Far East Material Trading Center Co., Ltd.

Regulations on Continuous Spot Trading

Chapter 1 General Provisions

Article 1 The Regulations are formulated according to relevant national laws, regulations and policies to standardize the continuous spot trading of Far East Material Trading Center Co., Ltd. (hereinafter referred to as the “Trading Center”) and safeguard legitimate rights and interests of trading parties.

Article 2 The Trading Center is under the supervision and management of the State Administration for Industry and Commerce, Ministry of Commerce, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Finance, People's Bank of China, China Banking Regulatory Commission, Financial Affairs Office of the People's Government of Jiangsu Province (hereinafter referred to as the “Financial Affairs Office”) and other relevant governmental departments.

Article 3 The Trading Center shall follow the principles of “openness, fairness, impartiality” during continuous spot trading and shall provide such market management services as trading, settlement, delivery, storage, logistics, financing and information provision for continuous spot trading of copper, aluminum, plastics, rubber, drawing oil and other industrial raw and auxiliary materials on the basis of fully taking the advantages of modern information technology.

Article 4 The Trading Center, brokerage members, specified balance banks, specified delivery warehouses and specified inspection organizations as well as their workers must comply with the Regulations.

Chapter 2 Listed Varieties and Trading Hours

Article 5 Trading varieties listed at the Trading Center include copper, copper rods, copper wires, aluminum, aluminum rods, rubber, plastics, natural rubber, PVC resin, drawing oil and other industrial raw and auxiliary materials (refer to the announcements of the Trading Center on the time to market and detailed rules on trading of each variety).

Article 6 Trading days refer to Monday to Friday of each week (excluding national statutory holidays). The trading hours of each variety listed for trading are announced by the Trading Center separately. Unless otherwise stated, the trading hours is based on China Standard Time.

Chapter 3 Electronic Trading Contract

Article 7 The electronic trading contract refers to a sales contract agreed by traders on spot trading of listed varieties via the electronic trading system of the Trading Center according to the Regulations and relevant provisions of the Trading Center.

Article 8 Main clauses of the electronic trading contract are about the contract name, trading variety, commodity code, trading unit, price quotation unit, minimum price variation unit, daily price limit, trading hours, time for delivery declaration, delivery class, delivery place, minimum delivery unit (minimum delivery quantity), minimum performance bond, trading fee, delivery fee, way of delivery, compensation rate for deferred delivery and attachments. Attachments to the electronic trading contract have the same legal effect as that of the contract.

Article 9 The commodity code refers to the code of a variety for trading in the electronic trading system and represents what is specified in the electronic trading contract.

Article 10 The minimum price variation unit refers to the minimum unit of price variation in the electronic trading contract.

Article 11 The daily price limit (also referred to as the “price limit”) refers to the upper and lower limits agreed in the electronic trading contract on price variation for a trading day. The quotation price variation higher than the upper limit or lower than the lower limit will be deemed as invalid, i.e. the commands for quotations varying in this way cannot be entered in the electronic trading system of the Trading Center.

Article 12 The trading unit in the electronic trading contract is “Shou” (a Chinese unit) and continuous spot trading must be carried out based on integral multiples of “Shou”. The quantity of commodities in the contract per “Shou” for each trading variety shall be specified in the electronic trading contract for that trading variety.

Article 13 The price of the electronic trading contract is calculated based on the Chinese currency and the unit is RMB.

Chapter 4 Trader

Article 14 The trader refers to an investor who is qualified in the accreditation by the Trading Center and rents trading position of the Trading Center.

Article 15 After review and approval by the Trading Center, the qualified investor may participate in the trading.  

Article 16 To apply to be a trader, the following conditions shall be met:

(I) An enterprise with certain financial strength and good business reputation;

(II) Having the qualifications of traders specified by the Financial Affairs Office and other government supervision departments;

(III) Complying with the Regulations and other relevant provisions of the Trading Center;

(IV) Meeting other conditions as specified by the Trading Center.

Article 17 The investor applying to be a trader shall fill in the Application Form for Entering the Market of the Far East Material Trading Center Co., Ltd. and shall provide relevant documents as required. After review and approval by the Trading Center, the investor shall timely finish the following affairs as required by the Trading Center:

(I) Open a fund account in the balance bank specified by the Trading Center;

(II) Sign a tripartite agreement with the Trading Center and the specified balance bank according to their requirements or sign a bilateral agreement with the specified balance bank;

(III) Sign the Application Form for Entering the Market of the Far East Material Trading Center Co., Ltd. with the Trading Center;

(IV) Make relevant payments to the Trading Center according to the Application Form for Entering the Market of the Far East Material Trading Center Co., Ltd.;

(V) Finish other affairs specified by the Trading Center.

