Chapter 1 General Provisions

Article 1 The Methods are formulated according to Regulations on Continuous Spot Trading of Far East Material Trading Center Co., Ltd. to enhance the risk management for continuous spot trading, to protect the lawful rights and interests of the parties involved in transactions and to guarantee normal transactions of Far East Material Trading Center Co., Ltd. (hereinafter referred to as the trading center).

Article 2 The following systems are carried out for risk management at the trading center:  performance bond system, price limit system, ordering quota system, major client reporting system, system of transfer instead of trader and risk warning system.

Article 3 Both the trading center and the trader must abide by the Methods.

Chapter 2 Performance Bond System

Article 4 The performance bond system is carried out at the trading center. The trading center can adjust the standards concerning performance bond of the electronic transaction contracts as per actual conditions of the market. As for the trading center, the performance bond is managed through a third-party supervision bank.

Article 5 The trading center reserves the right to increase the proportion of the performance bond unilaterally or bilaterally at the same proportion or different proportions for partial traders or all the traders as per the actual conditions of the market.

Article 6 In case of legal holidays, the market closing may be relatively long. In this case, the trading center can adjust the standards concerning performance bond of the electronic transaction contracts before market closing as per the actual conditions of the market.

Article 7 In case two or above measures (specified in the Methods) are taken by the trading center to adjust the performance bond, whichever is larger shall be taken as the performance bond of the electronic transaction contracts.

Article 8 In case the trading center decides to adjust the standards concerning performance bond, a public notice shall be published timely.

Chapter 3 Price Limit System

Article 9 The trading center adopts a daily price up/down limit system for the listed varieties. The level of the daily maximum price up/down limit shall be set by the trading center.

Article 10 Only buy orders or only sell orders quoted at the price up/down limit refers to the circumstances where there are only buy orders or only sell orders quoted at the daily price up/down limit for a particular contract during the five minutes prior to the closing of the market, or transactions are executed whenever there is a buy order or sell order but all orders are quoted at the daily price up/down limit.

Article 11 Where a one-sided market for a variety contract occurs on one trading day (which is referred to as D1, and the following trading days are referred to as D2, D3, D4, D5 and D6 in sequence), the price up/down limit range of D1 shall be ±5% of the settlement price on the previous trading day, and the price up/down limit range shall be ±7% and ±9% for D2 and D3 respectively. If the one-sided market does not occur on D3, the price up/down limit and trading margin ratio on D4 shall get back to normal levels. For the listed varieties of the trading center, the specific standard of normal compensation rate for deferred delivery shall be subject to the provisions in electronic trading contract.

Article 12 The trading center can adjust the price up/down limit range and compensation rate for deferred delivery of the listed varieties according to market conditions.

Article 13 Where a trading variety is quoted at the up/down limit price, the auto-trading principle exercised shall be the principle of “transfer instead of a trader priority, transfer priority, transfer priority and time priority”. But, the principle of “transfer priority” is not applicable for the electronic trading contracts newly-concluded on that day.

Article 14 Where the situation of only buy orders or only sell orders quoted at the price up/down limit for a trading variety occurs on one day, the price up/down limit range thereof on D2 shall be adjusted to ±7%, and the compensation rate for deferred delivery shall be adjusted to 10×Y (Y = the normal compensation rate for deferred delivery stipulated in the electronic contract of such trading variety).

Article 15 If the situation of only buy orders or only sell orders quoted at the price up/down limit in the same direction as that on D1 does not occur on D2, the price up/down limit and compensation rate for deferred delivery on D3 shall get back to ±5% and Y respectively.

Article 16 If, for a trading variety, the situation of only buy orders or only sell orders quoted at the price up/down limit in the same direction as that on D1 occurs on D2, the price up/down limit range and compensation rate for deferred delivery on D3 for such trading variety shall be adjusted to ±9% and 100×Y respectively.

Article 17 If the situation of only buy orders or only sell orders quoted at the price up/down limit in the same direction as that on D2 does not occur on D3, the price up/down limit and compensation rate for deferred delivery on D4 shall get back to ±5% and Y respectively.

