Bulk Stock Electronic Transaction Specification (2003)

Introduction: With the vigorous development of Internet, electronic transaction based on the Internet has become inevitable. Under the situation of global economic integration, we are required to establish a mode combining traditional industries, visible market and e-commerce as soon as possible, to cope with international competition. This Standard is prepared on the basis of widely collected data for domestic bulk stock transaction and features of electronic spot transaction, and according to relevant national laws and regulations, such as Contract Law, Auction Law and Regulations for Safety Protection of Computer System. This Standard is for management technology, and the laws related to market subject behavior are implemented according to the requirements of national administrative authorities.

This Standard is prepared to standardize the mode of electronic spot transaction of bulk stock, to realize healthy and orderly development of stock wholesale market with the development of modern economy and technology, accelerate the improvement of stock wholesale market, develop the logistics distribution, and promote the modernization construction of circulation.

(I)  Scope

This Standard specifies the requirements for participants in electronic spot transaction of bulk stock and the procedure of electronic transaction business. This Standard is applicable to electronic transaction activities of bulk stock on the spot, especially those in the stock wholesale market, but not applicable to futures trading.

(II) Terms and Definitions: The following terms and definitions are applicable to this Standard

1.    Bulk Stock refers to material commodities sold and bought in large scale that can enter the circulation field rather than retail sector, with commodity attributes and used for industrial and agricultural production and consumption. (Note: Bulk stock is the subject matter of electronic transaction in this Standard)

2.    Data Electronic Text refers to information generated, stored or transferred by electronic, optical or other similar methods, including electronic data interchange (EDI), e-mail, telegraph, telex or fax.

3.    Electronic transaction refers to online transaction by means of communication provided on the network.

4.    Electronic Trade Center refers to a legal person providing the trader with e-commerce platform for spot transactions in time and corresponding logistics service.

5.    Trader refers to corporation conducting electronic transaction of bulk stock in the electronic trade center after review and approval by the center according to relevant laws and regulations as well as relevant provisions in the articles of center.

6.    Transaction Warehouserefers to third-party service sector which is approved and authorized by the electronic trade center to inspect and take care of bulk stock traded by the trader, and provide corresponding guarantee and related logistics service for electronic transaction. (Note: The inventory and transaction of electronic trade center is sourced from commodity stocks and dynamic information of transaction warehouse)

7.    Balance Bank refers to a bank designated by the electronic trade center to assist the center in settlement of transactions and transfer of funds.

(III)     Method of Participating in Electronic Transaction

1.    General

Electronic trade center provides the traders with trading service, logistics service, financial service and information service related to the electronic transaction; establish and implement management systems; supervise the behavior of other transaction participants; and guarantee safe, reliable and fair trading. Trader, transaction warehouse and balance bank participating in the electronic transaction, which are qualified by the electronic trade center, sign the contract with each other, to define mutual relation and rights and obligations. The transaction warehouse shall cooperate with the electronic trade center to provide logistics service; take care of bulk stock traded on the platform of electronic trading system as per the contract requirements; and provide logistics support for the electronic transaction. The balance bank shall cooperate with the electronic trade center to provide financial service, and provide supervision and guarantee on capital flow of electronic transaction.

2.    Electronic Trade Center

The electronic trade center shall be approved for establishment according to relevant national regulations. The center shall provide a reliable, safe and open electronic trading system platform, and maintain the management system of electronic transaction information. The electronic trade center shall prepare articles, transaction process documents and other documents for effective operation and control of process. The center shall manage and supervise the performance and implementation of transactions, and adopt necessary risk control systems, to guarantee the fulfillment of contracts.

(1)   Infrastructure

The infrastructures for electronic transaction are required as follows:

a) Operating sites and facilities which meet the requirements for electronic transaction.

b) Designated transaction warehouse which meets the requirements for safekeeping and other logistics services.

c) Electronic trading facilities and communication conditions shall be complete and meet the requirements for 24h service.

d) Electronic trading system which can guarantee the operation and control of electronic transaction process according to this Standard.

e) The infrastructure shall be capable of providing corresponding logistics distribution service.

f) The infrastructure can master the real-time inventory of transaction warehouse.

g) The infrastructure shall meet the requirements of relevant laws and regulations.

