Detailed Settlement Rules of Dalian Commodity Exchange (Revised by the Forty-third Session of the Second Board of Governors Meeting on September 26, 2013; Promulgated subject to DCE [2013] No. 273 Document on November 4, 2013; Revised portions shall enter into force as of November 8, 2013) Chapter I General Provisions Article 1 These Rules are formulated pursuant to the Trading Rules of Dalian Commodity Exchange for the purposes of standardizing the futures settlement conducts of Dalian Commodity Exchange (the Exchange ), protecting the lawful rights and interests of the parties to the trading and the interests of the general public and preventing and mitigating the futures market risks. Article 2 The settlement shall refer to the business matters of calculation and allocation, on the basis of the trading results and the applicable provisions of the Exchange, of the Member's trading margin, profit and loss, commission, delivery payment and any other relevant payments. Article 3 The Exchange shall implement the margin policy, the mark-to-market policy, the risk reserves policy and other policies. Article 4 The Exchange shall implement the all-member settlement policy. The Exchange shall carry out settlement with respect to the Members. The futures company Member shall carry out settlement with respect to the clients. Article 5 These Rules shall be applicable to any and all settlement matters within the Exchange. The Exchange and its workers, its Members and their workers, the clients and the Exchange-designated futures margin depositary banks (the "Depositary Banks"; each, a Depositary Bank ) must comply with these Rules. Chapter II Settlement Agency and Its Duties Article 6 The Exchange shall be responsible for the uniform settlement, the margin management, the risk reserves management and the prevention of the settlement risks. Article 7 The Exchange shall have the following duties with respect to the
settlement business: (i) To prepare the Member s settlement statements; (ii) To handle the allocation and remittances of the fund transfers; (iii) To collect, register and report the settlement information; (iv) To handle the payment disputes arising out of or in connection with the Member s trading; (v) To handle the delivery settlement business; (vi) To control the settlement risks so as to ensure the performance of the futures contracts; and (vii) To manage the margins and risk reserves pursuant to the applicable provisions. Article 8 All contracts transacted within the Exchange s system must be uniformly settled throughout the Exchange. Article 9 The Member shall cooperate in case the Exchange checks and examines the Member s settlement data, financial statements and related vouchers and books subject to the provisions of the Exchange. Article 10 The Member must set up a settlement division. The settlement division of the futures company Member shall be responsible for the settlement work between the Member and the Exchange and between the Member and the clients. The settlement division of the non-futures company Member shall be responsible for the settlement work between the Member and the Exchange. The settlement division shall properly keep the settlement data, financial statements and related vouchers and books for any possible consultation and confirmation. Article 11 The Exchange shall ensure the entirety and safety of the settlement data, financial statements and related vouchers and books, the preservation period of which shall be no less than twenty (20) years. Article 12 The Settlement and Delivery Clerk shall be the person who is authorized by the Member to handle the settlement and delivery business on behalf of the Member. Each Member must appoint no less than two (2) Settlement and Delivery Clerks. The Settlement and Delivery Clerk shall satisfy the applicable provisions of the China Securities Regulatory Commission (the CSRC ) for the futures practitioner qualification, be tested to be qualified after being trained by the Exchange and obtain a Settlement and Delivery Clerk Training Compliance Certificate of Dalian Commodity Exchange and after being duly authorized by the Member with which he
or she is affiliated, a Settlement and Delivery Clerk Certificate of Dalian Commodity Exchange. Article 13 The Settlement and Delivery Clerk shall have the following business duties: (i) To handle the Member s funding and withdrawal business; (ii) To acquire and timely verify the settlement data provided by the Exchange; (iii) To handle the procedures of using negotiable securities to set off the margins; (iv) To handle the physical delivery procedures; and (v) To handle other settlement and delivery business. Article 14 Upon handling the settlement and delivery business, the Settlement and Delivery Clerk must produce his or her Settlement and Delivery Certificate or may otherwise by refused by the Exchange. Article 15 The Settlement and Delivery Certificate may be used by its holder only and shall not be falsified, obliterated or lent. The Member shall timely handle the relevant procedures related thereto at the Exchange in the event its Settlement and Delivery Clerk changes or is changed. Article 16 The Member shall strengthen the management of its Settlement and Delivery Clerks, strictly implement the operation norms, and especially, prevent any disclosure due to any stolen password. Article 17 The Depositary Bank shall refer to the bank which is designated by the Exchange to assist the Exchange to handle the futures trading settlement business. The Exchange shall have the right to supervise the Depositary Bank s futures settlement business. Article 18 The Depositary Bank must satisfy the following conditions: (i) Being a nationwide commercial bank of abundant funds and good standing; (ii) Having branches, sub-branches and business networks in any and all main cities of the State; (iii) Having sophisticated and fast off-site fund allocation means; (iv) Having a perfect margin management policy; (v) Having professional technicians who have knowledge of futures and are of strong awareness of preventing risks; and (vi) Other conditions that must be satisfied as required by the Exchange. After satisfaction of the conditions described above and being approved by the Exchange to be a Depositary Bank, the Depositary Bank and the Exchange shall enter