Article 18 If the situation of only buy orders or only sell orders quoted at the price up/down limit in the same direction as that on D2 occurs on D3 (in the same direction for three consecutive days), the trading center shall take coercive measures to reduce order quantity after the market is closed on D3. If the continuous price up/down limit in the same direction is caused by traders or traders’ abnormal trading behaviors, it shall be handled as per the provisions in Chapter 7.

Article 19 If, for a trading variety, the cumulative price up/down limit range of the electronic contract of a trading variety on two consecutive trading days (D1 and D2) reaches to 12%, the price up/down limit range and compensation rate for deferred delivery on D3 for such trading variety shall be adjusted to ±9% and 100×Y respectively.

If the situation of only buy orders or only sell orders quoted at the price up/down limit in the same direction as that on D2 does not occur on D3, the price up/down limit and compensation rate for deferred delivery on D4 shall get back to ±5% and Y respectively.

If the situation of only buy orders or only sell orders quoted at the price up/down limit in the same direction as that on D2 occurs on D3, the trading center shall take measure by forcing reduction of order quantity after the market is closed on D3.

Article 20 Measure by forcing reduction of order quantity refers to an automatic transaction, made by the trading center at the limit price on that day, between the unsettled stop-loss “transfer” application quoted at price up/down limit and the order quantity held by trader who has the net profit of electronic trading contract, If the same trader holds two-way order quantity, the “transfer” application of its net order is considered in forcing reduction of order quantity, and automatic hedge occurs between the other “transfer” application and its locked order. The specific operation methods are as follows:

(I) Determination of the trader’s unit net order profits and losses:

Unit net order profits and losses of the electronic trading contract of a trading variety held by the trader = sum of order profits and losses of the electronic trading contract of such trading variety held by the trader (RMB) / [net order quantity of the electronic trading contract of such trading variety held by the trader (Shou) × trading unit (t/Shou)].

The sum of order profits and losses of the electronic trading contract of a trading variety held by the trader refers to the profit and loss sum of all orders quantity of the electronic trading contract of such trading variety held by the trader calculated on the basis of the difference between its actual transaction price and the settlement price on that day.

(II) Determination of application “transfer” range:

After the market is closed on D3, all orders, in the computer system, quoted at the up/down limit price that cannot be traded and the trader’s unit net order losses are greater than or equal to 6% of the settlement price on D3. If the trader does not want to transfer as above method, it can withdraw the order before closing, and this is not deemed as “transfer” application.

(III) Determination of the automatic transaction range for the trader’s net order profits

All orders that the trader’s unit net profits are greater than zero are included in the automatic transaction range.

(IV) Distribution principles and methods of automatic transaction quantity:

1. Automatic transaction distribution principles

(1) Within the automatic transaction range, quantity shall be divided into three levels according to profit size and then shall be distributed step by step.

At first, it shall be distributed to the orders with the unit net profit, within the automatic transaction range, of more than or equal to 6% of the settlement price on D3 (“orders with the profit of more than 6%” for short);

Then it shall be distributed to the orders with the unit net profit of more than 3% and less than 6% of the settlement price on D3 (“orders with the profit of more than 3%” for short);

And then it shall be distributed to the orders with the unit net profit of more than zero and less than 3% of the settlement price on D3 (“orders with the profit of more than zero” for short)

(2) The distribution proportion automatically transacted at such above levels is distributed based on the ratio of the application transfer quantity (remaining application transfer quantity) and the actual automatic transaction profit order quantity at each level.

2. Distribution methods and steps of automatic transaction quantity:

If the quantity of orders with the profit of more than 6% is greater than or equal to the application transfer order quantity, according to the proportion of the application transfer order quantity and the quantity of orders with the profit of more than 6%, the automatic transaction quantity will be distributed from the application transfer order quantity to the quantity of orders with the profit of more than 6%.

If the quantity of orders with the profit of more than 6% is less than the application transfer order quantity, according to the proportion of the quantity of orders with the profit of more than 6% and the application transfer order quantity, the quantity of orders with the profit of more than 6% will be distributed to the trader applying for transfer order. Then the remaining application transfer quantity will be distributed, according to the above method, to the quantity of orders with the profit of more than 3%; if there is still some, it will be distributed to the quantity of order with the profit of more than zero. However, distribution cannot be carried out if there is still any remaining.

