park

SEOUL, June 26 (Reuters) - Over an 18-year career trading

currencies in Seoul, Namkoong Taehun was on the front lines of

the collapse of Lehman Brothers, the post-Brexit plunge in the

pound, and the won's dramatic tailspin after South Korea's 2024

martial law decree.

Now his job will be stretched around the clock as South

Korea's long-cloistered currency opens up to a 24-hour trading

cycle from July 6, with banks trialling the system from Monday.

That's a transition even a veteran dealer like Namkoong

calls "daunting", as Seoul tears down safeguards in place since

the won's collapse during the 1997 Asian Financial Crisis.

"When I first came to the market, it was a 9-to-3 game,"

said Namkoong, 47, who is part of the 37-member FX trading team

at Hana Bank in Seoul, the country's biggest forex bank by

trading volume. "You could count the participating financial

institutions on one hand."

"Now, the market has expanded exponentially," he said,

surrounded by a dozen empty coffee cups and eight monitors

blinking FX conversion orders.

"I'm seeing a significant increase in demand for won assets

based on the many financial institutions that are inquiring

about them. We are afraid that our workload will increase

significantly."

Seoul's priorities have reversed from three decades ago: an

open, fully accessible currency is a requirement in its pursuit

of index provider MSCI's coveted "developed market" designation,

which would raise the country's profile among global investors.

But there are clear risks to an always-on won. Languishing

near a 17-year low versus the dollar, the currency is

particularly vulnerable to pockets of thin liquidity that could

turn modest flows into disproportionately large price swings.

Ironically, the world-beating doubling of the benchmark

KOSPI share index to all-time highs this year is

reinforcing won weakness, as the heady gains spurred overseas

funds into record selling to book profits or rebalance

portfolios. At the same time, South Korean investors continue to

favour U.S. equities, investing at an unprecedented pace.

WON GUARDRAILS

To guard against liquidity gaps and trading disruptions,

reforms include permits for offshore investors to hold and trade

the currency, an offshore won settlement system and an overdraft

policy.

"Previously, foreign financial institutions were only able

to convert money," said a government official in charge of FX

policies, "but through the offshore won settlement system, they

will be able to directly hold and utilize the won."

Tight currency restrictions have for years been a major pain

point for investors and traders in the country, making doing

business slow and costly because of a reliance on derivatives

contracts to manage won exposure overnight.

It has only been two years since South Korea extended the

won trading day to 2 a.m. to capture the London market.

"Roughly 20% of the spot volume now takes place during

offshore hours, concentrated in the London morning," said Shen

Li, head of FX sales for APAC at State Street Hong Kong.

"The extension to 24 hours could further enhance this whole

liquidity scheme."

'KOREA DISCOUNT' MILLSTONE

Seoul's broader goal is to eliminate what's termed the

"Korea Discount" - the tendency for the country's stock market

to trade at steep discounts to global peers due to factors

including currency curbs, unpredictable policymaking and opaque

governance structures at the country's dominant "chaebol"

conglomerates.

MSCI kept South Korea in the emerging market category on

Wednesday, citing long-standing accessibility issues and saying

onshore liquidity was insufficient even with extended FX trading

hours. The next review will be a year from now.

Meanwhile, banks are preparing for the 24-hour day by adding

night shifters to staggered roster systems.

Hana Bank, which runs a three-shift schedule, plans to add

three more staff.

Woori Bank will double the size of its UK-based team to

four, while Shinhan Bank will add one person in London and KB

Kookmin Bank has added two.

The need for constant monitoring was highlighted recently

for 35-year-old Hana Bank FX dealer Shin Jae-min.

"Sometimes it gets intense all of a sudden, like the other

day when orders flooded in after SpaceX went public," he said

while biting into a delivery chicken kebab towards the end of

his shift at 9 p.m.

"Responding to such demand means no break even during some

really odd hours."

(Additional reporting by Jihoon Lee and Ankur Banerjee; Editing

by Kevin Buckland)