into an appropriate agreement to clearly describe their rights and obligations to standardize the relevant business conducts. Article 19 The Depositary Bank shall have the following rights: (i) To open the Exchange s special settlement account(s) and the Member s special fund account(s); (ii) To accept the deposits from the Exchange and the Members; and (iii) To get knowledge of the Member s credit at the Exchange. Article 20 The Depositary Bank shall assume the following obligations: (i) To provide to the Exchange the information of the funds in the Member s special fund account(s); (ii) To first transfer the Member's funds on the basis of the documents or orders provided or issued by the Exchange, and timely notify the fund transfer results and the changes to the relevant accounts to the Exchange; (iii) To assist the Exchange to check the sources and destinations of the Member s funds; (iv) To timely notify to the Exchange the information related to the pledge of the standard warehouse receipts of the Exchange and the Member s improper conducts and risks in fund settlement; (v) To assist the Exchange to mitigate any material risk occurring to the Exchange; (vi) To take, as required by the CSRC or the Exchange, the necessary regulatory measures against the funds in the Member s special fund account; (vii) To keep confidential the trade secrets of the Exchange and the Members; and (viii) To accept the supervision by the Exchange over its futures business. Article 21 The Exchange shall open at the Depositary Banks the special settlement accounts for deposit of the Member s margins and the relevant payments. Article 22 The Member must open at the Depositary Bank a special fund account for deposit of the margins and the relevant payments. Article 23 The Member who intends to open or change its special fund account shall file an application to the settlement division and obtain the consent by the Exchange. Article 24 The settlement of transfers of the futures business funds between the Exchange and the Member shall be made through the Exchange s special settlement account and the Member s special fund account. Article 25 The Exchange shall carry out the ledger management of the margins
deposited by the Member into the Exchange s special settlement account, set up a subsidiary account for each Member and register and calculate, on the daily basis, each Member s funding and withdrawal amounts, profits and losses, trading margins, commissions and otherwise. Article 26 The futures company Member shall carry out the ledger management of the margins deposited by the client into the futures company Member s special settlement account, set up a subsidiary account for each client and register and calculate, on the daily basis, each client s funding and withdrawal amounts, profits and losses, trading margins, commissions and otherwise. Article 27 Upon opening the special fund account, the Member must submit to the Exchange the Power of Attorney of Seal and other relevant materials. Article 28 The official seal, financial seal, statutory representative s seal and/or the seal of his or her authorized person under the Power of Attorney of Seal shall be the Member s effective seals and the Member shall be solely liable for any and all consequences arising out of or in connection with the use of any of such seals. Article 29 The Member s change of its name or transfer shall be subject to its submission to the Exchange of a new Power of Attorney of Seal, and the procedures for changing the relevant special fund account must be handled. Article 30 The Exchange shall have the right to collect any and all accounts receivables from the Member s special fund account through the Depositary Bank without any notice to the Member, and to consult the information of the funds in such account from time to time. Chapter III Routine Settlement Article 31 The Exchange shall implement the margin policy. The Member shall pay to the Exchange, subject to the applicable provisions, a certain amount of the funds used for settlement and guarantee of contractual performance. The margins shall be divided into the settlement reserves and the trading margins. After being approved by the Exchange, the Member may use the standard warehouse receipts, the negotiable treasury bonds and other negotiable securities identified by the CSRC to set off the margins. Article 32 The settlement reserves shall refer to the funds which are deposited by the Member in advance in the Member s special settlement account for the purpose of trading settlement, and it must be the funds not occupied by the contract. The
minimum balance of the settlement reserves shall be determined by the Exchange. Article 33 The minimum balance of the settlement reserves shall be CNY two million (2,000,000.00) for the futures company Member to be fully paid from its own funds or CNY five hundred thousand (500,000.00) for the non-futures company Member. The Member must satisfy the requirement of the minimum balance of the settlement reserves prior to the market-opening of the immediately following trading day. In case of no satisfaction, if the balance of the settlement reserves is more than zero but less than the minimum balance of the settlement reserves, any new opening of a position shall be prohibited, and if the balance of the settlement reserves is less than zero, the Exchange will, subject to the applicable provisions, carry out forced liquidation against the Member. Article 34 The Exchange shall calculate the interest on the basis of the portions of the monetary funds of the balance of the settlement reserves of the then-current day at a rate no less than the same-period bank current-deposit interest rate published by the People s Bank of China. The Exchange shall publicly announce the specific strike rate and shall respectively pay the interest to the Member within the monthly last third of March, June, September and December of each year. Article 35 The trading margin shall refer to the funds which are used to guarantee the contractual performance in the Exchange s special settlement account, and it must be the margin occupied by the contract. After the transaction between the seller and the buyer, the Exchange will collect the trading margin at a certain percentage of the open contract value. After the standard warehouse receipts are delivered at the Exchange, the trading margins of selling position of the latest delivery month which is of the amount equal to such receipts will not be collected upon settlement except for the egg product. Article 36 The standards for collection of the trading margins of any and all product contracts shall be subject to the applicable provisions of the Exchange s trading margins policy. Article 37 The margins collected from the client by the futures company Member which trades as an agent of the clients shall be owned by the client and shall be deposited in the Member s special fund account to be used for payment from time to time of the margins and any relevant costs. The futures company Member shall not use the margins for any purpose other than depositing thereof to the Exchange for the client and carrying out trading settlement subject to the provisions of the CSRC.