(2)   Trading service

The electronic trade center shall provide the following trading services:

a) Prepare and implement the business rules of electronic transaction.

b) Arrange for market transaction of commodities.

c) Manage and supervise the electronic transaction, settlement and delivery of bulk stock.

d) Establish the risk prevention measures, and guarantee the implementation of measures.

e) Supervise the performance of electronic transaction contract for bulk stock, and take measures to guarantee its fulfillment.

f) Monitor and record the credit standing of trader; improve the online transaction credit through a just credit rating system; and guide a standard and trustworthy trading style.

(3)   Supporting service of logistics

The electronic trade center shall provide the following logistics services:

a) Provide timely and convenient warehouse service and transport agency service to the trader.

b) Designate the transaction warehouse and ensure the business process of warehouse is controllable.

c) Guarantee the authenticity of traded goods jointly with the transaction warehouse, and take the corresponding guarantee measures.

(4)   Information service

The electronic trade center shall provide the following information services for the electronic transaction:

a) Provide the data of electronic transaction, settlement and delivery, and ensure the data is complete, safe and controllable.

b) Provide the public information of electronic transaction participants in time.

c) Provide related general information of industries, market quotation and analysis for transactions.

d) The inquiry period of transaction data shall not be less than the recourse period of contract economic disputes.

e) The released public information may be obtained through the Internet at any time.

f) Ensure the key information of trader is safe, and the relevant information will not be improperly used.

g) Take measures for system security, data backup and failure recovery, and ensure the transaction data of trader is safe, complete and accurate.

h) Trader’s information, trading instruction and sensitive information of transaction process shall be reliably encrypted.

i) Take reliable and effective technical and management measures, to ensure proper identification of trader and non-repudiation of trade information.

(5)   Document requirements for electronic trade center

General - The electronic trading system documents of electronic trade center shall include:

a) Articles of electronic trade center.

b) Management regulations for electronic transaction participants.

c) Management regulations for electronic transaction processes and links.

d) Documented procedures as required in this Standard.

e) Other documents required for ensuring effective planning, operation and control of relevant transaction processes.

Articles of electronic trade center - The articles shall include the following main contents:

a) Purpose and function.

b) Name, address and place of business.

c) Registered capital.

d) Term of operation.

e) Organizational settings, authorities and rules of procedure.

f) Election, appointment & dismissal and responsibilities of management personnel.

g) Basic business rules.

h) Financial and internal audit system.

i) Conditions and procedures of change and termination, and liquidation methods.

j) Amendment procedure of articles.

k) Other items to be specified in articles.

Transaction process documents - The electronic trade center shall include the following basic contents in the management regulations for electronic transaction process via a series of documents:

a) Place and time of electronic transaction.

b) Mode of electronic transaction.

c) Commodity of electronic transaction and delivery term.

d) Procedures for suspension, recovery and cancellation of electronic transaction.

e) Electronic transaction procedure and its management system.

f) Electronic transaction contract and its management system.

g) Procedure for handling of transaction exceptions.

h) Management method for trader.

i) Management regulations for transaction warehouse.

j) Delivery management system.

k) Transaction settlement system.

l) Risk control system for electronic transaction.

m) Release method for transaction information.

n) Violations and handling methods.

o) Management method for warehouse receipt.

p) Safety guarantee measures for electronic transaction.

q) Credit guarantee measures for electronic transaction.

r) Transaction dispute handling method.

s) Other items to be defined in the transaction business rules.

(6)   Information disclosure

The electronic trade center shall release the basic information of transaction participants (including name, company profile, service scope and capability, contact information, etc.), credit standing of trader and real-time quotation of electronic transaction (including range of goods, delivery time, transaction price, fluctuation, declared number of transactions, trading volume, order quantity, etc.) through the Internet or by other accessible means.

3.    Trader

The trader, as buyer and seller in the electronic transaction of bulk stock, shall obey the transaction regulations of electronic trade center, accept supervision of the center, and cooperate with the center.

