FSC Press Release of October 21, 1998

Introduction of a Mark-to-Marketing System for Bonds

- Background

o To this date, the poor availability of price information acted as an impediment to secondary market activity of bonds. The introduction of a mark-to-marketing system for bonds will improve the current situation considerably. Furthermore, the introduction of mark-to-marketing principles is essential in terms of bringing bond valuation practices up to international standards and to induce foreign investment.

- Scope of bonds to be effected

o 1st stage : bonds that are held in funds newly established after November 15, 1998

o 2nd stage : to be fully implemented starting from July 1, 2000

- Expected Outcome

o A fully developed bond market will provoke the establishment of mutual funds

o Funds managed by investment trust companies and banks will be recognized as a means of investment involving risk and return

o Problems encountered due to asset valuation based on book value of bonds when transferring gains/losses of fund assets or gain/losses of fund assets and proprietary assets will be resolved

- Future Plans

o Necessary amendments to the Securities Investment Trust Regulations will be presented at the FSC meeting on November 13, 1998


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Financial Supervisory Commission

Seoul, Korea