Article 38 The amount of the trading margins collected by the futures company Member from the client shall not be less than the amount of the trading margins collected by the Exchange from the Member. Article 39 The Exchange will charge the trading commissions on the basis of the quantity, or amount, of the transacted contracts of the then-current day for the Member; and the charging standards will be separately formulated by the Exchange. Article 40 The Exchange shall implement a mark-to-market policy. The mark-to-market policy shall refer to that after the ending of the daily trading, the Exchange shall settle the profits and losses, trading margins, commissions and other costs for all the contracts at the settlement price of the then-current day and allocate the net amounts of the accounts receivable and payable so as to appropriately increase or decrease the Member's settlement reserves. Article 41 In respect of a certain futures contract, the settlement price of the then-current day shall refer to the weighted average price of the then-current transaction price on the basis of the trading volume. In case of no transaction price on the then-current day, the settlement price of the then-current day for the contract shall be determined as per the following methods: (i) In case there exist authorized quotations respectively on behalf of the seller and the buyer, the middle one of the highest bid price, the lowest ask price and the settlement price of the immediately previous trading day for such contract shall be the settlement price of the then-current day of the contract; (ii) In case of no consecutive unilateral quotations upon occurrence of price limits, the price of the price limits shall be the settlement price of the then-current day; or (iii) In case of no authorized quotations on the then-current day or in case of no consecutive unilateral quotations upon occurrence of price limits when there is unilaterally authorized quotation on behalf of the buyer or the seller, the settlement price of the contract with no transaction on the then-current day shall be calculated on the basis of the benchmark contract which is the immediately preceding transacted contract nearest the contract with on transaction of the then-current day: a. In case the increase or decrease percentage of the settlement price of the then-current day of the benchmark contract (%) is lower than or equal to the price limits of the then-current day of the contract with no transaction of the then-current day, the settlement price of the contract with no transaction of the then-current day = the settlement price of the immediately previous trading day of the contract (1 ± increase or decrease percentage of the settlement price of the benchmark contract);
b. In case the increase or decrease percentage of the settlement price of the then-current day of the benchmark contract (%) is higher than the price limits of the then-current day of the contract with no transaction of the then-current day, the settlement price of the contract with no transaction of the then-current day = the settlement price of the immediately previous trading day of the contract (1 ± percentage of the price limits of the then-current day of the contract); or c. In case no benchmark contract can be found, the settlement price of the contract with no transaction of the then-current day = the settlement price of the contract on the immediately previous trading day; or in case no benchmark contract can be found on the first listing day for a new contract, the settlement price of the contract with no transaction of the then-current day = the listed benchmark price. In case there is no transaction for a newly listed contract for three (3) consecutive trading days, the Exchange may separately adjust the settlement price. Article 42 In respect of a futures contract, the settlement price of the then-current day shall be the basis for calculating the profit or loss of the then-current day. The specific calculation formula shall be below: The profit or loss of the then-current day = the profit or loss of the liquidation + the profit or loss of the position; The profit or loss of the liquidation = the profit or loss of the liquidation of the past days + the profit or loss of the liquidation of the then-current day; The profit or loss of the liquidation of the past days = Σ [(the selling liquidation price - the settlement price of the immediately previous trading day) the selling liquidation quantity] + Σ [(the settlement price of the immediately previous trading day - the buying liquidation price) the buying liquidation quantity]; The profit or loss of the liquidation of the then-current day = Σ [(the selling liquidation price of the then-current day - the buying position-opening price of the then-current day) the selling liquidation quantity] + Σ [(the selling position-opening price of the then-current day - the buying liquidation price of the then-current day) the buying liquidation quantity]; The profit or loss of the position = the profit or loss of the position of the past days + the profit or loss of the position-opening and position of the then-current day; The profit or loss of the position of the past days = Σ [(the settlement price of the immediately previous day - the settlement price of the then-current day) the selling quantity of the position of the past days] + Σ [(the settlement price of the then-current day - the settlement price of the immediately previous day) the buying quantity of the position of the past days]; The profit or loss of the position-opening and position of the then-current day = Σ [(the selling position-opening price - the settlement price of the then-current day) the selling position-opening quantity] + Σ [(the settlement price of the then-current day - the buying position-opening price) the buying position-opening quantity].