Article 18  The trading position refers to a special purpose terminal used by the trader for commodity trading via the electronic trading system of the Trading Center (hereinafter referred to as the “ETS”). Each trader may own one trading position.

Article 19  To ensure convenient and safe electronic trading, the Trading Center manages the traders based on trading codes, i.e. one trader corresponds to one trading code.

The trader shall apply to the Trading Center for a trading position in written form. After the application is reviewed and approved, the Trading Center will give a unique trading code for the trading position.  

The trader shall set and manage the trading password for his trading position by himself. After the trading password is verified by the ETS, it is used as the key for the trader to enter the ETS through the computer terminal, namely his trading position. To do a transaction, the trader must enter the trading password for his trading position within the specified time limit to log in to the ETS.

Article 20  The trader enjoys the following rights:

(I) Trade on the trading software platform provided by the Trading Center;

(II) Enjoy such services as economic trends, market information, storage, logistics and legal financing provided by the Trading Center;

(III) When the trading fee paid by the trader to the Trading Center reaches a certain amount, the trader may enjoy a discount on the trading fee. Refer to announcements of the Trading Center for specific standards.

(IV) Have the right to participate in various promotion activities organized by the Trading Center.

Article 21 The trader shall fulfill the following obligations:

(I) Strictly comply with the trading rules and relevant management regulations of the Trading Center;

(II) Keep well the trading account and password and never reveal them to anyone. Otherwise, the trader shall assume the responsibilities arising therefrom by himself;

(III) Comply with relevant national laws and regulations;

(IV) Assume other obligations specified by the rules and relevant management regulations of the Trading Center;

Article 22 The Trading Center may disqualify the trader in one of the following situations:

(I) The trader refuses to implement relevant regulations of the Trading Center;

(II) The trader fails to pay relevant fees as specified by the Trading Center;

(III) The trader closes no deal for more than a year consecutively.

(IV) The trader breaches the national laws, rules and regulations and commits other grave breaches specified by relevant provisions of the Trading Center.

Chapter 5 Brokerage Member

Article 23 The brokerage member refers to business entities or other economic organizations that are reviewed and approved by the Trading Center according to relevant regulations of the Trading Center to engage in the business authorized by the Trading Center within the scope of authority of the Trading Center.

Article 24 There are two types of brokerage members: the general and the professional. General brokerage members provide marketing and consultation services for traders and help them open accounts for all varieties listed for trading at the Trading Center; professional brokerage members provide marketing and consultation services for traders and help them open accounts for certain variety listed for trading at the Trading Center.

Article 25 The brokerage member may engage in the following scope of business:

(I) Develop the market on behalf of the Trading Center;

(II) Assist traders to go through listing and trading procedures of the Trading Center;

(III) Provide training on trading business for traders on behalf of the Trading Center;

(IV) Introduce commodities for trading on the market on behalf of the Trading Center;

(V) Provide information for traders (including but not limited to delivery of settlement sheets, delivery notes and other written/electronic documents and notes);

(VI) Assist the Trading Center in risk control for trading behaviors of his traders;

(VII) Finish other affairs entrusted by the Trading Center in written form;

Article 26 With approval of the Trading Center, the brokerage member may charge his traders trading fees within the limit specified by the Trading Center.

Chapter 6 Continuous Spot Trading Business

 Article 27 Continuous spot trading is carried out by the Trading Center. Continuous spot trading refers to the process in which the trader declares the price of an agreement to be signed or transferred for trading commodities via the ETS of the Trading Center and applies for physical delivery according to relevant regulations of the Trading Center and the electronic trading contract generated after automatic pairing for closing a deal by the ETS.

The ETS refers to an e-commerce platform which is provided by the Trading Center for traders to declare a price for an agreement to be signed or transferred for trading commodities and generates an electronic trading contract after automatic pairing for closing a deal.

After signing the electronic trading contract, the traders may submit their application of delivery right on the trading day or in days to come according to the specific situation.  For traders fail to get their benefits due to deferred approval of the physical delivery application, the Trading Center will compensate them based on the compensation system for deferred delivery.