(1)   Selection

Trader is a corporation registered in the People's Republic of China and engaged in stock production, operation and consumption activities related to the trading commodities, and shall have good credit standing. The trader may be qualified after approval by electronic trade center. For transfer or succession of trader’s qualification, approval shall be obtained from the electronic trade center and the relevant procedures shall be implemented.

(2)   Transaction requirements

Trader participating in the electronic transaction shall meet the following requirements:

a) The trader shall only conduct commodity trading on behalf of enterprises in the industry, and shall not act as agent for the social public investment.

b) The trader shall obey the laws and contracts, and conduct fair trading.

c) The trader shall protect its own account and password, and shall be fully responsible for any consequence resulting from use of its account in the electronic trade center.

d) The trader shall abide by articles, transaction business rules and relevant regulations of electronic trade center.

e) The trader shall enter into relevant agreements with the balance bank, and open an account in the balance bank of electronic trade center.

f) The trader shall guarantee the authenticity of provided data and assume the relevant responsibilities.

g) It shall accept the business management of electronic trade center. During exercise of management authority, the electronic trade center may conduct an investigation on the trader according to authorities and procedures as specified by the center, and the trader shall cooperate.

h) It shall abide by relevant laws and regulations as well as relevant provisions of the electronic trade center.

(3)   Cancellation

If the trader will no longer participate in transaction in the electronic trade center, it shall apply for the cancellation of its qualification. The trader who fails to go through the cancellation procedure shall be fully responsible for all behaviors resulting from its account.

4.    Transaction Warehouse

Transaction warehouse is designated by the electronic trade center as the storage site of electronic transaction commodities, and is responsible for safekeeping of commodities and inspection of appearance and quality.

The electronic trade center shall enter into an agreement with the transaction warehouse to define mutual rights and obligations. Its business related to the electronic transaction shall be supervised and managed by the electronic trade center. The transaction warehouse shall not participate in the electronic transaction activities of relevant commodities.

(1)   Selection

The transaction warehouse shall meet the following conditions:

a) It is a corporation registered in the People's Republic of China and has good credit standing.

b) The warehousing operation permit from competent authority in the place of warehouse is obtained;

c) Warehouse infrastructure and management system meet the requirements of electronic transaction.

d) Provide supporting logistics service and information service required for the electronic transaction.

e) Accept the transaction business rules and delivery systems of the electronic trade center.

f) Meet other conditions as specified by the electronic trade center.

The electronic trade center shall select the optimum warehousing company according to investigation and evaluation results, and enter into the transaction warehouse agreement with such company, to define mutual rights and obligations. The warehouse shall provide risk guarantee and accept supervision and inspection of the electronic trade center.

(2)   Infrastructure

The infrastructure of transaction warehouse shall meet the following conditions:

a) Storage yard or warehouse shall be of a certain scale and available for storage of trading commodities of the electronic trade center. The equipment shall be complete and intact, and the metering shall meet the specified requirements.

b) Meet the conditions as required for transportation and distribution.

c) Good business reputation, and perfect warehouse management rules and regulations.

d) Strict and perfect commodity inspection & analysis system, commodity warehouse-in & warehouse-out system, inventory management system, etc.

e) Accept the transaction business rules and delivery systems of the electronic trade center.

f) Its fixed assets and registered capital shall reach the amount as specified by the electronic trade center.

g) Good financial condition and strong anti-risk capability.

h) Warehousing management information system which meets the requirements for safekeeping and logistics service, and can accurately reflect the real-time dynamic conditions of stored materials and conduct real-time communication with the electronic trade center.

i) Meet other conditions as specified by the electronic trade center.

(3)   Service to be provided

The transaction warehouse shall provide the following services:

a) Cooperate with the electronic trade center to provide the logistics distribution service.

b) Take good care of commodities in the warehouse, and ensure the safety of commodities.

c) Act as an agent for transportation of traded commodities.

d) Generate a warehouse receipt as specified after the goods are inspected and warehoused.

e) The transaction warehouse shall guarantee the quantity, appearance, quality and other properties of traded commodities as reflected on the warehouse receipt.

f) Cooperate with the electronic trade center for information release and inquiry.

g) Protect the commercial secrets related to the transaction.

h) Transmit relevant data and provide related conditions to the electronic trade center in real time as required.

i) If the storage period of commodities is beyond the valid period as required for commodity (quality) inspection, the transaction warehouse shall timely inform and assist the consignor in entrusting the national recognized commodity (quality) inspection department with rechecking of stored commodities.

