Measures for the Administration of Futures Companies

Article 3: Futures companies shall comply with laws, administrative regulations and the provisions of the China Securities Regulatory Commission (the CSRC), operate prudently and perform their obligation of good faith toward customers.

Article 4: The controlling shareholder or de facto controller and other affiliated parties of a futures company may not abuse their rights, appropriate the futures company's assets, divert the margins and other assets of customers or harm the lawful rights and interests of the futures company or customers.

Article 5: The CSRC and its agencies shall oversee futures companies and their branches and sub-branches in accordance with the law.

The China Futures Association and futures exchanges shall be in charge of the self-regulation of futures companies in accordance with the law.

Institutions responsible for monitoring the safe custody of futures margins shall monitor the safety of margins in accordance with the law.

PART TWO: ESTABLISHMENT OF, CHANGES TO AND TERMINATION OF BUSINESS

Article 6: To apply to establish a futures company, the following conditions, in addition to the conditions specified in Article 16 of the Regulations for the Administration of Futures Trading, shall be satisfied:

(1) having at least 15 persons with the qualifications of futures practitioners; and

(2) having at least 3 senior managing persons with the qualifications for their positions.

Article 7: When applying to establish a futures company, the shareholders shall have Chinese legal personality, and each of the shareholders with at least 5% of the equity shall satisfy the following conditions:

(1) it has paid-in capital and net assets both of not less Rmb30 million, has been continuously in business for at least two full financial years and has been profitable in at least one of the two most recent financial years; or has paid-in capital and net assets both of not less than Rmb200 million;

(2) it has net assets of not less than 50% of its paid-in capital and contingent liabilities of less than 50% of its net assets, and is not facing other risks that have a material undetermined effect on its financial position;

(3) its aggregate long-term equity investments in third parties, including its capital contribution to the futures company, do not exceed its own net assets;

(4) it does not have any relatively large due and unpaid debts;

(5) it has not been subjected to administrative penalties or criminal punishment for operating in violation of laws or regulations during the most recent three years;

(6) it has not had a case opened against it and been under investigation or had enforcement measures taken against it by a competent authority for suspicion of having operated in violation of laws or regulations;

(7) it has not committed bad faith acts, such as abusing its shareholder rights or evading its shareholder obligations as a shareholder or de facto controller of a financial institution or as the controlling shareholder or de facto controller of a listed company during the most recent three years;

(8) its natural person shareholders, legal representative and senior management personnel have not been banned from the securities or futures market, or if so banned, two years have elapsed since the expiration of such ban; they have not had their qualifications for their positions of securities or futures senior management personnel or practitioners' qualifications revoked, or if the same have been revoked, two years have elapsed since the date of the revocation; and they are not characterized by any of the circumstances set forth in the first paragraph of Article 147 of the Company Law; and

(9) it is not characterized by another circumstance determined by the CSRC in accordance with the principle of prudent regulation that would make it ineligible to have an equity interest in a futures company.

Article 8: When establishing a futures company, if a shareholder is to hold 100% of its equity, such shareholder shall, in addition to satisfying the conditions set forth in Article 7 hereof, have net capital of not less than Rmb1 billion; if net capital or a similar indicator is not applicable to the shareholder, its net assets shall not be less than Rmb1.5 billion.

Article 9: If shareholders with an affiliated relationship with the futures company hold a total of at least 5% of its equity, the shareholder with the greatest equity percentage shall satisfy the conditions set forth in Article 7 hereof.

If shareholders with an affiliated relationship with the futures company hold in total 100% of its equity, the shareholder with the greatest equity percentage shall satisfy the conditions set forth in Article 8 hereof.

Article 10: When applying to establish a futures company, the following application materials shall be submitted to the CSRC:

(1) an application letter for the establishment of a futures company;

(2) a draft of the company's articles of association;

(3) a business plan;

(4) a list of the promoters and their audit reports;

(5) a list of the proposed senior management personnel and practitioners, their r¨¦sum¨¦s and proofs of their relevant qualifications;

(6) documents on the proposed futures business system, internal control systems and risk control systems;

(7) supporting documents for the premises, equipment and funds;

(8) a legal opinion issued by a law firm; and

(9) other application materials as specified by the CSRC.

Article 11: A futures company established in accordance herewith may engage in commodities futures brokering business. If it is to engage in other futures business, it shall additionally obtain the appropriate business qualifications.

Article 12: If a futures company is to apply for financial futures brokering qualifications, it shall satisfy the following conditions:

(1) its risk control indicators have continuously complied with the prescribed standards during the two months prior to the application date;

(2) it has sound corporate governance, risk management and internal control systems that have been effectively implemented;

(3) it complies with the provisions of the CSRC on the monitoring of the safe custody of futures margins;

(4) it has a detailed plan to engage in financial futures brokering business;

(5) its business facilities and technical systems comply with relevant technical standards and operate well;

(6) during the most recent two years, its senior management personnel have not been subjected to criminal punishment, have not been subjected to administrative penalties for operating in violation of laws or regulations, have not had a poor credit record and are not being investigated by a competent authority due to suspicion of having operated in violation of laws or regulations;

(7) it has not had regulatory measures as specified in the second paragraph of Article 59 or Article 60 of the Regulations for the Administration of Futures Trading taken against it by the CSRC or its agency;

(8) it has not had a case opened against it and is being investigated by an administrative or judicial authority due to suspicion of having operated in violation of laws or regulations;

(9) it has not been subjected to criminal punishment or administrative penalties during the most recent two years for operating in violation of laws or regulations; however, if its controlling shareholder or de facto controller has changed, more than 50% of its senior management personnel has been replaced, the senior management personnel and persons in charge of the business who were responsible for the aforementioned circumstance are no longer with the company and it has completed rectification and passed the acceptance check by the CSRC agency of the place where it is domiciled, it shall not be subject to this restriction;

(10) its controlling shareholder has net assets of not less than Rmb30 million;

(11) its controlling shareholder or de facto controller has not been subjected to criminal punishment or been subjected to administrative penalties for operating in violation of laws or regulations during the most recent two years and it has not had a case opened against it and been investigated by a competent authority due to suspicion of having operated in violation of laws or regulations; and

(12) other conditions as specified by the CSRC in accordance with the principle of prudent regulation.