Trading is an act of purchase and sale of traders which is organized by the Trading Center and done by traders sending an offer or commitment for purchasing or selling via the ETS based on the principles of “price priority and time priority” and then the ETS automatically pairing for closing a deal and automatically generating an electronic trading contract.

Article 28 The trade offer refers to a tax-inclusive unit price of trading commodities declared by traders in the ETS of the Trading Center.

Article 29 Traders make an offer (for signing or transferring an agreement) through the offer window of the ETS.

Article 30 Definitions of terms for price and quantity in trading:

(I) Opening price: It refers to the first transaction price of certain trading commodity generated after quotation by traders on certain trading day upon opening.

(II) Closing price: It refers to the last transaction price of certain trading commodity on certain trading day before closing.

(III) Top price: It refers to the highest transaction price of certain trading commodity on certain trading day.

(IV) Bottom price: It refers to the lowest transaction price of certain trading commodity on certain trading day.

(V) Settlement price: It refers to the weighted average price of the transaction price of certain trading commodity on certain trading day calculated based on the trading volume. The settlement price shall be an integer based on the minimum price variation unit. In case of no transactions on that trading day, the settlement price will be that of the previous trading day. The settlement price is the base price for settlement of profits and losses on that trading day and for setting of the price limit for the next trading day.  

(VI) Highest purchasing price: It refers to the highest price in all current commands of purchasing offers for certain trading commodity.

(VII) Lowest selling price: It refers to the lowest price in all current commands of selling offers for certain trading commodity.

(VIII) Latest price: It refers to the current latest transaction price of certain trading commodity.

(IX) Up and down: It refers to the result obtained by subtracting the settlement price of the previous trading day from the latest price; positive means up while negative means down.

(X) Purchasing volume: It refers to the sum of purchasing offers of the highest purchasing prices of certain trading commodity.

(XI) Selling volume: It refers to the sum of selling offers of the lowest selling prices of certain trading commodity.

(XII) Trading volume: It refers to the cumulative offers of certain trading commodity accepted on certain trading day.

(XIII) Order quantity: It refers to the offers for which traders have signed an electronic trading contract and have not yet finished delivery.

Article 31 Traders make offers by themselves within 5 minutes before opening on each trading day. Within the first 4 minutes, commands for purchasing and selling prices are declared; within the last minute, automatic pairing of such offers is performed. The opening price is generated upon opening.

In case no transaction price is generated by autonomous offering, the first transaction price after making such offers is used as the opening price.

Article 32 Traders’ offers are accepted based on the maximum trading volume, i.e. the maximum trading volume possible for transaction based on the accepted offers. Declared purchasing prices higher than the price generated by autonomous offering are all treated as transaction prices; Declared selling prices lower than the price generated by autonomous offering are all treated as transaction prices; in case declared purchasing or selling prices are equal to the price generated by autonomous offering, the transaction is done based on the smaller of the two quantities: declared purchasing quantity and declared selling quantity. The list of unaccepted price declarations during autonomous offering upon opening will be automatically included in the offering after opening.

Article 33 Traders do transactions through their trading positions. All transaction behaviors of a trader at his trading position are considered as transaction behaviors of the trader. Traders must assume legal responsibilities for all the trading commands sent at their trading positions and the trading results.

Article 34 Traders shall pay trading fees to the Trading Center for his trading according to regulations.

Article 35 Trading Procedures

(I) The Trading Center implements the system of performance bond and traders shall have adequate fund for trading as required by the Trading Center before trading. Traders make offers through the offer window of the ETS and shall pay performance bonds according to relevant regulations of the Trading Center. The specific standards for paying performance bonds by the purchaser and seller shall be based on relevant regulations of the Trading Center and the electronic trading contract.

(II) The ETS sorts and pairs the purchasing or selling commands based on the principles of “price priority and time priority”. When a purchasing price is higher than or equal to a selling price, then the ETS automatically pairs them for transaction. When a purchasing price is equal to a selling price, the latest price is equal to the purchasing price and the selling price; when a purchasing price is higher than a selling price, the latest price is equal to the earlier entrusted pending purchasing price or selling price.　

To be specific, if the purchasing price is entrusted earlier, when the selling price is lower than the purchasing price, the latest price is the purchasing price;  

If the selling price is entrusted earlier, when the purchasing price is higher than the selling price, the latest price is the selling price.