Article 43 The portions of the trading margins upon settlement on the then-current day above the trading margins upon settlement yesterday shall be deducted from the Member s settlement reserves; and the portions of the trading margins upon settlement on the then-current day below the trading margins upon settlement yesterday shall be transferred into the Member s settlement reserves. The profit of the then-current day shall be transferred into the Member s settlement reserves and the loss of the then-current day shall be deducted from the Member s settlement reserves. The commissions and other costs and expenses shall be deducted from the Member s settlement reserves. Article 44 The balance of the settlement reserves shall be calculated below: The balance of the settlement reserves of the then-current day = the balance of the settlement reserves of the immediately previous trading day + the trading margins of the immediately previous trading day - the trading margins of the then-current day + the actually available offset amount of the then-current day - the actually available offset amount of the immediately previous trading day + the profit or loss of the then-current day + the funding amount - the withdrawal amount - commission and others The specific methods for calculation of the actually available offset amount are detailed in the relevant provisions of the Chapter V hereof. Article 45 After the completion of the settlement, in case the Member s settlement reserves are lower than the minimum balance, the calculation result shall be deemed to be the notice issued by the Exchange to the Member of increasing the margins. Article 46 The Exchange shall handle the funding and withdrawal business under the principles of accuracy and speediness. Under normal circumstances, the Exchange shall complete the Member s funding business prior to the closing of the market on the then-current day in respect of a funding application filed by the Member prior thereto in writing, electronic form or otherwise, or prior to the opening of the market on the immediately following trading day in respect of a funding application filed by the Member in writing after the closing of the market on each trading day; and the Member shall file a withdrawal application in writing, electronic form or otherwise prior to 15:10 of each trading day, and the Exchange, after its examination thereof, shall handle the Member s withdrawal transfers in a centralized manner after 15:10 of the then-current day. Under special circumstances, the time for the Exchange s handling the withdrawal and funding business will be appropriately prolonged. Article 47 The Member s withdrawal must be subject to the Exchange s provisions. The standards for the Member s withdrawal shall be:
(i) Where the actually available offset amount is higher than or equal to eighty (80) percent of the trading margins, The amount which may be withdrawn = the monetary funds the trading margins 20% the minimum balance of the settlement reserves; or (i) Where the actually available offset amount is lower than eighty (80) percent of the trading margins, The amount which may be withdrawn = the monetary funds (the trading margins the actually available offset amount) the minimum balance of the settlement reserves The Exchange may properly adjust the standards for the Member s withdrawal on the basis of the market risk situations. Article 48 In case any of the following circumstances occur to the client or the Member, the Exchange may limit the Member s withdrawal: (i) Being investigated by the Exchange due to its being suspected of any material irregularity; (ii) Being formally investigated by any of the judicial organs, the Exchange or any other authorities due to any complaint, reporting, trading dispute or otherwise and being in the period of the investigation; or (iii) Any other necessary circumstances as determined by the Exchange. Article 49 After the completion of the trading of the then-current day, The Exchange shall settle each Member s profits and losses, trading commissions, trading margins and other amounts. The Exchange will provide to the Member the settlement data of the then-current day by issuing the settlement documents, by electronic transmission or otherwise, including the Member s Transacted Contracts List of the Then-current Day of Dalian Commodity Exchange, the Member s Liquidation Profits and Losses List of the Then-current Day of Dalian Commodity Exchange, the Member s Positions List of the Then-current Day of Dalian Commodity Exchange, the Member s Funds Settlement List of Dalian Commodity Exchange and other data. Article 50 The Exchange shall separately notify the time for providing the settlement data in special circumstances under which the Exchange cannot timely provide the settlement data. Article 51 The Member shall daily and timely obtain, and shall verify and properly preserve, the settlement data provided by the Exchange. The data shall be preserved for at least twenty (20) years, or in case of a dispute related to a certain futures trading, until the settlement of the dispute. Article 52 The Member which has an objection to the settlement data shall notify the