Article 13: When a futures company applies for financial futures brokering qualifications, it shall submit the following application materials to the CSRC:

(1) an application letter for financial futures brokering qualifications;

(2) photocopies of its business licence and business permit bearing its official seal;

(3) the resolution document of its shareholders' meeting or board of directors on the futures company's application for financial futures brokering qualifications;

(4) its month-end risk control statements for the two months prior to the application date and a written warranty that its risk control indicators have continuously complied with the prescribed standards during the two months prior to the application date;

(5) documents on its corporate governance, risk management and internal control systems and a report on the implementation thereof;

(6) its plan for engaging in financial futures brokering business;

(7) a report on the operation of its business facilities and technical systems;

(8) a Senior Management Personnel Particulars Form, Main Department Officer Particulars Form and Practitioners' Particulars Form;

(9) its financial report for the preceding year audited by an accounting firm with securities and futures related business qualifications; if the application date falls in the second half of the year, an audited interim financial report shall additionally be submitted;

(10) the most recent financial report of its controlling shareholder audited by an accounting firm with securities and futures related business qualifications;

(11) a legal opinion issued by a law firm stating whether the futures company satisfies the conditions set forth in Items (6), (8), (9) and (11) of Article 12 hereof and whether the resolution issued by the shareholders' meeting or board of directors is lawful;

(12) if the circumstance specified in Item (9) of Article 12 hereof exists, a dedicated opinion on the rectification acceptance check issued by the CSRC agency of the place where the futures company is domiciled; and

(13) other application materials as specified by the CSRC.

Article 14: If a change in the equity of a futures company is characterized by either of the following circumstances, the approval of the CSRC shall be required:

(1) the equity percentage of any single shareholder increases to at least 5%, or the total equity percentage of affiliated shareholders increases to at least 5%; or

(2) a shareholder holding at least 5% of the equity acquires further equity; or affiliated shareholders holding a total of at least 5% of the equity acquire further equity.

Article 15: If a change in the equity of a futures company is characterized by either of the circumstances specified in Article 14 hereof, the following conditions shall be satisfied:

(1) the equity that is to be the subject of the change has not been placed under seal, been frozen, etc.;

(2) there is no cross equity holding between the futures company and the shareholder(s), and the futures company is not providing any form of financial support to the party acquiring the equity; and

(3) the shareholder(s) involved satisfies/satisfy the conditions specified in Articles 7, 8 and 9 hereof.

Article 16: If a change in equity is characterized by either of the circumstances specified in Article 14 hereof, the futures company shall submit the following application materials to the CSRC:

(1) an application letter for an equity change;

(2) the resolution document of the shareholders' meeting on the equity change;

(3) the equity transfer contract and the undertakings of the other shareholders waiving their right of first refusal;

(4) a chart illustrating the background of the equity of the futures company's shareholders following the change;

(5) a report on the natural persons who indirectly hold at least 5% of the equity of the futures company;

(6) an explanation by the futures company of whether affiliated relationships will exist between shareholders after the change and whether it has provided any form of financial support to the party acquiring the equity;

(7) the relevant resolution of the shareholders' meeting or board of directors of the shareholder that intends to increase its capital contribution;

(8) a report on the basic particulars of the shareholder that intends to increase its capital contribution and of the shareholders specified in Article 9 hereof;

(9) the audit reports of the shareholder that intends to increase its capital contribution and of the shareholders specified in Article 9 hereof;

(10) the feasibility study reports and plans for investing in the futures company of the shareholder that intends to increase its capital contribution and of the shareholders specified in Article 9 hereof;

(11) a legal opinion issued by a law firm; and

(12) other materials as specified by the CSRC.

Article 17: If a futures company intends to make a change to its registered capital, it shall satisfy the following conditions:

(1) its registered capital after the change will not be less than the minimum registered capital required for the futures business in which it engages;

(2) the simulated calculation of its net capital and other financial indicators after the change in registered capital comply with risk control indicator standards; and

(3) if the registered capital is to be increased, the shareholder(s) that intend(s) to increase its/their capital contribution(s) or acquire equity complies/comply with Articles 7, 8 and 9 hereof.

Article 18: If a futures company intends to make a change to its registered capital, it shall require the examination of the CSRC and shall submit to it the following application materials:

(1) an application letter for a change in registered capital;

(2) the resolution document of the shareholders' meeting on the change in registered capital;

(3) the contract for the change in the capital contribution of the shareholder, and the undertakings of the other shareholders waiving their right of first refusal;

(4) the detailed plan for the change in registered capital;

(5) a simulated balance sheet and risk control statement after the change in registered capital;

(6) the materials specified in Items (4) to (11) of Article 16 hereof; and

(7) other materials as specified by the CSRC.

Article 19: If a single shareholder or affiliated shareholders intend to hold 100% of the equity of the futures company by virtue of a change in the futures company's equity or registered capital, the CSRC shall conduct an examination in accordance with the principle of prudent regulation, and render a decision granting or withholding its approval.

Article 20: If a futures company intends to replace its legal representative, the proposed replacement shall have the qualifications for the position. The futures company shall submit the following application materials to the CSRC agency of the place where it is domiciled:

(1) an application letter to replace the legal representative;

(2) the resolution document of the shareholders' meeting on replacing the legal representative; if the company's articles of association provide otherwise, such provisions shall apply;

(3) proof of the proposed legal representative's qualifications for the position; and

(4) other materials as specified by the CSRC.