The transaction price is the price for signing, transferring or assigning the electronic trading contract by the purchaser and the seller.

(III) After a transaction is done, the ETS will automatically generate the electronic trading contract with electronic signatures, the trading code and transaction time. The trading result will be sent by the ETS to the trading terminal of the traders.

(IV) If the declared purchasing and selling quantities have not all been automatically paired for transaction, the remaining quantity will still be stored in the ETS and included for trading based on offers that day.

(V) The ETS will calculate the trading funds of traders at real time based on the trading results. When the remaining trading funds of traders are inadequate, the ETS will no longer accept the purchasing/selling commands for increasing the order quantity.

(VI) The unaccepted commands can be canceled. If not, they will automatically become invalid after closing on the trading day.

(VII) After traders (the purchaser and seller) sign the electronic trading contract at the Trading Center, they may transfer their rights and obligations in the contract to other traders via the ETS through mutual agreement.

(VIII) After closing of trading on each trading day, traders may acquire the transaction records via the ETS. Traders shall timely check the transaction records. In case of any doubts on them, they shall inform the Trading Center in written form before opening of trading on the next trading day.

Article 36 The Trading Center implements the system of price limits on trade offers, i.e. through setting the price limit for trade offers via the ETS, base price for the price limit of the trading day will be based on the settlement price of the previous trading day. The offers exceeding the price limit will be considered as invalid.  When the upper or lower price limit is reached, the ETS will sort and pair the purchasing or selling commands based on the principles of “substituted transfer priority, transfer priority and time priority”. However, the principle of “transfer priority” does not apply to the electronic trading contracts signed right on that day.

The Trading Center has the right to adjust the price limit according to market fluctuation to control the trading risks.

Article 37 Guide prices for the varieties listed for trading are determined and announced in advance by the Trading Center. The trading guide prices are the basis for determining the price limits of electronic trading contracts for new varieties listed for trading on the first trading day. For the electronic trading contract signed previously rather than currently, when there is a big difference between its settlement price and the market price, the Trading Center may announce new guide prices.  

Article 38 The Trading Center implements the system of compensation for deferred delivery. The system of compensation for deferred delivery is a system which applies to the situation in which the purchaser (seller), not paired for delivery after submission of delivery declaration during the period of delivery declaration of each trading day, claims compensation from the sellers (purchasers) who hold the electronic trading contracts for the commodities and fail to submit the delivery declarations on the trading day.

Article 39 Payment and Calculation of Compensation for Deferred Delivery

(I) Compensation Payment

The purchaser (seller) not paired for delivery after submitting the delivery declaration shall claim compensation based on the quantity unpaired for delivery according to relevant regulations of the Trading Center.

All sellers (purchasers) failing to submit their delivery declarations shall pay the compensation according to relevant regulations of the Trading Center.

(II) Calculation

Total amount of compensation = difference between declared delivery volume x settlement price for the trading day x compensation rate

Compensation due to a trader = quantity of the trader unpaired for delivery x settlement price for the trading day x compensation rate

Compensation due to be made by a trader = total amount of compensation ÷ undeclared net order quantity x net order quantity not declared by the trader

The difference between declared delivery volumes refers to the difference between the purchasing volume and the selling volume declared for delivery;

The specific compensation rate standards are in accordance with relevant regulations of the Trading Center and the electronic trading contract. The Trading Center may adjust the compensation rate according to the market situation. In terms of allotment and payment, the compensation for deferred delivery is accurate to two decimal places based on the rules of rounding off.

Article 40 Traders shall pay trading fees to the Trading Center for physical delivery according to regulations.

Article 41 The Trading Center shall keep the continuous spot trading, settlement and delivery data for at least 20 years.

Chapter 7 Settlement Business

Article 42 Daily settlement system shall be implemented by the Trading Center.

Article 43 The Trading Center shall open a special settlement account at each specified balance bank for settlement of performance bonds due to be paid by traders, profits and losses on trading days, payments for goods and payments relevant to transaction.

Article 44 Traders shall open a fund account at a specified balance bank. The fund transfer between the Trading Center and the traders is realized through the special accounts of the Trading Center and the traders opened at the same balance bank.

