Issues Relevant to Capital Contributions to Futures Brokerages Circular

(Issued by the China Securities Regulatory Commission on, and effective as of, January 14 2003.)

All branches, regional offices and special delegate's offices of the China Securities Regulatory Commission:

We hereby notify you as follows concerning issues relevant to capital contributions to futures brokerages, in order to regulate the making of capital contributions to futures brokerages and promote the compliant development of the futures market:

1. A contributor of capital to a futures brokerage shall satisfy the following criteria:

(1) it has Chinese legal person status;

(2) it has both minimum registered capital and minimum net assets of Rmb10 million;

(3) it has been in operation for two or more years in succession; if it has both registered capital and net assets exceeding Rmb50 million, it has been in operation for one or more years in succession;

(4) it has been profitable in the most recent two years; if it has both registered capital and net assets exceeding Rmb50 million, no requirements are made in respect of profitability;

(5) it has not committed any major violations of laws or regulations during the most recent two years;

(6) the legal representative, the general manager and, if a natural person, the controlling shareholder of the contributor of capital is not characterized by any of the circumstances specified in Article 57 of the Company Law; and

(7) other prudential criteria specified by the China Securities Regulatory Commission (the CSRC).

No requirements are made in respect of the registered capital, net assets, profitability or years of operation of contributors of capital that hold less than 10% of the equity of, and that do not actually control, a futures brokerage.

2. The organizations listed below may not become contributors of capital to futures brokerages:

(1) organizations involved in pending legal actions in which the subject matter of the action accounts for 30% of their net assets;

(2) party and government organizations, military units, people's organizations and those institutional legal persons whose funding is allocated by the State; and

(3) other organizations that laws or regulations prohibit from making capital contributions to futures brokerages.

Cross shareholdings between futures brokerages and between futures brokerages and their contributors of capital are prohibited.

3. This Circular shall enter into effect on the date of issuance. The Several Issues Concerning the Regulation of Capital Contributions to Futures Brokerages Circular (ref. Zheng Jian Qi Zi [1996] No.16) issued by the CSRC on December 23 1996 is simultaneously repealed. In the event of any inconsistency between Item (3) or (4) of Article 1 of the Criteria, Procedure and Submission Materials for Approving the Qualifications of Shareholders of Futures Brokerages Circular (ref. Zheng Jian Qi Huo Zi [2002] No.39) issued by the CSRC on July 2 2002 and this Circular, the provisions hereof shall prevail.

Each agency is requested to transmit this Circular to futures brokerages after the receipt hereof and to supervise their compliance herewith. When carrying out examinations for the establishment, or changes in the equity, of futures brokerages, all agencies shall scrupulously abide by the requirements hereof and strictly examine the qualifications and capital contributions of the contributors of capital so as to promote compliant operation of the brokerages.