Article 21: If a futures company intends to change its domicile, it shall duly handle its customers' margins and positions, and the domicile it intends to relocate to and the facilities it intends to use shall satisfy futures business requirements. If a futures company is to change its domicile to a location in the jurisdiction of a different CSRC agency, it shall additionally satisfy the following conditions:

(1) it complies with the rules of sustained operations;

(2) it has not had a record of a major violation of laws or regulations or been involved in a major risk event during the most recent two years; and

(3) other conditions as specified by the CSRC in accordance with the principle of prudent regulation.

Article 22: When a futures company is to change its domicile, it shall submit the following application materials to the CSRC agency of the place where it is to relocate:

(1) an application letter for a change of domicile;

(2) a detailed plan for the change of domicile;

(3) proof of title to or of the right to use the new domicile and proof of passing the fire safety check;

(4) a report on its due handling of customer margins and positions; and

(5) other materials as specified by the CSRC.

Article 23: If a futures company is to apply to establish a business office, it shall satisfy the following conditions:

(1) it is not being investigated by the competent authority due to suspicion of operating in violation of laws or regulations, and during the most recent year has not been subjected to administrative penalties or criminal punishment for operating in violation of laws or regulations;

(2) it has complied with the standards for risk control indicators of futures companies during the three months prior to the application date;

(3) it complies with provisions on the protection of customer assets and the monitoring of the safe custody of futures margins;

(4) its corporate governance and internal control systems comply with relevant provisions and have been effectively implemented;

(5) the proposed person in charge satisfies the qualification conditions for the position and the working personnel have the qualifications of futures practitioners;

(6) the responsibilities attaching to the business positions are clear, the division of responsibilities is reasonable and complies with the business plan of the business office;

(7) it has business premises and facilities that satisfy futures business requirements; and

(8) other conditions as specified by the CSRC in accordance with the principle of prudent regulation.

Article 24: When a futures company applies to establish a business office, it shall submit the following application materials to the CSRC agency of the place where it intends to establish the business office:

(1) an application letter to establish a business office;

(2) the resolution document on the establishment of a business office;

(3) its month-end risk control statements for the three months prior to the application date;

(4) the document on the business office's management systems;

(5) the application materials for, or proof of, the qualifications of the proposed person in charge for his/her position;

(6) a list of the names of the proposed practitioners and photocopies of their certificates for qualifications of futures practitioners;

(7) proof of title to or of the right to use the place of business and proof of passing the fire safety check; and

(8) other materials as specified by the CSRC.

Article 25: If the business office of a futures company intends to replace its person in charge, the proposed person in charge shall have the proper qualifications for the position.

The futures company shall submit an application letter for replacement of the person in charge and proof of the qualifications of the proposed person in charge for the position to the CSRC agency of the place where the business office is located.

Article 26: If the business office of a futures company is to change its place of business, it shall duly handle its customers' margins and positions, and the domicile it intends to relocate to and the facilities it intends to use shall satisfy futures business requirements.

The futures company shall submit the following application materials to the CSRC agency of the place where the business office is located:

(1) an application letter for the change of the place of business of the business office;

(2) a detailed plan for the change of the place of business of the business office;

(3) a report on the due handling of customer margins and positions;

(4) proof of title to or of the right to use the proposed new place of business and proof of passing the fire safety check; and

(5) other materials as specified by the CSRC.

For the purposes of these Measures, the change of place of business of the business office of a futures company is limited to a change of place of business within the jurisdiction of the same CSRC agency.

Article 27: If the business office of a futures company is to be closed down, it shall first duly handle the margins and other assets of its customers, settle its futures business and terminate its business activities.

The futures company shall submit the following application materials to the CSRC agency of the place where the business office is located:

(1) an application letter to close down the business office;

(2) the resolution document proposing the close-down of the business office;

(3) a report on the handling of the margins and other assets of customers, the settlement of the futures business and the termination of the business activities; and

(4) other materials as specified by the CSRC.

Article 28: If a futures company applies to suspend operations due to force majeure or other such legitimate reasons, it shall duly handle the margins and other assets of customers and return or transfer them to the customers.

If the futures company is to resume operations, it shall comply with the rules of sustained operations of futures companies. If the futures company remains unable to resume operations or still fails to comply with the rules of sustained operations when the period of suspension of operations expires, the CSRC may cancel its futures business permit in accordance with the first paragraph of Article 21 of the Regulations for the Administration of Futures Trading.

Article 29: If a futures company is to suspend operations, it shall submit the following application materials to the CSRC:

(1) an application letter for the suspension of operations;

(2) the resolution document on the suspension of operations;

(3) a report on the handling of the margins and other assets of customers and the settlement of the futures business; and

(4) other materials as specified by the CSRC.

Article 30: If a futures company is to be dissolved or to go bankrupt, it shall first duly handle the margins and other assets of customers and settle its futures business.

If a futures company has all of its futures business permits revoked, it shall duly handle the margins and other assets of customers and settle its futures business. If the company is to continue to exist, it shall carry out the procedures for the amendment of business registration, including change of name and scope of business, amendment of its articles of association, etc., in accordance with the law. The company that continues to exist may not continue to engage in futures business as a futures company and its name may not contain the word ¡°futures¡± or other similar term or terms.

Article 31: When a futures company is established, makes changes, is dissolved, goes bankrupt, has its futures business permit revoked, or if it establishes, makes changes to or closes down a business office, the futures company shall make an announcement to that effect in the newspapers, periodicals or other media designated by the CSRC.