Exchange in writing at least thirty (30) minutes prior to the opening of the market of the second day, or in writing within two (2) hours after the opening of the market of the second day under a special circumstance. In case the Member fails to pose an objection to the settlement data within the prescribed period, it shall be deemed that the Member has confirmed the accuracy of the settlement data. Article 53 The Exchange shall provide to the Member the Funds Settlement Check List of Dalian Commodity Exchange (As the Receipt) (sealed by the settlement special seal) of the immediately preceding month on the monthly first trading day as the basis for the Member to check the records of the trading books. Article 54 In case of any of the following circumstances, the position-transfer may be carried out after being approved by the Exchange: (i) The merger, consolidation, separation, bankruptcy or insolvency occurring to the futures company Member; (ii) The futures company Member failing to engage in the futures brokerage business due to a certain reason; or (iii) Any other position-transfer circumstances as determined by the Exchange. In case of either the circumstances of Items (i) and (ii) above, the futures company Member shall announce such circumstance pursuant to the laws, regulations and other provisions of the State and submit the relevant announcement to the Exchange. In case of the merger or consolidation occurring to the futures company Member, the futures company Member shall file a position-transfer application, the materials of which shall include the positions respectively to be transferred into and out of, the application that the futures company Member agrees to the position-transfer, and the detailed list of the client s positions. In case of any other circumstances, the futures company Member and the client shall jointly file a position-transfer application, the materials of which shall include the positions respectively to be transferred into and out of, the application that the futures company Members agrees to the position-transfer, the application that the client agrees to the position-transfer, and the detailed list of the client s positions. Article 55 After the application for position-transfer is approved, the Exchange will negotiate with the futures company Member which trading day within one (1) week will be the client s position-transfer settlement date. Article 56 After the settlement of the then-current day is completed on the agreed date, the Exchange shall carry out the client s position-transfer for the
futures company Member, and will provide the position lists respectively prior to and after the position-transfer to the futures company Member for confirmation. Article 57 The position-transfer contents shall include the client s positions and corresponding trading margins, exclusive of the profits and losses, the trading commissions, the settlement reserves and other amounts of the then-current day. Article 58 The futures company Member shall carefully check the position-transfer information prior to and after the position-transfer, and no information may be changed upon being confirmed. Article 59 No position-transfer may be handled in the event that the balance of the Member s settlement reserves of the then-current day is below zero or that the Member uses its negotiable securities to set off margins. Chapter IV Physical Delivery Settlement Article 60 The Member who carries out the physical delivery shall pay to the Exchange the delivery commissions subject to the applicable provisions; and the specific standards thereof shall be provided in the detailed delivery rules. The delivery commissions shall be deducted from the Member s settlement reserves. Article 61 The delivery settlement prices shall be determined on the basis of the different delivery methods. The delivery settlement price on the rolling delivery matching date shall be the settlement price of the very matching date of the futures contract; and the delivery settlement price on last trading day of the rolling delivery and the lump-sum delivery shall be the weighted average price of all the transaction prices of the futures contract from the first trading day of the delivery month through the last trading day. The exchange of futures for physicals (EFP) settlement price shall be the price mutually agreed by the seller and the buyer. The delivery settlement price for bill of lading delivery shall be the settlement price of the very matching date of the bill of lading delivery of the futures contract. Article 62 The delivery payments shall be settled as per the delivery settlement price. Article 63 Within the delivery period, it shall be a delivery default or breach in case the buyer fails to fully make the payments or the seller fails to fully deliver the standard warehouse receipts or the bills of lading. Article 64 The selling client to the delivery shall issue the delivery VAT special
(ordinary) invoice to the buying client thereto; and their respective Members shall forward, obtain and assist in confirmation of such VAT special (ordinary) invoice. The Exchange shall fully settle the appropriate balance on the basis of the results confirmed by their respective Members. The VAT ordinary invoice shall be issued for the egg product. Article 65 In case the selling Member fails to submit the VAT special (ordinary) invoice within the prescribed period, the Exchange shall collect the late payment from the selling Member as compensation to the buying Member at the daily rate of zero point five per thousand (0.5 ) of the loan amount as of the second day of the due date on which the VAT special (ordinary) invoice should have been submitted; and in case the selling Member fails to submit the VAT special (ordinary) invoice within thirty (30) natural days as of the date thereof, it shall be deemed that no VAT special (ordinary) invoice will be submitted, and the Exchange will collect the damages of the amount equal to the VAT amount calculated subject to the national taxation policies, which together with the late payment will be paid to the buying Member as the indemnification. The foregoing amounts will be deducted from the delivery payment amount reserved by such Member at the Exchange, and the remaining payment shall belong to the selling Member. Any other agreements between the seller and the buyer other than those described herein shall prevail. Article 66 The settlement business of the delivery on the last trading day shall be subject to the following provisions: (i) After the closing of the market on the last trading day, the buying Member s trading margins of buying position in the delivery month shall be transformed to be the delivery advances, and the selling Member s trading margins of selling position in the delivery month shall be transformed to be the delivery margins; and in respect of any product other than