Article 45 At the end of each trading day, the Trading Center shall settle the performance bonds of traders, profits and losses of that trading day, payments for goods and other payments according to the trading results and relevant regulations of the Trading Center. If the trading fund balance of a trader is not enough for making the above payments, the Trading Center shall give a notice to the trader for providing additional performance bond.

Article 46 When the trading fund balance of a trader is not enough, the trader shall provide the insufficient amount before 10:00 a.m. on the next trading day. Otherwise, the Trading Center will transfer his electronic trading contracts on behalf of him until the insufficient amount is paid off.

Article 47 The Trading Center is responsible for settling the payment for goods for the traders. The payment for goods delivered shall be made by the method of “one receipt to one payment and receipt before payment”. The seller shall collect the payments for goods based on the settlement price of the goods on the day the delivery is declared and paired, and issue special VAT invoices. The purchaser shall make the payments for goods based on the settlement price of the goods on the day the delivery is declared and paired.

Article 48 After settlement is finished for the trading day, the traders may acquire relevant settlement data from the ETS. In case of any doubts on the data, the traders shall inform the Transaction Settlement Department in written form within one hour before trade opening on the next trading day. In case the traders have no doubts on the settlement data within the time limit specified above, it is deemed that the traders have acknowledged correctness of the settlement data.

Article 49 Traders shall strengthen management of their trading funds, strictly implement relevant rules and regulations of the Trading Center, timely acquire and check the settlement data, and properly keep the settlement data, documents, account books and so on for future inquiry.

Chapter 8 Delivery Business

Article 50 Delivery refers to the process in which the seller transfers the ownership of commodities to the purchaser and the purchaser makes payment to the seller according to relevant delivery regulations of the Trading Center and the electronic trading contract.

Article 51 The Trading Center implements the system of physical delivery declaration for each trading day. The purchaser and seller may declare deliveries for the trading day during the period from 16:00-16:45 on each trading day. The Trading Center shall pair according to the delivery declarations made by the purchaser and the seller.

Article 52 If a trader’s declared delivery is successfully paired and he fails to fulfill his obligations or fulfill only part of his obligations, he shall assume corresponding responsibilities for breaching the contract.

Article 53 After the delivery declarations of the purchaser and seller are successfully paired, they shall pay the performance bonds according to relevant regulations of the Trading Center.  The specific standards for payment of performance bonds are in accordance with relevant regulations of the Trading Center and the electronic trading contract.

Article 54 Traders shall store the goods to be delivered in specified delivery warehouses, and shall fulfill relevant obligations and pay relevant fees according to regulations.  

Article 55 The specified delivery warehouse refers to an enterprise specified by the Trading Center for providing goods delivery and warehousing services for traders to perform electronic trading contracts. The specified delivery warehouse falls into two types: benchmark delivery warehouses and general delivery warehouses. The benchmark delivery warehouse is specified by the Trading Center to determine the offers for trading commodities.

Article 56 The specified delivery warehouse shall guarantee delivery of traders according to the Agreement on Specified Delivery Warehouses of Far East Material Trading Center Co., Ltd. Losses caused due to poor condition of facilities and equipment or improper warehouse management shall be borne by the specified delivery warehouse.

Article 57 Upon receiving of goods of traders, the specified delivery warehouse shall, according the relevant requirements, provide the traders with “storage certificates” which after being verified and registered by the Trading Center becomes the Registered Warehouse Receipt.

Article 58 Traders successfully paired for delivery must deliver the Registered Warehouse Receipt or make payment for goods to the Trading Center within the time limit specified by the Trading Center.

Article 59 The Trading Center shall allocate the Registered Warehouse Receipt to the purchaser participating in physical delivery based on the principles of “nearest pairing according to overall arrangement”.

Article 60  After the purchaser participating in physical delivery makes the payment for goods within the time limit specified by the Trading Center, the Trading Center shall give the Registered Warehouse Receipt to the purchaser; after the seller participating in physical delivery submits the Registered Warehouse Receipt and goes through relevant procedures, the Trading Center makes payment for goods to the seller based on the principle of “one receipt to one payment and receipt before payment”.

Article 61 If the purchaser participating in physical delivery has any doubts upon receiving of the Registered Warehouse Receipt, he shall, within the time limit specified by the Trading Center, finish acceptance of subject matters listed in the Registered Warehouse Receipt at the specified delivery warehouse.