Article 32: The permits of futures companies and their business offices shall be centrally printed by the CSRC. If the original or a duplicate of a permit is lost or destroyed, the futures company shall, within 30 days, declare the same void in the newspapers, periodicals or other media designated by the CSRC and, on the strength of the published statement, apply for a new one from the CSRC.

PART THREE: CORPORATE GOVERNANCE

Article 33: A futures company shall establish and enhance its corporate governance on the basis of the principles of clearly defined responsibilities, strong checks and balances and strengthening of risk management.

Article 34: A futures company shall be kept strictly separate from its controlling shareholder in terms of its business, personnel, assets, financial affairs, premises, etc., and it shall operate independently and keep independent accounts.

The controlling shareholder or de facto controller of a futures company may not circumvent the futures company's shareholders' meeting or board of directors to appoint or dismiss directors, supervisors or senior management personnel of the futures company, or illegally interfere in business and management activities such as custody of customer margins, trading, settlement, risk management, financial affairs, accounting and business office management.

A futures company may not give an undertaking of minimum returns or dividends to its shareholders. If a futures company provides futures brokering services to its shareholders, de facto controller or affiliated parties, it may not lower its risk management requirements in respect thereof.

Article 35: The shareholders' meeting of a futures company shall deliberate and vote on matters falling within its purview in accordance with the Company Law and the company's articles of association. Shareholders' meetings shall be convened at least once per year.

The shareholders of a futures company shall exercise their voting rights in proportion to their capital contributions.

Article 36: If a shareholder or the de facto controller of a futures company is characterized by any of the circumstances set forth below, it shall notify the futures company within three days of the occurrence thereof:

(1) the equity of the futures company it holds is frozen, placed under seal or the subject of an enforcement proceeding;

(2) it pledges the equity of the futures company that it holds;

(3) itdecides to transfer the equity of the futures company that it holds;

(4) it cannot normally exercise its shareholder rights or bear its shareholder obligations, potentially resulting in a major defect in the futures company's corporate governance;

(5) it is suspected of operating in serious violation of laws and regulations and it is being investigated or has had enforcement measures taken against it by the competent authority;

(6) it has changed its name;

(7) it has merged, divided or undergone a major asset or debt reorganization;

(8) it has been banned, had a receiver or new management appointed, has closed down, or has been dissolved or gone bankrupt; or

(9) another circumstance that could effect a change in the equity of the futures company occurs.

If any of the circumstances specified in the preceding paragraph occurs in respect of a shareholder of a futures company, the futures company and the relevant shareholder shall submit a written report to the CSRC agency of the place where the futures company is domiciled within five days. If any of the circumstances specified in Items (5) to (8) of the preceding paragraph occurs in respect of the de facto controller of a futures company, the futures company and the de facto controller shall submit a written report to the CSRC agency of the place where the futures company is domiciled within five days.

Article 37: If a futures company is characterized by any of the circumstances set forth below, it shall immediately notify all of its shareholders in writing and submit a report to the CSRC agency of the place where it is domiciled:

(1) it or any of its directors, supervisors or senior management personnel is suspected of a major violation of laws or regulations and it/he/she has had a case opened against it/him/her and is being investigated or has had enforcement measures taken against it/him/her by the competent authority;

(2) it intends to replace its chairman of the board or general manager;

(3) its financial position has deteriorated and it no longer complies with the standards for risk control indicators specified by the CSRC;

(4) a customer has incurred a material overdraft or overloss;

(5) a contingency has occurred that materially and adversely affects or could materially and adversely affect the interests of the futures company and/or its customers; or

(6) another circumstance that could affect the futures company as a going concern has arisen.

A futures company shall notify all of its shareholders in writing of rectification notices given, regulatory measures taken or administrative penalties imposed by the CSRC or its agency to or against it or its business office.

Article 38: A futures company shall establish a board of directors. Meetings of the board of directors shall be convened at least twice each year. Minutes of board meetings shall be true, accurate and complete.

Article 39: In addition to exercising the functions and powers specified in the Company Law, the board of directors of a futures company shall perform the following duties:

(1) deliberating and deciding on the system for the safe custody of customer margins and ensuring that the custody of customer margins complies with various requirements in respect of the protection of customer assets and the monitoring of the safe custody of futures margins; and

(2) deliberating and deciding on risk management and internal control systems.

Article 40: Futures companies that have the settlement business qualifications for futures exchanges that implement a settlement system by member grade as well as wholly owned futures companies shall have independent directors.

Independent directors shall maintain their independence, may not serve with the futures company except in their capacity of director and may not have a relationship with the futures company, its controlling shareholder or de facto controller or other affiliated parties that could prevent them from exercising independent and objective judgement.

An independent director shall comply with laws, administrative regulations, CSRC provisions and the company's articles of association, bear obligations to the futures company of loyalty and due diligence, and safeguard the lawful rights and interests of customers, the futures company and all of the shareholders. The other directors and the supervisors and senior management personnel of the futures company shall actively cooperate with and assist the independent directors in performing their duties.

Article 41: A futures company shall establish a supervisory board or appoint a supervisor in accordance with the Company Law and duly secure the supervisory board's or supervisor's right to know about the business position of the company. The supervisory board or supervisor shall perform its/his/her duties in accordance with the Company Law and the company's articles of association.

Article 42: The articles of association of a futures company shall specify the liability that the legal representative is required to bear, and the procedure for pursuing the same, if he/she violates the company's business plan, and systems such as the system for the safe custody of futures margins, risk management system and internal control system decided by the board of directors or other board resolutions when he/she engages in business activities with third parties as the representative of the company.

Article 43: A futures company shall have a chief risk officer, who shall monitor and inspect the futures company's risk management and the legality and compliance of the company's operations and management.