(V) Handling method of transfer quantity mantissa

The automatic transaction distribution quantity adopts “Shou” as the unit. The following calculation method shall be adopted for the quantity of less than one Shou: At first, distribute the integer part of automatic transaction quantity that is distributed to each trading code, and then distribute based on “ceil” from big to small for decimal part.

(VI) Execution of the measure by forcing reduction of order quantity

The measure by forcing reduction of order quantity shall be automatically executed by the trading system according to the principle thereof after the market is closed on D3. The result of reduction of order quantity shall be deemed as the trader’s trading result on D3.

(VII) After the execution of this measure, the price limit of the electronic trading contract on the next trading day shall get back to the normal levels specified in the electronic trading contract.

Article 21 Economic losses caused by this measure shall be borne by the trader.

Article 22 If risks still exist after the above measure is taken for the electronic trading contract, the trading center shall declare that the trade is abnormal and take risk control measures in accordance with relevant provisions.

Chapter 4 Ordering Quota System

Article 23 The trading center shall adopts the ordering quota system.

The ordering quota refers to the maximum amount of order quantity of a trading variety. It is calculated as per only one way, i.e. buying or selling. It can be held in a single trader.

Article 24 When the total order quantity of only buy orders or sell orders for a trading variety is greater than 1 million Shou, the ordering quota of only buy orders or sell orders of such trading variety held by each trader shall be 20% of the total quantity of only buy orders or sell orders of such contract; when the total quantity of only buy orders or sell orders of a trading variety is less than or equal to 1 million, the ordering quota of only buy orders or sell orders of such trading variety held by each trader shall be 0.2 million Shou.

Article 25 According to the market conditions of various trading varieties, the trading center respectively determines the ordering quota of the trading varieties for each trader.

Article 26 The ordering quota standard of a trading variety within a certain trading hours shall be calculated based on the order quantity in the settlement on the trading day before the starting date of such trading hours.

Article 27 The trader’s order quantity shall not exceed the ordering quota given by the trading center. For the order goods exceeding the ordering quota, the trading center has right to transfer them instead of trader on the next trading day according to the relevant regulations.

Article 28 When the same trader has more than one trading code, the total order quantity on such trading codes shall not exceed the ordering quota of a single trader. If the order quantity exceeds the total ordering quota, the trading center shall transfer the exceeding part instead of such trader.

Chapter 5 Major Reporting System

Article 29 The trading center adopts the major reporting system. A trader is required to make a report, including fund and order conditions, to the trading center when its order quantity of a trading variety reaches or exceeds 80% of the ordering quota given by the trading center. The trading center can adjust or modify the standards of ordering report in accordance with the market risks.

Article 30 A trader shall actively make a report by the end of the next trading day if its order quantity reaches to the limit of the ordering quota given by the trading center. If it is required to report again or supplementary report is required, the trading center will notify the relevant trader.

Article 31 The trader whose order quantity reaches to the limit of the ordering quota given by the trading center shall provide the following materials:

(I) Report Form of Trader (Major Client), including name of trader, trading code, commodity code, existing order quantity and direction, performance bond, and available funds;

(II) Explanation of capital source;

(III) Other materials required by the trading center.

Article 32 The trading center will check the material provided by the trader from time to time.

Article 33 If a trader has a number of trading codes, and the total order quantity of such codes reaches to the limit of the ordering quota given by the trading center, the trader shall provide the trading center with the relevant materials.

Chapter 6 System of Transfer Instead of Trader

Article 34 To effectively control the trading risks and protect the rights and interests of all the traders, the trading center exercises the system of transfer instead of trader. Transfer instead of trader refers to a kind of risk prevention measure that under certain conditions, the trading center makes a compulsory transfer for the part of or all of the electronic trading contracts of such trader.

Article 35 In case of any of the following cases, the trading center shall make a transfer instead of the trader:

(I) The trader has insufficient trade funds and fails to make up before 10:00 a.m. the next trading day;

(II) The trader's order quantity exceeds the limit of the given ordering quota;

(III) The trader has irregularities that determined by the trading center;

(IV) Transfer instead of the trader according to the emergency measures of the trading center;

(V) Other transfers instead of the trader.