Article 62 The Trading Center shall specify several nationally certified inspection organizations as the third-party inspection organizations. In case of any doubt of traders on quality of the goods delivered, an inspection organization shall be selected from the above mentioned. The inspection report issued by the specified inspection organization will be used by the Trading Center as the basis of deciding whether the trader is involved in breaches of the contract for delivery.

Article 63 The specified inspection organization must be responsible for the inspection report issued by it. For any losses caused by false inspection reports, the specified inspection organization shall bear corresponding responsibilities.

Article 64 The occurrence of any one of the following situations constitutes a breach of the contract for delivery:

(I) The seller fails to submit the required copies of Registered Warehouse Receipts within the specified time limit for delivery.

(II) The purchaser fails to make full payment for goods within the specified time limit for delivery.

(III) The commodities delivered by the seller fail to meet the specified standards.

(IV) The seller fails to issue the special VAT invoices within the specified time limit.

(V) Other situations of breaching the contract of delivery according to the Trading Center;

Punishment for breach of the contract for delivery shall be according to relevant regulations of the Trading Center.

Article 65 The rights, interests and risks of the purchaser and seller for quantity and quality during delivery shall be determined based on relevant provisions in the detailed delivery rules of the Trading Center.

Article 66 Premiums and discounts for the quality of substituted commodities for delivery shall be according to relevant regulations and announcements of the Trading Center.

Chapter 9 Risk Control

Article 67 The trading center adopts the ordering quota system. The ordering quota refers to the maximum amount of order quantity in an electric trade contract. It is calculated as per only one way, i.e. buying or selling. It can be held by a single trader. According to the specific conditions of various trading varieties, the trading center respectively determines the ordering quota in an electric contract for each trader. The specific enforcement regulations will be developed separately.

Article 68 The trading center can carry out transfer instead of a trader. Specifically, the trading center can transfer partial or all electric trade contracts held by a trader if the trader’s order quantity exceeds the ordering quota or the trader does not timely pay additional performance bond in accordance with the relevant rules, and if the trader breaks other rules. The specific enforcement regulations will be developed separately.

Article 69 Both the cost and loss caused by the above-mentioned transfer will be undertaken by the trader who breaks rules. The additional loss caused by failure in the above-mentioned transfer due to market causes will also be undertaken by the trader who breaks rules. (See Chapter 10.)

Article 70 When the price in an electric trade contract is subjected to continuous price limit in one direction, or when the market risk increases significantly, the trading center can take relevant measures such as range adjustment of price limit, increase of performance bond, and forced reduction in order quantity as per certain principle, so as to control the trade risk. If the risk cannot be released after the above-mentioned risk control measures are taken, the trading center shall declare that the market is abnormal.

Article 71 If a trader fail to implement its contract, the trading center will have right to take the following safeguard measures:

(I) Suspend the trader to “conclude” any trade contract.

(II) Carry out the above-mentioned transfer instead of the trader as per the relevant rules, and then use the performance bond released after the transfer to undertake the violation responsibility for the observant party.

(III) File a claim for recovery when undertaking the violation responsibility instead of the trader.

Article 72 The trading center adopts the major client reporting system. A trader is required to make a report, when its order quantity in an electric trade contract of a trading variety reaches or exceeds 80% of the ordering quota given by the trading center. The trader shall actively make a report to the trading center as per the relevant rules specified by the trading center before the end of the next business day. The trading center can adjust or modify the standards of ordering report in accordance with the market risks.

The report includes as follows:

(I) Report Form of Trader (Major Client), including name of trader, No. of trader, code of electric trade contract, existing order quantity and direction, performance bond, and available funds;

(II) Explanation of capital source;

(III) Other materials required by the trading center.

Article 73 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.

Chapter 10 Exception Handling

Article 74 During the continuous spot 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 (a) force majeure including but not limited to earthquake, flood, fire, war and strike; (b) causes not attributable to the trading center, such as failures of computer system and network.

(II) A trader suffers from a crisis of settlement or delivery.

(III) The case in Article 71 occurs and the relevant risks are not eliminated after the corresponding measures are taken.

(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 75 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 76 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 11 Information Issue

Article 77 The trading center uploads its relevant documents and data to the electronic trading system and professional websites, so as to provide a trader with relevant trading conditions and general industrial information.

Article 78 The trading center, trader, brokerage member, specified balance bank, specified delivery warehouse, and specified inspection body shall not reveal any trade secrets obtained from relevant business of trading center or not issue false information or misleading information.