If the chief risk officer discovers a suspected violation of laws or regulations, such as appropriating or diverting a customer's margin, or the occurrence of a potential risk, he/she shall promptly report the same to the CSRC agency and the board of directors of the company.

If a futures company intends to dismiss its chief risk officer, it shall have a legitimate reason for doing so and report the same to the CSRC agency. If a chief risk officer fails to perform his/her duties, the CSRC or its agency shall have the right to order that he/she be replaced.

Article 44: There may not be a close family member relationship among the chairman of the board, general manager and chief risk officer of a futures company. The same person may not concurrently serve as chairman of the board and general manager.

Article 45: A futures company shall rationally establish business departments and specify their functions, establish position responsibility systems for trading, settlement, risk management and financial affairs, etc., focus its control efforts on key positions and business, and ensure the separation of front office, middle office and back office affairs.

A futures company's trading business, settlement business and financial affairs shall be handled by separate departments and personnel.

Article 46: A futures company shall establish a risk control department or position to manage and control its business risks.

A futures company shall establish a compliance audit department or position to examine and audit the lawfulness and compliance of its operating and management acts.

Article 47: With respect to its business office, a futures company shall, in accordance with CSRC provisions, implement centralized settlement, centralized risk management, centralized fund allocation and centralized financial management and accounting, establish a compliant and sound responsibility system for business office positions, and formulate compliant and sound business operating rules.

A futures company may not enter into an equity or cooperative joint venture with a third party to operate and manage a business office, or contract out, lease or entrust the operation and management of a business office to a third party.

PART FOUR: BROKERING RULES

Article 48: A futures company shall formulate and effectively implement business rules and procedures for risk management, internal controls, custody of futures margins, etc. in accordance with the principle of prudent operation, maintain financial stability and comply on an ongoing basis with the risk control indicator standards specified by the CSRC so as to ensure the safety and security of customer transactions and assets.

Article 49: A futures company shall comply with the principle of good faith and execute customer instructions with professional skill and with due diligence so as to safeguard the lawful rights and interests of customers.

A futures company shall avoid conflicts of interest with customers and where the same are unavoidable, it shall ensure that customers' interests have priority.

Article 50: In addition to the circumstances specified in Article 26 of the Regulations for the Administration of Futures Trading, the following personnel may not engage in futures trading in their own or a third party's name:

(1) persons with no or limited civil capacity;

(2) working personnel of futures companies and their spouses; and

(3) the working personnel of the CSRC and its agencies, futures exchanges, institutions responsible for monitoring the safe custody of futures margins and the China Futures Association and their spouses.

Article 51: When a customer opens an account, he/she/it must produce his/her Chinese citizen ID card or lawful proof of its status as a Chinese legal person or as another economic organization, unless otherwise specified by the CSRC.

Article 52: Before opening an account for a customer, a futures company shall present to him/her/it an Explanation of the Risks of Futures Trading that shall be signed by him/her/it in confirmation that he/she/it understands its contents, after which he/she/it shall enter into a futures brokering contract. A futures company may not open an account for a customer that has not executed a futures brokering contract.

The substance and format of the Guidelines for Futures Brokering Contracts and the Explanation of the Risks of Futures Trading shall be formulated by the China Futures Association.

A futures company shall, in a timely manner, update its model futures brokering contracts in accordance with the Guidelines for Futures Brokering Contracts, submit the same to the China Futures Association for examination and the record, and submit the same to the CSRC agency of the place where it is domiciled for the record.

The advertisements and publicity materials that a futures company releases shall be submitted to the CSRC agency of the place where it is domiciled within five working days of the release date.

Article 53: A futures company shall fully disclose futures trading risks to customers, make available on its business premises regulations regarding futures trading and the business rules of the futures exchange and disclose information such as its relevant futures brokering procedures and the proof of the qualifications of the relevant practitioners for review by the customers.

In its futures brokering contracts, on its website and in its place of business, a futures company shall inform customers that they may consult the publicly available information on the qualifications of its practitioners on the website of the China Futures Association.

Article 54: A futures company shall apply for a trading number for a customer in accordance with provisions. When a futures company carries out the procedure for closing a customer's account, it shall, in a timely manner, apply to the futures exchange to cancel the customer's trading number in accordance with provisions.

Article 55: If a customer wishes to appoint a third party to handle matters such as issuing instructions and allocating funds, he/she/it shall designate the appointed party, specify the limit of his/her authority, his/her contact information and method of issuing instructions in the futures brokering contract and leave a specimen of such person's signature with the company.

Article 56: A customer may issue trading instructions in writing, by telephone, by computer, via the internet, etc. If trading instructions are to be issued in writing, the customer shall complete a trading instruction form; if trading instructions are issued by telephone, the futures company shall synchronously record the same; if trading instructions are issued by computer or via the internet, etc., the futures company shall use an appropriate method to preserve such instructions.

Article 57: If a futures company provides to customers an instruction issuing service via the internet, it shall establish a risk management system for internet trading and particularly make customers aware of the risks of trading via the internet.

Article 58: A futures company shall transmit customer trading instructions on a ¡°first given, first transmitted¡± basis.

Article 59: A futures company shall specify the standards, conditions and handling measures with respect to risk management in its futures brokering contracts.

Article 60: A futures company shall provide transaction settlement reports to its customers after market closing each trading day. Customers shall review the transaction settlement reports at the time and by the method specified in the futures brokering contract.

A futures company shall settle with its customers on the day in question based on the settlement results of the futures exchange or a qualified settlement institution. The substance, format, handling method and handling date of settlement headings shall be consistent with those of the futures exchange.

A futures company shall inform customers in its futures brokering contracts, on its website and in its place of business that they may consult the settlement results and other information relating to futures trading via the search service system of the institution responsible for monitoring the safe custody of futures margins.