the egg, the Exchange will refund the seller s delivery margins after the selling Member delivers the standard warehouse receipts to the Exchange; and in respect of the egg product, the Exchange will not refund the seller s delivery margins after the standard warehouse receipts are delivered to the Exchange; (ii) Upon settlement on the last trading day, the Exchange shall settle the Member s positions in such delivery month at the delivery settlement price, the profits or losses arising out of which shall be calculated into the liquidation profit or loss of the then-current day; (iii) Upon settlement on the last trading day, the Exchange shall deduct the delivery commissions from the Member s settlement reserves; (iv) Prior to the closing of the market on the last trading day, the buying Member shall transfer the differences between the payments corresponding to its buying positions in the delivery month and the delivery advances to the Exchange s special settlement account, and the selling Member shall deliver the standard warehouse receipts
corresponding to its selling positions in the delivery month to the Exchange; (v) After the closing of the market on the last trading day, it shall be a delivery default or breach in case the seller fails to fully deliver the standard warehouse receipts or the buyer fails to fully make the payments; (vi) After the closing of the market on the last trading day, the Exchange will issue to the buying Member a Standard Warehouse Receipts Holder Certification. In respect of any product other than the egg, the Exchange shall pay to the selling Member eighty (80) percent of the payments, and the balance will be fully settled after the selling Member submits the VAT special invoice. In respect of the egg product, in case of no objection from the buying client, after the closing of the market on the fourth trading day following the last delivery day, the Exchange will refund the seller s delivery margins and pay to the selling Member eighty (80) percent of the payments, and the balance will be fully settled after the selling Member submits the VAT ordinary invoice; in the event the buying client has an objection to the quality of the eggs or there occurs epidemic, the applicable provisions of the Detailed Delivery Rules of Dalian Commodity Exchange shall apply; (vii) Within one (1) trading day after the last delivery day, the buyer shall notify the seller such specific items for issuing the VAT special (ordinary) invoice as the name and address of the purchaser, the taxpayer s registration number, the amount and other information subject to the provisions of the tax authorities; and (viii) In respect of any product other than the egg, the selling Member shall submit the VAT special invoice to the buying Member within seven (7) trading days after the last delivery day; and in respect of the egg product, the selling Member shall submit the VAT ordinary invoice corresponding to the actually delivered goods within seven (7) trading days after payment by the Exchange of the eighty (80) percent of the payments. Article 67 The settlement business of the rolling delivery shall be subject to the following provisions: (i) After the closing of the market on the matching date, the buying Member s trading margins of the matched buying positions shall be transformed to be the delivery advances; (ii) Upon settlement on the matching date, the Exchange shall settle the Member s positions in such delivery month at the delivery settlement price, the profits or losses arising out of which shall be calculated into the liquidation profit or loss of the then-current day; (iii) Upon settlement on the matching date, the Exchange shall deduct the delivery commissions from the Member s settlement reserves; (iv) Prior to the closing of the market on the due delivery day, the buying Member shall transfer the differences between the payments corresponding to its
buying positions in the delivery month and the delivery advances to the Exchange s special settlement account; (v) After the closing of the market on the due delivery day, it shall be a delivery default or breach in case the buyer fails to fully make the payments; (vi) After the closing of the market on the due delivery day, the Exchange will issue to the buying Member a Standard Warehouse Receipts Holder Certification, and shall pay to the selling Member eighty (80) percent of the payments, and the balance will be fully settled after the selling Member submits the VAT special invoice; (vii) Within one (1) trading day after the matching date, the buyer shall notify the seller such specific items for issuing the VAT special invoice as the name and address of the purchaser, the taxpayer s registration number, the amount and other information subject to the provisions of the tax authorities; and (viii) The selling Member shall submit the VAT special invoice to the buying Member within seven (7) trading days after the matching date. Article 68 The EFP settlement business shall be subject to the following provisions: (i) The Exchange shall be responsible for the due delivery of the warehouse receipt and payment in connection with the EFP of the standard warehouse receipts; (ii) The trading parties shall mutually negotiate and fix, and the Exchange shall not be liable for guaranteeing, the warehouse receipt and payment in connection with the EFP of the non-standard warehouse receipts; (iii) Upon settlement on the EFP approval day, the Exchange shall settle the EFP positions of the trading parties at the agreed price, the profits or losses arising out of which shall be calculated into the liquidation profit or loss of the then-current day; (iv) Upon settlement on the EFP approval day, the Exchange shall deduct the EFP commissions from the Member s settlement reserves; the EFP commissions in respect of the standard warehouse receipts shall be collected following the commission standards for such product delivery, and the EFP commissions in respect of the non-standard warehouse receipts shall be collected following the commission standards for such product delivery. (v) Prior to 11:30 a.m. on the EFP approval day for the standard warehouse receipts, the buying Member shall transfer all of the payments into the Exchange s special settlement account, and the selling Member shall deliver the corresponding quantity of the standard warehouse receipts to the Exchange; (vi) After the closing of the market on the EFP approval day for the standard warehouse receipts, the Exchange will issue to the buying Member a Standard Warehouse Receipts Holder Certification, and shall pay to the selling Member eighty (80) percent of the payments, and the balance will be fully settled after the selling Member submits the VAT special invoice; and (vii) The selling Member shall submit the VAT special invoice to the buying Member