Article 79 The trading center owns all trade information generated from the trading center market. No organization or person is allowed to use or spread such information without permission.

Article 80 The professional organization, which provides both software and hardware services for the electric trading system and professional websites of the trading center, needs to abide by relevant agreements signed with the trading center, to ensure safe operation of trading facilities as well as timeliness and accuracy of releasing of trade information.

Chapter 12 Supervision and Administration

Article 81 The trading center will carry out supervision and administration for all trading activities that occur in the trading center in accordance with the Method and relevant rules and provisions. In addition, the trading center will also be subject to supervision and administration carried out by relevant government departments.

Article 82 The main responsibilities of the trading center to carry out supervision and administration are as follows:

(I) Supervise and check both execution and implementation of relevant policies, laws and regulations, and relevant rules and provisions specified by the trading center, to ensure that the trading center is running in accordance with the relevant laws and regulations and in order.

(II) Supervise and check the financial credit standing and trading operation conditions of a trader. Abide by the principles of “openness, impartiality and fairness” to protect the interests of each party taking parting in the market trade.

(III) Supervise and check the market promotion and trading service carried out by a brokerage member, to ensure the authentication services of the brokerage member are in conformity with relevant laws and regulations.

(IV) Supervise and check the warehouse service, goods delivery and relevant business of the specified delivery warehouse, to ensure the delivery is performed successfully. (V) Mediate and handle the relevant trade disputes resulted from continuous spot trading. Investigate and handle all defaults.

(VI) Assist judicial organizations and administrative enforcement agencies to perform official business in accordance with relevant laws.

Article 83 When the trading center carries out supervision and administration, it can investigate and collect evidences by itself or entrust the investigation and evidence collection to specialized persons. Meanwhile, relevant traders shall fully cooperate with such investigation and evidence collection.

Chapter 13 Default and Treatment for Default

Article 84 A trader shall bear relevant legal liabilities for all its trading activities occurred in the trading center and corresponding results.

Article 85 When a trader, the specified delivery warehouse and the specified inspection body are in dispute about trading, settlement and delivery conducted in the trading center, they can negotiate to settle such dispute by themselves or apply to the trading center for mediation. If each disputing party reaches an agreement through their own negotiation or the mediation performed by the trading center, the trading center will supervise the execution of the agreement. If they fail to reach an agreement through their own negotiation or the mediation performed by the trading center within 30d after the dispute occurs, each party shall consent to submit the dispute to Wuxi Arbitration Committee for arbitration.

Article 86 In case of the following defaults, the default party must undertake relevant violation responsibilities.

(I) The buyer does not timely or fully pay the performance bond or other relevant funds in accordance with the electric trade contract.

(II) The seller does not timely or fully submit the registration warehouse receipt in accordance with the electric trade contract.

(III) The seller does not timely or fully pay the performance bond or other relevant funds in accordance with the electric trade contract.

(IV) The quality of goods delivered by the seller does not reach the standard agreed in the electric trade contract.

(V) Other defaults specified by the trading center.

Article 87 In case of the above-mentioned defaults, the default party shall undertake relevant violation responsibilities in accordance with the electric trade contract; meanwhile, the trading center shall have right to punish the default party.

Article 88 The following activities are forbidden by the trading center:

(I) Interference with execution of duty undertaken by staff in the trading center;

(II) Arrears of relevant expenses and funds;

(III) Defaming of the trading center or damage to property owned by the trading center;

(IV) Malicious manipulation of market or disturbance of trading order;

(V) Other activities violating the Method and relevant provisions specified by the trading center.

Article 89 For a trader who violates the Method and relevant provisions specified by the trading center, the trading center will give punishments depending on the seriousness of the case, mainly including warning, authorization limit, trading suspension, and disqualification. If the case is so serious as to constitute a crime, the trader will be transferred to a judicial organ to investigate and affix legal liability.

Article 90 A trader can submit a reconsideration application to the trading center in writing within ten working days upon receiving the handling decision. The trader shall execute the original handling decision before the trading center makes the decision of reconsideration.

Chapter 14 Supplementary Articles

Article 91 The trading center can develop enforcement regulations in accordance with the Method.

Article 92 Far East Material Trading Center Co., Ltd. has right to interpret and revise the Method.

Article 93 The Method will be implemented as of the date of publication.

Far East Material Trading Center Co., Ltd.

September 1, 2016