Article 61: If a customer objects to the contents of a transaction settlement report, he/she/it shall submit a written objection to the futures company by the time specified in the futures brokering contract. If the customer has no objections to the contents of the transaction settlement report, he/she/it shall confirm the contents of such report in the manner specified in the futures brokering contract. If a customer neither confirms the contents of a transaction settlement report nor makes an objection known by the time specified in the futures brokering contract, he/she/it shall be deemed to have confirmed the contents of the transaction settlement report.

If a customer has an objection, the futures company shall check the same by the time specified in the futures brokering contract.

Article 62: A futures company shall formulate and implement rules for the handling of erroneous instructions.

Article 63: A futures company shall open an information file for each customer and maintain the confidentiality thereof except in the event of investigations and inspections carried out in accordance with the law.

Article 64: A futures company shall establish and enhance a customer complaint handling system. A futures company shall keep on file customers' complaint materials and the results of the handling of such complaints.

Article 65: If a futures business related dispute arises between futures companies or between a futures company and a customer, it may be submitted to the China Futures Association or the futures exchange for resolution by mediation.

Article 66: If the entrustment relationship between a customer and a futures company terminates, the relevant account closing procedures shall be carried out. A futures company may not lend to a third party a customer's fund account or the trading number that has not been cancelled.

Article 67: A futures company shall establish a system for backing up trading, settlement and financial data.

Customer information files concerning the opening, modifications to and closing of accounts shall be kept for at least 20 years from the date of termination of futures brokering contracts. Transaction instruction records, transaction settlement records, erroneous instruction records, customer complaint files and other business records shall be kept for at least 20 years.

If a futures company keeps or backs up relevant information in the form of electronic data, it shall ensure the truthfulness and reliability of the electronic data, take effective measures to prevent the alteration or damage of the electronic data, and information stored in electronic data format shall be capable of being converted into hard copy format at any time.

Article 68: A futures company may appoint another institution approved by the CSRC to engage in the business of serving as an intermediary in introducing business.

PART FIVE: PROTECTION OF CUSTOMER ASSETS

Article 69: Futures margins in the custody of futures companies shall belong to the customers. With the exception of the transfer of customer margins in accordance with Article 29 of the Regulations for the Administration of Futures Trading, the appropriation or diversion thereof by any work unit or individual in any manner is strictly prohibited. If a futures company goes bankrupt or is liquidated, the margins and other assets serving as margins of customers shall not form part of the property in bankruptcy or liquidation. The margin or other assets serving as a margin of a customer may not be placed under seal, frozen, seized or be the subject of an enforcement proceeding for other than the debts of the customer himself/herself/itself or other circumstance specified in laws or administrative regulations.

Customers' margins shall be kept independent and managed separately from a futures company's own assets.

Article 70: A futures company shall open futures margin accounts with a futures margin custody bank approved in accordance with the law.

When a futures company opens, modifies or closes a futures margin account, it shall report the same to the CSRC agency of the place where it is domiciled and the institution responsible for monitoring the safe custody of futures margins for the record on the same day and disclose the details of the opening, modification or closing of the account to the customer by the prescribed method.

The customer shall deposit its margin into the futures margin account disclosed by the futures company via the website of the institution responsible for monitoring the safe custody of futures margins.

The term ¡°futures margin accounts¡± means the dedicated deposit accounts opened by a futures company with a futures margin custody bank for the deposit and management of customer's margins and includes the dedicated fund accounts opened in the place where the futures exchange is located and used for the handling of futures business related fund transactions with the futures exchange.

Article 71: The entire amount of customer margins in the custody of a futures company shall be deposited in futures margin accounts and the futures exchange's dedicated settlement accounts. The deposit of customer margins in places other than futures margin accounts and the futures exchange's dedicated settlement accounts is strictly prohibited.

Article 72: A customer shall register with the futures company the futures settlement account used for margin deposit and withdrawal opened in his/her/its own name.

The futures company and customer shall make account transfers, deposits and withdrawals of the margin through the futures margin account filed for the record and the registered futures settlement account.

Article 73: A futures company shall, in a timely manner, submit information to the institution responsible for monitoring the safe custody of futures margins in accordance with provisions on monitoring the safe custody of futures margins.

Article 74: If a futures margin custody bank fails to submit information on futures margins to the institution responsible for monitoring the safe custody of futures margins in accordance with the relevant provisions of the CSRC, the futures company shall, as required by the CSRC or its agency, transfer the margins and deposit them with another qualified futures margin custody bank.

Article 75: A futures company shall use its own funds to contribute to the clearing fund and deposit a settlement reserve in accordance with the rules of the futures exchange, and maintain a minimum settlement reserve and other such dedicated funds to ensure the normal operation of customers' futures transactions and the safety of customer margins.

Article 76: If a customer is in default in a futures transaction, resulting in a shortfall in his/her/its margin, the futures company shall advance the shortfall from its risk reserve or by using its own funds. It may not appropriate another customer's margin.

A futures company shall make allocations to, manage and use its risk reserve in accordance with provisions, and may not divert it for other purposes.

PART SIX: OVERSIGHT

Article 77: A futures company shall regularly submit its annual reports, monthly reports and other such information in accordance with provisions.

The directors, senior management personnel and the person in charge of finance of a futures company shall sign a confirmation opinion in respect of the annual reports; and the legal representative, principal persons in charge of operations and management and the person in charge of finance shall sign a confirmation opinion in respect of the monthly reports.

The persons signing the annual reports and monthly reports of a futures company shall ensure that such reports are true, accurate and complete. If such person has an objection in respect of such report, he/she shall note his/her opinion and reasons therefor.