within seven (7) trading days after the EFP approval day for the standard warehouse receipts. Article 69 The settlement business of the bill of lading delivery shall be subject to the following provisions: (i) After the closing of the market on the matching date, the buying Member s trading margins of the matched buying positions shall be transformed to be the delivery advances; and the selling Member s trading margins of the matched selling positions shall be transformed to be the delivery margins; (ii) Upon settlement on the matching date, the Exchange shall settle at the delivery settlement price the Member s positions applied for delivery, the profits or losses arising out of which shall be calculated into the liquidation profit or loss of the then-current day; (iii) Upon settlement on the matching date, the Exchange shall deduct the delivery commissions from the Member s settlement reserves; (iv) Prior to the closing of the market on the third natural day after the notification date (or the immediately following trading day in case the third natural day is not a trading day), the buyer s delivery advances and the seller s delivery margins shall be additionally paid as per twenty (20) percent of the value of the matched contracts. After the closing of the market, they shall be deducted by the Exchange from the relevant Member s settlement reserves. Prior to the closing of the market on the third natural day after the notification date (or the immediately following trading day in case the third natural day is not a trading day), the delivery advances for all buyers, and the delivery margins for all sellers, which participate in the bill of lading delivery, shall be additionally paid as per twenty (20) percent of the value of the matched contracts. After the closing of the market, they shall be deducted by the Exchange from the relevant Member s settlement reserves; (v) Prior to the closing of the market on the due delivery day, the buying Member shall transfer to the Exchange s special settlement account the differences between the payments corresponding to the delivery buying positions (inclusive of the excess or shortage and the discounts and premiums) and the delivery advances; (vi) After the closing of the market on the due delivery day, the Exchange shall release the seller s delivery margins and shall transfer to the seller eighty (80) percent of the total payments, and the balance shall be fully settled after the seller submits the VAT special invoice; (vii) On the due delivery day, the buyer shall notify the seller such specific items for issuing the VAT special invoice as the name and address of the purchaser, the taxpayer s registration number, the amount and other information subject to the provisions of the tax authorities; and (viii) The selling Member shall submit the VAT special invoice to the buying Member within seven (7) trading days after the due delivery day.
Chapter V Negotiable Securities Setting Off Margins Article 70 The following negotiable securities may be used to set off the margins after being approved by the Exchange: (i) The standard warehouse receipts other than those of the egg product; (ii) The negotiable treasury bonds; and (iii) Other negotiable securities as determined by the CSRC. In case any of the negotiable securities listed in the preceding Paragraph are used to set off the margins, the offset period shall not exceed the effective term of such negotiable securities and the amount used to set off the margins each time shall not be less than CNY one hundred thousand (100,000.00). Article 71 In case the standard warehouse receipt is used to set off the margins, the Exchange shall calculate its value at the settlement price of the futures contract in the latest delivery month in respect of the product under such standard warehouse receipt on the immediately previous trading day of the offset day. In case the treasury bond is used to set off the margins, the Exchange shall calculate its value at the lower of the closing prices on the immediately previous trading day of the offset day respectively at Shanghai Stock Exchange and Shenzhen Stock Exchange. In case the increases or decreases of the market value of the negotiable securities used to set off the margins exceed ten (10) percent or more, the Exchange may appropriately adjust the benchmark values of such negotiable securities. Article 72 The amount of the negotiable securities used to set off the margins shall not exceed the lower of the following standards: (i) Eighty (80) percent of the benchmark calculation values of the negotiable securities; and (ii) Four (4) times the Member s actually existing monetary funds in the Exchange s special settlement account. The Exchange shall automatically adjust upon the daily settlement the offset amount of the Member s negotiable securities under the above principles. Article 73 The losses, costs and expenses, payments, taxes and other amounts related to the futures trading shall be paid in monetary funds and shall not be paid by using the amounts set off by the negotiable securities. Article 74 In case the client uses the negotiable securities to set off the margins, the Member shall submit the received negotiable securities to the Exchange.
