(Adopted at the 19th meeting of the 6th Board of Governors on May 30, 2019; issued by Announcement [2019] No. 39 on May 31, 2019; effective as of May 31, 2019)

Chapter 1    General Provisions

Article 1          These Rules are made in accordance with the Regulation on the Administration of Futures Trading, Interim Measures for the Administration of Overseas Traders’ and Overseas Brokers’ Engagement in the Trading of Specified Domestic Futures Products, Measures for the Administration of Securities and Futures Investors Suitability, and other laws and regulations as well as the Rules of the Zhengzhou Commodity Exchange (the “Exchange”) for the purposes of encouraging investors to engage in futures trading in a rational manner, protecting their lawful rights and interests, and promoting a stable, well-regulated, and sound futures market.

Article 2          The trading of option contracts and the futures contracts of Specified Domestic Products at the Exchange is subject to investor suitability requirements.

Article 3          “Trader” as referred to in these Rules means an individual, legal entity, or unincorporated organization that engages in futures trading and accepts the results of such trades.

Each trader shall comprehensively evaluate its understanding of the market and products, its capacity to manage and tolerate risks, and its financial position in accordance with the suitability rules and prudently determine whether to engage in futures trading.

Article 4          Each futures brokerage Member (“FB Member”) and overseas broker (each an “Account-Opening Institution”) shall evaluate each client for its knowledge on futures trading and its risk tolerance, and offer the appropriate products to the suitable clients.

Trading codes are managed through a permission system. Upon assigning a trading code to a client, the Account-Opening Institution shall grant to the code the trading permissions for the relevant listed contracts.

Chapter 2    Standards for Suitability Management

Article 5          When applying for a trading code for or assigning trading permissions to an institutional client that intends to trade any listed products that are subject to investor suitability requirements, the Account-Opening Institution shall ensure that the institutional client:

(1)        has relevant professionals who understand the basics of futures trading and the relevant rules;

(2)        has records for no fewer than twenty (20) executed trades during simulated futures or options trading at a domestic trading venue from at least ten (10) days of actual trading; or records for no fewer than ten (10) executed trades in a futures contract, option contract, or other centrally cleared derivatives at a domestic trading venue within the most recent three (3) years; or records for no fewer than ten (10) executed trades in a futures contract, option contract, or other centrally cleared derivatives at any overseas trading venue regulated by the national or regional futures regulatory authority that has entered into a memorandum of understanding on regulatory cooperation with the China Securities Regulatory Commission (“CSRC”) (“Recognized Overseas Trading Record”);

(3)        has maintained a daily available funds balance in its margin account of no less than RMB 100,000 or the equivalent foreign currency for the five (5) consecutive trading days before applying for the trading code or trading permissions;

(4)        has sound internal controls, risk management protocols, and other futures trading-related policies;

(5)        has no record of material integrity breach, has not being declared as a prohibited futures market participant by any competent regulatory authority, and is not otherwise prohibited or restricted from futures trading by laws, regulations, ministry-level rules, or the Rules of the Exchange; and

(6)        meets other requirements specified by the Exchange.

Article 6          When applying for a trading code for or assigning trading permissions to an individual client that intends to trade any listed products that are subject to investor suitability requirements, the Account-Opening Institution shall ensure that the individual client:

(1)        has full capacity for performing civil juristic act;

(2)        understands the basics of futures trading and the relevant rules;

(3)        has records for no fewer than twenty (20) executed trades during simulated futures or options trading at a domestic trading venue from at least ten (10) days of actual trading; or records for no fewer than ten (10) executed trades in a futures contract, option contract, or other centrally cleared derivatives at a domestic trading venue within the most recent three (3) years; or Recognized Overseas Trading Records of no fewer than ten (10) executed trades within the most recent three (3) years;

(4)        has maintained a daily available funds balance in his margin account of no less than RMB 100,000 or the equivalent foreign currency for the five (5) consecutive trading days before applying for the trading code or trading permissions;

(5)        has no record of material integrity breach, has not being declared as a prohibited futures market participant by any competent regulatory authority, and is not otherwise prohibited or restricted from futures trading by laws, regulations, ministry-level rules, or the Rules of the Exchange; and

(6)        meets other requirements specified by the Exchange.

Article 7          For any client that is already permitted to trade any other listed product subject to the suitability requirements of a domestic trading venue, if the client applies for a trading code or trading permission at the Exchange, its Account-Opening Institution may exempt it from Items (1) and (2) of Article 5 or Items (2) and (3) of Article 6 of these Rules; where the funds balance requirement for the said product is equal to or higher than that set out in Item (3) of Article 5 or Item (4) of Article 6 of these Rules, the Account-Opening Institution may exempt the client from the funding check.

