(Adopted at the 25th meeting of the 7th Board of Governors on July 29, 2022; issued by Announcement [2022] No. 74 on August 31, 2022; effective as of December 1, 2022)

Chapter 1    General Provisions

Article 1          These Rules are made in accordance with the relevant laws, administrative regulations, and ministry-level rules of the People’s Republic of China as well as the Bylaws of Zhengzhou Commodity Exchange and Trading Rules of Zhengzhou Commodity Exchange for the purposes of improving the capacity of Zhengzhou Commodity Exchange (the “Exchange”) to serve the real economy, providing expanded services to futures trading-related activities, and ensuring the orderly operation of the ZCE Integrated Services Platform (“ZISP”).

Article 2          The Exchange, futures brokers, Futures Margin Depository Banks, clients, Dealers, and other market participants shall comply with these Rules when transacting business on ZISP.

Article 3          The Exchange organizes the transactions and related activities taking place on ZISP in a fair and impartial manner and in good faith, and fulfills its self-regulatory duties.

Chapter 2    Participants

Article 4          Non-natural person investors may transact business on ZISP. A client must sign an account-opening agreement and the Risk Disclosure Statement when opening its account.

Article 5          Any client that intends to use ZISP shall obtain a digital certificate issued by a certificate authority recognized by the Exchange in accordance with the relevant requirements, for the purposes of authentication during log-in, negotiated trading, and affixation of electronic signature and seal.

Article 6          A client may register for and open a ZISP account directly through ZISP. The Exchange may request the assistance of a futures broker when opening account for a client.

Article 7          Each client shall prudently determine whether to transact on ZISP based on its risk tolerance and understanding of conducting businesses on ZISP and solely bear the risks arising from its transactions.

Article 8          A “Dealer” refers to any institutional client recognized by the Exchange to provide quotation services on ZISP.

Article 9          Any client that applies to become a Dealer shall:

(1)        have a dedicated quotation services department and team, with the team members being familiar with the relevant laws and regulations as well as the Rules of the Exchange;

(2)        have sound business implementation plan, internal controls, and risk management protocols;

(3)        have the technologies necessary for providing quotation services;

(4)        have a strong client base and sufficient experience;

(5)        have no record of major illegal or non-compliant activity within the most recent two (2) years; and

(6)        meet other requirements specified by the Exchange.

Article 10        Each Dealer shall offer quotations in accordance with the rules of the Exchange and shall have the right to join the institution group, manage customer groups, and enjoy reduced fees.

Chapter 3    Trading

Article 11        ZISP supports trading of standard warehouse receipts (“receipt”), basis trading, repo with pledged receipts, receipt auction, over-the-counter options trading, commodity swaps, and other transactions launched by the Exchange. The specific types of supported transactions will be separately specified in the relevant guidelines.

Article 12        ZISP supports the two trading modes of Listed Trading and Negotiated Trading. The Exchange makes one or more trading modes available to a type of transaction based on the characteristics of the transaction and market needs.

Article 13        ZISP performs funds balance check before executing a client’s trading or clearing order. Client orders backed by insufficient funds are deemed invalid.

Article 14        “Listed Trading” is conducted through the public quotation bulletin board, where Dealers and other clients provide public quotes which may be selected and executed by other clients either at or below the quantity offered.

Article 15        “Negotiated Trading” is conducted through the ZCE Instant Messaging (ZIM) software provided by ZISP, and permits a buyer and a seller to negotiate on the underlying asset, quantity, price, and other terms and conditions of the trade and then execute it.

Article 16        Any unfilled portion of a client’s trading order can be cancelled.

Article 17        The Exchange is not liable for the losses resulting from trading disruptions due to earthquake, flood, fire, or other force majeure events and such causes as computer system fault, communication interruptions, and power outages.

Chapter 4    Clearing

Article 18        A Futures Margin Depository Bank may offer clearing services for ZISP transactions, in which case it shall open a dedicated ZISP settlement account for the Exchange to deposit client margin and other relevant funds for ZISP transactions.

Article 19        The Exchange clears trades for clients directly. Each client shall, in accordance with relevant requirements, obtain financial services from a Futures Margin Depository Bank that support real-time funds transfers to enable funds deposits and withdrawals between its bank account and the Exchange’s Dedicated Settlement Account.