J) If there is a dispute on the commodity quality between both parties of transaction, the transaction warehouse shall cooperate with both parties for recheck by the national recognized commodity (quality) inspection department.

k) The goods to be delivered shall be accepted for warehousing according to the standards as specified in the transaction contract. The warehouse-in inspection of goods shall be conducted jointly by the seller of goods and the transaction warehouse, and the inspection results shall be accepted by both parties.

(4)   Cancellation

If the transaction warehouse will give up its qualification, it shall file a written application to the electronic trade center for review and approval.

If the qualification of transaction warehouse is waived or canceled, the following items shall be completed:

a) Conduct warehouse-out process for all traded commodities, and cancel the warehouse receipt after approval by the electronic trade center.

b) Settle the credit and debt with the electronic trade center.

c) Check and return the risk guarantee according to the standards of electronic trade center. If the qualification of any transaction warehouse is confirmed, waived or canceled, the electronic trade center shall timely inform the trader and other transaction warehouses.

5.    Balance Bank

The balance bank is uniformly designated by the electronic trade center, and mainly assists the electronic trade center in settlement and fund transfer.

The electronic trade center shall open a special balance account in each balance bank to deposit the payment of goods and relevant amounts of trader.

(1)   Selection

The balance bank providing service for the electronic transaction shall meet the following conditions:

a) Nationwide commercial bank which sets branches and banking outlets in major cities.

b) Safe and fast transfer means for funds in different places.

c) Other conditions as required by the electronic trade center.

If the balance bank meets the above conditions, it shall enter into an agreement with the electronic trade center, to define mutual rights and obligations and standardize the relevant business procedures.

(2)   Service to be provided

The balance bank shall provide the following services:

a) Open a special balance account for the electronic trade center and a special fund account for the trader.

b) Take deposits and make loans for the electronic trade center and the trader.

c) Understand and reflect the credit standing of trader in the electronic trade center.

d) Transfer the funds of trader preferentially as per the bill provided by the electronic trade center.

e) In the event of major risk in the electronic trade center, assist the center in eliminating the risk.

f) Protect the commercial secrets of electronic trade center and trader.

(3)   Cancellation

If the qualification of balance bank is confirmed, waived or canceled, the electronic trade center shall timely inform the trader. If the balance bank applies for giving up its qualification, it shall submit a written statement of qualification cancellation to the electronic trade center in advance.

(IV)     Electronic Transaction Procedure

The trader shall enter into an electronic transaction contract through a transaction mode in the electronic trade center, and execute the contract within the specified period. The trader shall carry out the exchange of goods and payment as per the contract, and conduct a settlement as specified. The electronic trade center shall appoint specific electronic transaction procedure and prepare corresponding management methods, and inform all traders of electronic trade center.

1.    The subject matter of electronic transaction contract is bulk stock.

2.    Signing of Electronic Transaction Contract

The traders shall enter into an electronic transaction contract with each other through the transaction platform of electronic trade center, to agree on each other’s trading behavior. Total order quantity in the contract shall not exceed total social supply and demand of subject matter in the same period.

(1)   Contents of contract

The electronic trade center may issue a model contract text accepted by the trader. The contract shall include the following main clauses:

a) Name of buyer and seller.

b) Subject matter.

c) Quantity.

d) Quality.

e) Packing method.

f) Inspection standards and methods.

g) Delivery time.

h) Price.

i) Settlement method.

j) Performance deadline, place and method.

k) Responsibility of default.

l) Method of dispute settlement.

m) Contract signing place.

The specific clauses of contract shall be agreed by buyer and seller when signing the contract.

(2)   Offer

The trading order input into the transaction platform of electronic trade center by the trader is an offer issued by such trader to other traders. The trading order shall include specific contents and the main clauses of contract.