An Account-Opening Institution shall make full use of available information and assessment results. Any client that, following a suitability assessment, has already obtained the trading permission to a product listed on the Exchange may be automatically granted the permission to trade the other products listed on the Exchange through the same Account-Opening Institution, without a reassessment under Article 5 or 6 of these Rules.

Article 8          Unless otherwise provided by laws, regulations, ministry-level rules, or the CSRC, an Account-Opening Institution may, when applying for a trading code for or assigning trading permissions to a client intending to trade any listed products subject to suitability requirements, exempt such client from Items (1) through (3) of Article 5 or Items (2) through (4) of Article 6 of these Rules if the client:

(1)        is a professional investor as defined under the Measures for the Administration of Securities and Futures Investors Suitability;

(2)        is already permitted to trade a product subject to suitability requirements and is applying for the trading permission for the same product through another Account-Opening Institution;

(3)        has an aggregated record of no less than fifty (50) days of trading futures contracts, option contracts, or other centrally cleared derivatives at domestic trading venues in the most recent year or the equivalent Recognized Overseas Trading Record; or

(4)        is a market maker, Special Institutional Client, or any other type of exemptible trader recognized by the Exchange.

Article 9          The Exchange may adjust the investor suitability standards based on market conditions.

Chapter 3    Implementation of the Suitability Requirements

Article 10        An Account-Opening Institution shall, in accordance with the rules of the CSRC and the requirements of these Rules, develop a sound, specific plan for implementing the suitability requirements for clients; improve its internal division of duties and operating procedures; comprehensively evaluate its clients in such areas as basic profile, relevant investment experience, financial position, and integrity history; and, within three (3) trading days of granting or terminating any trading permission, report the change and the corresponding trading code to the Exchange.

Article 11        An Account-Opening Institution shall establish and effectively enforce an accountability system for client development and clarify the responsibilities of the relevant personnel.

Article 12        Each Account-Opening Institution shall adequately inform their clients of the risks of futures trading; objectively explain the laws and regulations governing futures trading, the Rules, policies, and decisions of the Exchange, as well as the characteristics of its products; identify its clients’ level of knowledge on the basics of futures trading; rigorously verify their funds balance and experience in trading and simulated trading; prudently assess their integrity history and risk tolerance; and review their application materials for trading code or trading permission and other account opening materials.

Article 13        An Account-Opening Institution shall provide guidance to its clients to supervise them to observe the futures trading laws, regulations, and ministry-level rules as well as the Rules, policies, and decisions of the Exchange; organize risk awareness training for clients on an ongoing basis; and strengthen the legal and compliance oversight of their clients’ trading activities.

Article 14        An Account-Opening Institution shall establish and properly preserve client files and keep them strictly confidential.

Article 15        Each Account-Opening Institution shall establish a reasonable channel for receiving client complaints, inform clients of the method and procedures for filing a complaint, properly resolve disputes, and remind clients to protect their rights and interests through lawful means.

Article 16        Each trader shall ensure its account opening materials, including those for trading code and trading permission, are truthful, and shall not circumvent the trader suitability requirements through false filings or other means.

Article 17        Each trader shall bear the consequences of its trades, shall perform the contractual obligations arising from its futures trading activities, and shall not repudiate such contractual obligations on the grounds that it does not meet trader suitability requirements.

Article 18        Traders shall safeguard their rights and interests through lawful channels in accordance with laws and regulations, and shall not harm the national, public, or collective interests or the lawful rights and interests of others, nor disrupt the public order or the normal functioning of the Exchange and related organizations.

Article 19        Any FB Member that has entered into a brokerage service agreement with an overseas broker shall establish coordination rules with the overseas broker to enforce the trader suitability requirements.

Article 20        Any FB Member that engages a company with the introducing broker qualification to assist in the application process for trading code or trading permission shall establish coordination rules with the company to enforce the trader suitability requirements, and shall review the processes handled by the company.

Article 21        The Exchange conducts checks on Account-Opening Institutions for their enforcement of the trader suitability requirements.

Account-Opening Institutions shall cooperate with such checks and provide truthful information regarding clients’ trading code or trading permission application materials, other account opening materials, and funds accounts, and shall not withhold information, obstruct the checks, or refuse to cooperate.

Chapter 4    Ancillary Provisions

Article 22        Any violation of these Rules will be handled in accordance with the Rules of Zhengzhou Commodity Exchange on Violations.

Article 23        The Exchange reserves the right to interpret these Rules.

Article 24        These Rules take effect on May 31, 2019.

(This English version is for reference ONLY. In case of any inconsistency between the different language versions, the Chinese version prevails.)