Article 36 Procedures for execution of transfer instead of trader

(I) Notice

The transaction center will, via electronic trading system, deliver the notice about transfer instead of trader to the relevant trader at the same time when sending the settlement data on that day. Notice is deemed to have been received when the electronic trading system of the trading center confirms the notice has been delivered.

(II) Execution and confirmation

(1) Before 10:00 a.m. the next trading day, the relevant trader must supplement performance bond or make a “transfer” by himself until the requirements of the trading center are satisfied. Meanwhile, the trading of “transfer” rather than “conclusion” is only allowed by the electronic trading system of the trading center.

(2) If the trader does not meet the requirements of the trading center within the stipulated time, the trading center will carry out "transfer instead of trader" at the market price until it meets the requirements of the trading center.

(3) After the completion of “transfer instead of trader”, the trading center will send the result thereof to the relevant trader via the electronic trading system. The result is deemed to have been received when the electronic trading system of the trading center confirms the result has been delivered.

(4) If “transfer instead of trader” cannot be completed in time due to the price limit or other market reasons, it may be extended to the next trading day until it is completed.

Article 37 Losses and legal consequences caused by transfer instead of trader shall be borne by the trader.

Chapter 7 Exception Handling

Article 38 During the trading, in case of one of the following cases, the trading center can declare that the market trade is abnormal and it shall take relevant emergency measures to eliminate the risks:

(I) A trade fails due to force majeure including but not limited to earthquake, flood, fire, war and strike or causes not attributable to the trading center, such as failures of computer system;

(II) A trader suffers from a crisis of settlement or delivery which has or will have a significant impact on the market;

(III) Continuous price up/down limit of a trading price in the same direction occurs caused by the trader's violation of the trading rules and implementing regulations of the trading center (shown by evidence), and this has or will have a significant impact on the market;

(IV) Other cases specified by the trading center occur.

If cases in the above (I) occur, the trading center can take emergency measures such as adjustment of opening and closing time of market as well as suspension of trade. If cases in the above (II), (III) and (IV) occur, the trading center can decide to take emergency measures, such as adjustment of opening and closing time of market, suspension of trade, range adjustment of price limit, proportion adjustment of performance bond, suspension of signing of new contract, transfer within time limit, transfer instead of trader, and limitation of withdrawal.

Article 39 If the trading center declares that a trade is abnormal and decides to suspend the trade, the suspension duration shall not exceed 3 business days in general.

Article 40 The trading center will issue an announcement before declaring that the market trade is abnormal and taking relevant emergency measures. The trading center will not undertake any due obligations for the loss caused by taking relevant measures against the abnormal market.

Chapter 8 Risk Warning System

Article 41 The trading center adopts the risk warning system. When necessary, the trading center can respectively or simultaneously take one or more measures such as request to reporting of a trader, talking reminder, written warning, public censure, and releasing of risk warning, so as to warn and control the risks.

Article 42 In case of any the following cases, the trading center can request the trader to report or meet with the trader for conversation to remind the risks:

(I) Trading price abnormally changes;

(II) The trader has abnormal trading behaviors;

(III)Trader’s order quantity and funds abnormally change;

(IV)Trader is involved in violation, judicial investigation or lawsuits;

(V) Other cases considered as proper by the trading center;

If the trading center requests the trader to report the relevant conditions, the trader shall give a truthful report based on the time, content and mode required by the trading center.

If the trading center meets with the trader for reminding, the trader shall seriously perform based on the time, address and mode required by the trading center.

Article 43 In case of any of following cases, the trading center can send a risk warning letter to all the traders:

(I) Market trading at home and abroad abnormally changes;

(II) The trader is involved in violation;

(III) There is a big risk for the trader’s trading;

(IV) Other abnormal cases considered as proper by the trading center.

Chapter 9 Supplementary Provisions

Article 44 In violation of these provisions, the trading center shall handle it according to Measures for Continuous Spot Trading Administration of China Cable Trading Center and the relevant regulations.

Article 45 Far East Material Trading Center Co., Ltd. has right to interpret and revise the Measures.

Article 46 The Measures will be implemented as of the date of publication.

Far East Material Trading Center Co., Ltd.

June 16, 2012