Article 75 The procedures for the offset by the negotiable securities shall be: (i) Application: Upon handling the offset business of the negotiable securities, the Member shall file an application to the Exchange, and the handler shall submit the Special Power of Attorney for Offset by Negotiable Securities signed by the its statutory representative. Upon handling the offset business by using the client s negotiable securities, the Member shall concurrently submit the Client s Special Power of Attorney signed and sealed by the client. (ii) Filing and verification: The Member which handles the offset by the standard warehouse receipts must deliver, after the application for offset is approved b the Exchange, the Standard Warehouse Receipts Holder Certification to the Exchange to handle the filing procedures; and the verification and filing of other negotiable securities shall be separately prescribed by the Exchange. (iii) Execution of the agreement: After the accounting of the amounts set off by the negotiable securities, the Member and the Exchange shall enter into a Negotiable Securities Setting off Trading Margins Agreement of Dalian Commodity Exchange. (iv) The Member may also electronically handle the offset business. Article 76 The maximum term for offset by the negotiable securities shall be six (6) months. Any offset renewal shall require the re-handling of the procedures. Article 77 In case of the occurrence of any of the following circumstances, the Exchange may terminate the offset agreement and cancel the offset amount: (i) There occurs a higher risk of fund withdrawal and use to the Member which handles the offset, which might harm any of the Exchange s lawful rights and interests; or (ii) The offset needs to be discontinued due to any other reason. Article 78 During the term of the agreement, the Member may apply for cancellation of the offset in advance, and the offset agreement may be terminated, and the negotiable securities which are used for offset may be taken back, only after the margins which should have been paid have been recovered. Article 79 After the expiry of the agreement and the margins which are set off by the negotiable securities have been fully paid, the Member may terminate the offset agreement and the take back the negotiable securities which are used for offset.
Upon expiry of the offset term, in case the margins which are set off by the Member with the negotiable securities cannot be fully paid, the Exchange shall have the right to have the lawfully offset negotiable securities realized or cashed pursuant to these Rules and the applicable provisions of the offset agreement so as to have the margins offset by them and the relevant debts satisfied. Any balance after the satisfaction shall be returned to the Member; and the Exchange shall have the right to claim against the Member in case the amount of realization or cashing is insufficient to satisfy the margins offset by them and the relevant debts. Article 80 Upon handling the offset of the margins by the negotiable securities, the Member shall pay the offset commissions and bear the other costs and expenses arising out of or in connection with the negotiable securities during the offset term, such as the warehousing costs in respect of the standard warehouse receipts and the expenses related to realization or cashing. The standards for the offset commissions shall be determined by the Exchange. Article 81 In the event the Member fails to fully or partially fulfill the debts related to the trading margins, the Exchange shall have the right to have the negotiable securities realized and to be preferentially paid in respect of the trading margins debts and other trading related debts from the proceeds. Chapter VI Risks and Liabilities Article 82 The Member shall be liable for the risks with respect to the transacted contracts at the Exchange. Article 83 The risk prevention shall be under a two-level responsibility system. The Exchange shall be responsible for preventing the Members risks and the Members shall be responsible for the clients risks. Article 84 The Exchange shall have the right to take any of the following protective measures against the Member which fails to perform its contractual obligations: (i) To utilize the Member s settlement reserves; (ii) To suspend opening for trading; (iii) To carry out forced liquidation pursuant to the applicable provisions until the margins released after the liquidation are sufficient for contractual performance; and (iv) To have the offset negotiable securities realized and to carry out the contractual performance and compensation by using the proceeds. Article 85 The Exchange shall take the following actions listed below to carry out the contractual performance and compensation in case the Member still owes the funds to
the Member after the measures in the preceding Article have been taken: (i) To cancel the Member s membership and use its membership fee to carry out compensation; (ii) To utilize the risk reserves to carry out the contractual performance; (iii) To utilize the Exchange s own assets to carry out compensation; and (iv) To continue to claim against the Member through the legal proceedings. Article 86 The Exchange shall implement the risk reserves policy. The risk reserves shall refer to the funds which are set up by the Exchange and used to maintain the normal operation of the futures market, provide the financial security and recover the losses arising out of or in connection with the Exchange s unpredictable risks. Article 87 The sources of the risk reserves shall be: (i) Twenty (20) percent of the commissions collected by the Exchange from the Members to be withdrawn from the management costs; and (ii) Other revenues subject to the national financial policies. Article 88 The risk reserves must be deposited and managed pursuant to the applicable provisions. Article 89 The utilization of any risk reserves must be subject to the prescribed procedures and the prescribed purposes and be reported to the CSRC for filing. Chapter VII Supplementary Provisions Article 90 Any violation of these Rules shall be punished by the Exchange subject to the applicable provisions of the Measures for Handling of Violations of Dalian Commodity Exchange. Article 91 These Rules shall be interpreted by Dalian Commodity Exchange. Article 92 These Rules shall enter into force as of the date of promulgation.