Article 78: The CSRC or its agency may require the following organizations or individuals to submit information relevant to a futures company's operations, management, financial position, etc., within a specified period of time:

(1) the futures company and its directors, supervisors, senior management personnel and other working personnel;

(2) the shareholders, de facto controller or other affiliated parties of the futures company; and

(3) intermediary service organizations such as the accounting firm, law firm and asset appraisal institution that provide relevant services to the futures company.

Article 79: If the shareholders, de facto controller or other affiliated parties of a futures company engage in futures trading with the futures company, the futures company shall, within five working days from the date of opening an account therefor, report the same to the CSRC agency of the place where it is domiciled for the record, regularly report relevant trading details to all of the shareholders, the board of directors and the supervisory board or supervisor and regularly report relevant trading details to the CSRC agency of the place where it is domiciled.

Article 80: A futures company shall submit a written report to the CSRC agency of the place where it is domiciled within five working days after any of the following occurs:

(1) it changes its name or amends its articles of association;

(2) a change in its equity other than one specified in Article 14 hereof occurs;

(3) it adopts a material resolution, such as one to terminate its business;

(4) it appoints or dismisses a director, supervisor, member of its senior management personnel, its chief financial officer, the person in charge of its business office, or it makes a change to the division of responsibilities among the senior management personnel;

(5) a competent authority opens a case against it and is investigating it or takes enforcement measures against it; or

(6) another event as specified by the CSRC occurs.

If a material event that affects or could affect a futures company's operations, management or financial position, or the safety of customer assets occurs, the futures company shall immediately report the same to the CSRC agency of the place where it is domiciled, explaining why the event occurred, the current state, the possible consequences and its response plan or measures.

Article 81: If a futures company is to engage or dismiss an accounting firm, it shall report the same to the CSRC agency of the place where it is domiciled within five working days from the date on which it made the decision to do so. If it is dismissing its accounting firm, it shall explain the reason therefor.

If a CSRC agency has grounds to believe that an accounting firm is not suited to engaging in the business of auditing futures companies, it may require the futures company to replace it.

Article 82: A futures company shall publicly disclose its basic particulars, operating and management circumstances and other such relevant information in accordance with CSRC provisions.

Article 83: The documentation and information submitted, provided or disclosed by relevant organizations and individuals shall be true, accurate and complete and may not contain false records, misleading statements or material omissions.

Article 84: The CSRC may arrange for its agencies to conduct regular or ad hoc onsite inspections of futures companies or their business offices.

A CSRC agency may conduct onsite inspections of futures companies or their business offices within its jurisdiction.

When the CSRC or its agency performs its duties in accordance with the law by conducting an inspection, there shall be at least two inspectors who shall present their lawful credentials and an inspection notice. They may not disclose trade secrets to which they are privy.

Article 85: The CSRC or its agencies have the right to take the measures set forth below when inspecting the operations, management, business activities, financial position, etc., of a futures company or its business office:

(1) interviewing the working personnel of the futures company or its business office and requiring them to give an explanation of the subject matter of the inspection;

(2) reviewing and taking copies of documents and information relating to the subject matter of the inspection;

(3) making inquiries concerning the futures margin accounts of the futures company or business office; and

(4) inspecting the futures company's or business office's trading, settlement and finance computer systems.

Article 86: If the CSRC or an agency thereof is of the opinion that a futures company may be characterized by any of the circumstances set forth below, it may require it to engage an intermediary service organization to conduct a dedicated audit or appraisal, or issue a legal opinion:

(1) the futures company's annual report, monthly report or ad hoc report, etc., contains false records, misleading statements or material omissions;

(2) it has violated provisions relevant to customer asset protection or to monitoring the safe custody of futures margins, or provisions relevant to the administration of risk control indicators; or

(3) it is characterized by another material circumstance as determined by the CSRC in accordance with the principle of prudent regulation.

The futures company shall cooperate with the intermediary service organization in its work and duly provide relevant documents and information.

Article 87: If a futures company, a shareholder thereof, its de facto controller, another affiliated party or an intermediary service organization, such as an accounting firm, law firm, asset appraisal institution, etc., that provides relevant services to the futures company is suspected of violating relevant provisions hereof, the CSRC or its agency may give the person in charge thereof and relevant working personnel a regulatory discussion, order them to rectify the matter and issue them a warning.

Article 88: The CSRC or its agency may take appropriate regulatory measures in accordance with Article 59 of the Regulations for the Administration of Futures Trading if a futures company or its business office is characterized by any of following circumstances:

(1) its corporate governance is unsound or ineffectively implemented, a relatively major defect exists in the establishment of its departments or of its positions, it lacks key business positions or personnel or they have failed to perform their basic duties, potentially affecting the futures company as a going concern;

(2) its futures brokering rules are unsound or ineffectively implemented, relatively major defects exist in its risk management or internal controls, etc., or its business operations and management are in disarray, potentially affecting the futures company as a going concern or the safety of customer transactions;

(3) its futures settlement rules are unsound or ineffectively implemented, potentially harming the lawful rights and interests of other futures companies or customers;

(4) it is not in compliance with provisions relevant to customer asset protection or to monitoring the safe custody of futures margins, potentially affecting the safety of customer assets;

(5) it has failed to implement the system for centralized management of its business offices, exposing its operations and management to relatively large risks or latent risks;

(6) it has failed to entrust in accordance with regulations the business of serving as an intermediary in introducing business, exposing its business activities to relatively large risks or latent risks;

(7) its trading, settlement or financial system contains a material defect, potentially resulting in the corruption of relevant data or harm to the lawful rights and interests of customers;

(8) a shareholder, its de facto controller or another affiliated party has suspended operations, is facing a major risk, is suspected of a major violation of laws or regulations or is characterized by another such material circumstance, potentially affecting the futures company's corporate governance or its status as a going concern;

(9) a dispute, arbitration proceeding or lawsuit that could affect the stability of its finances is pending;

(10) relevant reports, materials or information, etc., submitted, provided or issued by it contain false records, misleading statements or omissions; or

(11) it fails to comply with other rules of sustained operations or another operating risk arises.