(3)   Commitment

When the trader responds to the offer issued by other traders, such trader shall input the selling order or buying order into the transaction platform of electronic trade center, which is a commitment made to the trader issuing the offer. When the transaction is brought to a conclusion, the commitment comes into effect and a contract is formed.

3.    Payment for Goods

The payment for goods shall be completed through the balance bank. The payment for goods shall be done by the method of “one receipt to one payment and receipt before payment”, to make ends meet. The delivery payment shall include the purchase price and the packaging payment. The purchase price shall be settled according to the selling rate +/- regional price differences and quality price differences, and the packaging payment, regional price differences and quality price differences shall be implemented according to the standards published by the electronic trade center.

(1)   Method of payment for goods

When the trader buys the goods, it may choose one-off payment or installment. The payment form and the schedule of installment shall be agreed in the electronic transaction contract signed by both parties.

(2) Payment process

Prior to the delivery time as specified in the contract, the buyer shall transfer the difference between total payment for bought commodities and previously paid amount to the special balance account of the electronic trade center. During the transaction settlement, the electronic trade center shall pay the delivery payment to the seller, and issue a certificate to the buyer for holding the warehouse receipt.

(3) Settlement process

The electronic trade center shall implement account-divided management for the payment for goods which is deposited by the trader in the special balance account of the center, and set a detailed account for each trader. The center shall calculate and collect the transaction fees on the basis of current trading volume of trader and according to the standards as specified in the electronic transaction contract. The settlement of transaction funds between the electronic trade center and the trader shall be done through the special balance account of center and the special fund account of trader.

(4)   Notice of settlement results

When the day trading ends, the electronic trade center shall settle the transaction fees and the payment for goods for each trader. The electronic trade center shall provide the current settlement data to the trader by issuing settlement document, data electronic text, etc.

If the electronic trade center fails to provide the settlement data on time under the special circumstances, the center shall give a further notice about time of providing the settlement data.

4.    Delivery

Delivery of commodities is a process in which both parties of transaction go through the transfer procedure for the ownership of agreed commodities according to the electronic transaction contract. During the delivery of commodities, the trader shall pay the delivery fees as specified to the electronic trade center. Specific standards shall be defined in the delivery system of the electronic trade center.

(1)   Selling of goods

The selling trader shall deliver its qualified goods to the transaction warehouse, obtain the warehouse receipt and sell the goods after registering in the electronic trade center. If the goods have not been transported to the warehouse, the trader shall provide the certificate of goods available for approval by the electronic trade center.

(2)   Delivery period

The traders shall agree on the delivery period when signing the contract. After the contract is signed, if the trader agrees, the delivery time may be arranged by itself within the period.

(3)   Delivery process

The trader shall deliver the goods to the transaction warehouse for inspection, and then obtain the warehouse receipt if the goods are qualified. Before the delivery date as specified by the electronic trade center, the trader shall submit the documents such as warehouse receipt and VAT invoice to the electronic trade center. The electronic trade center shall deliver the goods and pay for the goods after confirming both parties have no objection against quantity, quality and relevant procedures of goods.

5.    Assignment of Electronic Transaction Contract

If one trader transfers the electronic transaction contract to the third-party trader, the consent of another party shall be obtained and the electronic trade center shall be informed. The total number of transferred contracts in the electronic trade center shall be less than the total social transfer amount for subject matter in the same period.

6.    Termination of Electronic Transaction Contract

According to the electronic transaction contract signed in the electronic trade center, the buying and selling traders may terminate the contract after reaching consensus and informing the electronic trade center.

7.    Risk and Responsibility

Before entering the market, the trader shall enter into a market entry agreement with the electronic trade center, to specify mutual rights & obligations, exceptions and entry-into-force conditions of the agreement.

The trader is responsible for bearing the risks for contracts concluded in the electronic trade center.

If the trader fails to fulfill its responsibilities under the contract, the electronic trade center is entitled to take the following safeguard measures:

a) Terminate its qualification, and accept and fully handle its unfulfilled contracts. The corresponding profit and loss shall be fully assumed by the trader involved.

b) Convert the provided guarantees or pledged documents of title into cash, and use the income therefrom for compensation according to the contract.

c) The under-compensation part shall be recovered from the trader through legal procedures.