Special Provisions on Trading in Commodities on the Spot Market (for Trial Implementation) (Decree No. 3, 2013 of the Ministry of Commerce of the People’s Republic of China)

The Special Provisions on Trading in Commodities on the Spot Market (for Trial Implementation), as deliberated and adopted at the 7^th executive meeting of the Ministry of Commerce on August 15, 2013, and affirmed by the People's Bank of China and the China Securities Regulatory Commission, are hereby issued, and shall come into force on January 1, 2014.

Chapter 1 General Provisions

Article 1 To regulate trading in commodities on the spot market, maintain the market order, prevent market risks, protect the lawful rights and interests of all trading parties, promote the sound development of the spot market of commodities, and accelerate the adoption of modern circulation modes, these Provisions are developed in accordance with the relevant laws and regulations of the State and the Decision of the State Council on Straightening out and Rectifying Various Types of Trading Venues to Effectively Prevent Financial Risks (GF [2011] No. 38).

Article 2 Trading in commodities on the spot market within the territory of the People's Republic of China shall be governed by these Provisions, except as otherwise prescribed by the State.

Article 3 For the purposes of these Provisions, the spot market of commodities means venues or Internet trading platforms legally established with information, logistics, and other supporting service functions where buyers and sellers conduct open, frequent, or regular trading in spot commodities.

For the purposes of these Provisions, operators of the spot market of commodities (hereinafter referred to as “market operators”) include legal persons, other economic organizations, and individuals which legally establish the spot market of commodities, develop business rules and other rules and regulations related to the market and provide venues and related supporting services for trading in spot commodities.

Article 4 The principles of openness, fairness, equity, and good faith shall be adhered to in the trading in commodities on the spot market.

Article 5 The Ministry of Commerce shall be responsible for the planning, information, statistics, and other industry administration of the spot market of commodities across the country, and promote the sound development of the spot market of commodities.

The People's Bank of China shall, according to its functions, be responsible for the financial supervision involved in the trading in commodities on the spot market and the supervision over the payment business of non-financial institutions.

Article 6 The industry associations of the spot market of commodities shall develop codes of practice and industry standards, enhance industry self-regulation, organize business training, establish integrity files of senior executives, accept complaints, and mediate disputes, among others.

Chapter 2 Tradable Objects and Trading Methods

Article 7 Objects traded on the spot market of commodities shall include:

(1) Physical commodities;

(2) Warehouse receipts, negotiable bills of lading, and other delivery documents with physical commodities as the subject matter;

(3) Other tradable objects stipulated by the provincial people's government according to law.

Article 8 The physical commodities traded on the spot market of commodities shall be subject to the laws and regulations related to the liability for quality warranties of the State and shall be in accordance with the current effective quality standards.

Article 9 Trading in commodities on the sport market can be conducted through the following methods:

(1) Agreement trading;

(2) One-way bidding trading;

(3) Other trading methods stipulated by the provincial people's government according to law.

For the purpose of these Provisions, agreement trading means the trading method for physical commodities agreed by both buyers and sellers through negotiation, indicating such commodities are delivered immediately or within a certain time limit.

For the purpose of these Provisions, one-way bidding trading means the trading method in which an agreement is reached within an agreed trading time and then completed after a buyer (seller) applies to the market who will give a notice to the tradable objects in advance and more than one seller (buyer) raise or reduce the price as required.

Article 10 Market operators shall not conduct trading activities prohibited by laws and regulations and the State and the Decision of the State Council on Straightening out and Rectifying Various Types of Trading Venues to Effectively Prevent Financial Risks, and shall not make standardized contract trading in centralized trading way.

Assignment and alteration of a spot contract shall be handled in accordance with the relevant provisions of laws and regulations.

Chapter 3 Specifications for Operating the Spot Market of Commodities

Article 11 Market operators shall perform the following duties:

(1) Provide trading venues, facilities and relevant services;

(2) Establish and improve the business rules and regulations related to trading, delivery, settlement, warehousing, information release, risk control and market management and various rules and regulations;

(3) Other duties stipulated by laws and regulations.

Article 12 Market operators shall disclose business rules and regulations. Formulation, modification and alteration of business rules and regulations shall be publicized in advance within a reasonable time.

Article 13 The spot market of commodities shall be provided with contingency plans. Effective measures shall be taken in time in case of abnormal situations, to prevent market risk.

Article 14 Market operators shall take such measures as contract constraint, system control and internal management strengthening and reinforce fund management. No market operator may usurp or misappropriate the traders’ funds in any form.

Article 15 For the spot market of commodities, encourage the innovation of circulation ways to reduce trading cost, and build an energy efficiency, environmental protection, green and low carbon market.

Article 16 For the spot market of commodities, encourage the use of modern information technology and establish Internet trading platform to carry out e-commerce.

Article 17 Market operators shall establish and improve the system for releasing commodity information and promulgate the relevant information on the name, quantity, quality, specifications and origin of the commodities to be traded so as to ensure the truthfulness and accuracy of the information, and shall not release false information.

Article 18 Where a modern information technology is used to carry out trading activities, market operators shall record the relevant information such as warehousing, trading, delivery, settlement and payment of commodities in real time, take measures to ensure the integrity and safety of the relevant information, and keep it for more than five years.

Article 19 Market operators shall not tamper with or destroy relevant information and data without authorization.

Chapter 4 Supervision and Administration

Article 20 The competent commercial departments of the people's governments at or above the county level shall be responsible for the administration of the spot market of commodities within their respective administrative areas and shall submit the industrial development plans and other concrete measures as required in a timely manner.

The branches of the People's Bank of China shall be responsible for the supervision and administration of the financial institutions and payment institutions involved in the trading in commodities on the spot market within their respective jurisdictions.

Agency dispatched by the futures regulatory authority of the State Council shall be responsible for the identification of illegal futures trading activities in the spot market of commodities.

Article 21 Market operators shall submit the relevant business information and data according to the requirements of relevant departments.

Article 22 The competent commercial departments of the people's governments at or above the county level shall establish and improve various work systems in accordance with local conditions. If necessary, they shall report the relevant situation to the higher competent commercial departments and the people's government at the same level in a timely manner.

Chapter 5 Legal Liability

Article 23 For market operators who violate the provisions of Article 11, Article 12, Article 13, Article 14, Article 17, Article 18, Article 19 and Article 21, the competent commercial departments at or above the county level shall issue a rectification order jointly with the relevant departments, If they fail to make a rectification within the prescribed time limit, a fine of not less than RMB 10,000 but not more than RMB 30,000 shall be imposed on them.

Article 24 Market operators who violate the provisions of Article 8 and Article 10 and Regulation on the Administration of Futures Trading shall be dealt with according to law.

Article 25 If the staff member of the administrative department concerned neglects his duty, abuses his power or engages in malpractices for personal gains in the work of market supervision and administration, he shall be given an administrative sanction according to law; if a crime is constituted, he shall be prosecuted for criminal liabilities according to law.

Chapter 6 Supplementary Provisions

Article 26 These Provisions shall come into force on January 1, 2014.