If the business office of a futures company still fails to satisfy operating conditions after undergoing rectification, the CSRC agency shall have the right to shut it down in accordance with the law.

Article 89: If any individual or work unit or an affiliated party thereof holds 5% or more of the equity of a futures company without the approval of the CSRC, or if he/she/it becomes a shareholder of a futures company by providing false application materials or other such means, the CSRC may order him/her/it to transfer the equity within a specified period of time.

Until such equity is transferred, no voting rights or dividend distribution rights shall attach thereto.

Article 90: If a shareholder, the de facto controller or another affiliated party of a futures company is characterized by any of the circumstances set forth below, the CSRC or its agency may order it to rectify the matter within a specified period of time:

(1) it has appropriated assets of the futures company, potentially affecting it as a going concern;

(2) it directly appointed or dismissed a director, supervisor or member of the senior management personnel of the futures company, or it illegally interfered in the operating and management activities of the futures company;

(3) the shareholders exercised their voting rights other than in proportion to their capital contributions; or

(4) relevant reports, materials or information, etc., submitted, provided or issued by it contain false records, misleading statements or omissions.

If the futures company ceases to comply with the rules of sustained operations or an operating risk arises due to any of the circumstances in the preceding paragraph, the CSRC or its agency may order the controlling shareholder to transfer its equity or place restrictions on the exercise of its shareholder rights in accordance with Article 59 of the Regulations for the Administration of Futures Trading.

PART SEVEN: LEGAL LIABILITY

Article 91: If any individual or work unit or an affiliated party thereof holds 5% or more of the equity of a futures company without the approval of the CSRC, or if he/she/it became a shareholder of the futures company by providing false application materials or other such means, and the circumstances are serious, he/she/it shall be given a warning and/or fined at a maxumum of Rmb30,000.

Article 92: If a futures company or its business office carries out futures trading for a work unit or individual that has not carried out the procedure to open an account, or lends a customer's fund account number or trading number to another work unit or individual, it shall be given a warning and/or fined at a maximum of Rmb30,000.

Article 93: If an intermediary service organization, such as an accounting firm, law firm, asset appraisal institution, etc., fails to perform its reporting obligations in accordance with provisions, or if the reports, materials or opinions that it provides or issues are incomplete, it shall be ordered to rectify the matter, its revenue from such business shall be confiscated and/or it may be fined below Rmb30,000. The supervisors directly in charge and other responsible persons shall be given a warning and fined at a maximum of Rmb30,000.

Article 94: If a futures company or its business office commits any of the acts set forth below, it shall be penalized in accordance with Article 70 of the Regulations for the Administration of Futures Trading:

(1) it failed to keep customer margins independent and manage them separately from its own assets in accordance with provisions;

(2) it failed to contribute to the clearing fund or deposit a settlement reserve, or maintain a minimum settlement reserve or other such dedicated funds in accordance with provisions;

(3) it lowered the risk management requirements in respect of the futures trading by its shareholders, de facto controller or affiliated parties, thereby infringing the lawful rights and interests of other customers;

(4) it established a business office by means of an equity or cooperative joint venture or an association, or contracted out or leased out its business office to a third party or violated the provisions on the centralized management of business offices;

(5) it deposited customer margins in places other than futures margin accounts and the futures exchange's dedicated settlement accounts;

(6) the information it submitted to the institution responsible for monitoring the safe custody of futures margins contained false records, misleading statements or material omissions;

(7) it appropriated a customer's margin;

(8) it violated the CSRC's provisions on the administration of settlement and used its settlement business relationships to harm the lawful rights and interests of other futures companies or its customers;

(9) it violated provisions on entrusting the business of serving as an intermediary in introducing business, harming the lawful rights and interests of customers;

(10) it violated CSRC provisions on risk control indicators;

(11) it refused to cooperate in, impeded or destroyed oversight by the CSRC and its agency;

(12) it violated provisions on the administration of the futures investor protection fund; or

(13) it violated provisions on the use of negotiable securities as margin.

Article 95: If a futures company or its business office is characterized by either of the circumstances set forth below, it shall be penalized in accordance with Article 71 of the Regulations for the Administration of Futures Trading:

(1) it released false advertisements or engaged in false publicity to inveigle customers into participating in futures trading; or

(2) it failed to modify or close futures margin accounts in accordance with provisions, or failed to disclose futures margin account information to customers in the prescribed manner.

PART EIGHT: SUPPLEMENTARY PROVISIONS

Article 96: The taking of equity interests in futures companies by Hong Kong and Macao service providers shall be governed by relevant CSRC provisions.

Article 97: These Measures shall be effective as of April 15 2007. The Measures for the Administration of Futures Brokerages (Order of the China Securities Regulatory Commission No.7) promulgated on May 17 2002, and the Circular on Issues Relevant to the Establishment of, Changes to and Closure of Business Offices of Futures Brokerages (Zheng Jian Qi Huo Zi [2004] No.41), the Circular on Issues Relevant to Changes in the Legal Representative, Registered Capital, Shareholders, Equity Structure or Domicile of Futures Brokerages (Zheng Jian Qi Huo Zi [2004] No.42), the Circular on Issues Relevant to the Establishment, Dissolution and Merger of Futures Brokerages (Zheng Jian Qi Huo Zi [2004] No.46) and the Circular on the Qualifications of the Shareholders of Futures Brokerages and Relevant Issues (Zheng Jian Qi Huo Zi [2005] No.155) issued by the China Securities Regulatory Commission shall be repealed simultaneously.