Chapter 1 General Provisions

Article 1 The Detailed Rules are formulated according to the Regulations on Continuous Spot Trading of Far East Material Trading Center Co., Ltd. to standardize the settlement for electronic transactions of Far East Material Trading Center Co., Ltd. (hereinafter referred to as the trading center), to protect the lawful rights and interests of the parties involved in and the interests of the general public and to prevent and to eliminate the risks of the trading center.

Article 2 The settlement of the trading center refers to the business activities concerning calculation and allocation of the goods payment of the trader, performance bond, difference in price and various fees as per the trading results, the contract/agreement signed by and between the traders and relevant provisions specified by the trading center.

Article 3 Daily settlement system shall be carried out by the trading center.

Article 4 The trading center only provides settlement service for the traders approved.

Article 5 The Detailed Rules are applicable to the settlement activities for electronic transactions within the trading center, and the workers of the trading center, authorized service agencies, traders and the specified fund supervision banks must abide by the Detailed Rules.

Chapter 2 Settlement Agency and Responsibilities

Article 6 The settlement agency refers to the department in charge of settlement for the transactions carried out at the trading center.

Article 7 The settlement agency shall take charge of uniform settlement for electronic transactions at the trading center, for management of performance bond and prevention of settlement risks.

Article 8 The settlement responsibilities of the trading center include the followings:
(I) Prepare the account books concerning settlement of the trader;
(II) Handle with the business concerning flow, remittance and transfer of capital;
(III) Count, register and report the specific conditions concerning settlement of transactions;
(IV) Handle with the disputes concerning accounts of the traders in transactions;
(V) Handle with the business concerning delivery settlement;
(VI) Control the risks in settlement and guarantee the performance of the electronic transaction contracts;
(VII) Manage the performance bond as per relevant provisions;
(VIII) Handle with other business related to settlement.

Article 9 All the electronic transaction contracts clinched a deal in the transaction system of the trading center must be subject to uniform settlement through the trading center.

Article 10 The fund supervision bank refers to a commercial bank (appointed by the trading center) in charge of supervision on the funds of the traders at the trading center and of coordinating the trading center in transaction settlement and fund allocation.

Chapter 3 Settlement Business

Article 11 To facilitate the handling of capital flow of the trader and to guarantee the fund security of the traders, the transaction funds will be managed in the form of a third-party supervision bank at the trading center. The trading center shall open a special account for settlement at each fund supervision bank, and the traders must open a fund account at some fund supervision bank. The fund transfer between the trading center and the traders is realized through the special account of the trading center and the fund account of the traders of the same fund supervision bank.

The traders can handle with the formalities concerning capital flow through the self-service transaction client directly. As for specific operation details, relevant agreements signed among the traders, the trading center and the fund supervision banks shall be followed.

Article 13 The performance bond system is carried out at the trading center. Specifically, when the electronic transaction contracts are signed by the traders through the electronic transaction system at the trading center, the buyer shall pay the performance bond of certain amount to the trading center as per the standards and schedule specified, to guarantee the performance of the contracts. Before delivery, the seller shall guarantee the performance of the contracts as per the performance bond of the same amount paid by the buyer.

Article 14 The trading center will collect or pay the performance bond, goods payment, difference in price and various fees of each trader through the supervision banks, or save or pay the above temporarily.

Article 15 The traders involved in transactions shall deposit sufficient funds, to facilitate settlement and to guarantee the performance.

Article 16 For the trader subjected to one of the followings, the trading center may limit the allocation of its transaction funds:
(I) Those who are suspected of being involved in major illegal behaviors and are under investigation by the trading center of relevant departments;
(II) When major risks are identified in the market by the trading center;
(III) Other situations deemed necessary by the trading center.

Article 17 In general, the performance bond of the continuous spot contracts at the trading center is 20%. In case the order price of the buyer is higher than the settlement price of the trading center, the buyer must complement the difference in price timely. In case the order price of the seller is lower than the settlement price of the trading center, the seller must complement the difference in price timely.

Article 18 Once the electronic transaction contracts are transferred, cancelled or terminated by the traders, the trading center will return the goods payment or performance bond collected to such traders after deduction of various payable fees and settlement of profit and loss.

　　

Article 19 The settlement price of the day refers to the weighted average price of the transaction price of all the electronic contracts of some transaction variety on some transaction day. In case no transactions are made on the trading day, the settlement price at the trading center of the previous transaction day shall prevail.

Article 20 The settlement contents and methods for each trader at the trading center are as follows:
Balance of fund accounts on the trading day = balance of fund accounts of the previous day + fund inflow on the trading day – fund outflow on the trading day + performance bond of the previous day – performance bond on the trading day + transfer profit and loss on the trading day + delivery profit and loss + sales revenue – purchasing expenditure – handling charges of transactions – handling charges of delivery ± compensation for deferred delivery, wherein,
Transfer profit and loss= ∑ (transfer price sold – contract price bought) × transfer amount + ∑ (contract price sold – transfer price bought) × transfer amount
Delivery profit and loss = ∑ (order price of the buyer – delivery settlement price) × sales volume + ∑ (delivery settlement price – order price of the buyer) × purchasing amount
Sales revenue= delivery settlement price × sales volume
Purchasing expenditure= delivery settlement price ×purchasing amount
Handling charges of transactions= standard handling charges of transactions x number of transactions
Handling charges of delivery = standard delivery service charges x number of delivery
Total compensation = difference in number of delivery declaration × 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.

Article 21 The trading center reserves the right to formulate or adjust the compensation rate for deferred delivery and the standard handling charges of transaction and delivery as per the property of the transaction variety, supply-demand relationship and relevant national policies.

Article 22 The trading center can provide the settlement data on the trading day for the traders in the form of electronic documents, and the traders can extract the settlement data through the transaction client.
(I) The trader shall verify the settlement data on the trading day. In case of any dispute, the trader must submit a written application to the trading center for review 30 minutes before the first transaction of the next trading day. The trading center will make review conclusions based on the records of the database in the electronic transaction system. If the trader fails to do that, such trader will be deemed to accept the settlement data.
(II) In case the balance of the fund account of the trader is negative, the settlement data provided by the trading center shall serve as the notice for supplementing the performance bond. The trader shall supplement the insufficient part before 10:00 a.m. (Beijing time) of the next trading day. If not, the trading center reserves the right to transfer its electronic transaction contracts forcibly as per the Management Methods for Risk Control of Far East Material Trading Center Co., Ltd. until the balance is supplemented.
(III) If the trading center fails to provide the settlement data on time under the special circumstances, the center shall give a timely notice about time of providing the settlement data.

Article 23 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 paired, and issue VAT special invoices. The buyer shall make the payments for goods based on the settlement price of the goods on the day the delivery is paired and accept such invoices. As for specific time concerning collection and payment of the payment for goods delivered, the provisions specified in relevant delivery rules at the trading market shall prevail.

Chapter 4 Supplementary Provisions

Article 24 Far East Material Trading Center Co., Ltd. has right to interpret and revise the Detailed Rules.

Article 25 The Detailed Rules are implemented from the date of publishing.

　　　

Far East Material Trading Center Co., Ltd.

June 16, 2012