The funds available for withdrawal by a client on a given day is calculated as follows:

Current day’s withdrawable amount = beginning balance + (funds deposited on current day ? funds withdrawn on current day) + (current day’s income ? current day’s expense) ? funds frozen ? floating losses.

Article 20        ZISP supports such clearing modes as Negotiated Clearing and Instructed Clearing. The Exchange makes one or more clearing modes available to a type of transaction based on the characteristics of the transaction and market needs.

Article 21        “Negotiated Clearing” refers to the clearing mode in which the Exchange freezes and releases Trading Margin, transfers funds, and handles delivery pursuant to the clearing rules agreed by the trading parties but provides no guarantee for the performance of the trade. Where the Exchange has provided other rules in respect of Negotiated Clearing, those rules shall prevail.

Article 22        “Instructed Clearing” refers to the clearing mode in which the Exchange freezes and releases Trading Margin, transfers funds, and handles delivery pursuant to the instruction confirmed by both trading parties but provides no guarantee for the performance of the trade.

Article 23        The Exchange records the positions opened, closed, and held by and the delivery activities of each client on ZISP on a chronological and daily basis; manages, through a segregated subsidiary account, the funds deposited by each client into the Exchange’s Dedicated Settlement Account to record and calculate the client’s funds deposits and funds withdrawals, profits and losses, margin, service fees, and other clearing data; and properly preserves the relevant materials, for such a retention period as provided in the relevant rules, for possible future examination.

Article 24        A client may obtain its trading and clearing records through ZISP at the end of each trading day. Any objection to such record shall be submitted to the Exchange on the same day either in writing or through another documented method.

Article 25        Clients shall pay transaction fees, delivery charges, and other relevant fees and charges to the Exchange in accordance with applicable rules.

Chapter 5    Delivery

Article 26        ZISP supports the two delivery modes of ZISP Receipt Delivery and ZISP Physical Delivery.

Article 27        “ZISP Receipt Delivery” refers to the method of physical delivery which is completed through a transfer, from the seller to the buyer, of the relevant standard warehouse receipts registered with the Exchange.

Article 28        “ZISP Physical Delivery” refers to the method of physical delivery which is completed through a transfer, from the seller to the buyer, of the relevant physical commodities.

Article 29        The seller in delivery shall issue a special/general VAT invoice to the buyer. The buyer shall input into ZISP the particulars required for the issuance of the VAT invoice in accordance with the rules of the tax authority.

Article 30        The seller in a ZISP Receipt Delivery shall provide the VAT invoice within seven (7) trading days after the transfer day (exclusive) of the standard warehouse receipts. If the provision of the VAT invoice is delayed for one (1) to ten (10) calendar days, the seller shall pay a late fee at 3‰ of the delivery payment for each day of delay. If such provision is delayed for over ten (10) calendar days, the seller is deemed to have refused to issue the VAT invoice and shall pay a default penalty to the buyer. Any late fee and default penalty is deducted from the balance of the delivery payment; the remaining delivery payment still belongs to the seller.

The rate of the default penalty is governed by the Futures Delivery Rules of Zhengzhou Commodity Exchange.

Article 31        The time of issuance of the VAT invoice, shipments, and other particulars for a ZISP Physical Delivery are determined by the buyer and the seller.

Article 32        A buyer shall confirm a VAT invoice within seven (7) trading days after the day of receipt (exclusive) of the seller’s VAT invoice. Non-confirmation or non-rejection of the VAT invoice within this time limit is deemed as a confirmation thereof. Upon such confirmation, the Exchange will transfer the delivery payment or remaining delivery payment to the seller.

Chapter 6    Penalty for Violations and Defaults

Article 33        A “violation” as referred to in these Rules means a breach of these Rules or other relevant rules by a futures broker, Futures Margin Depository Bank, client, Dealer, or other futures market participants.

Article 34        Any market participant that commits any of the following violations will, based on the severity of the violation, be subject to such disciplinary sanctions as a warning, public reprimand, public censure, forced liquidation, suspension from opening new position, and revocation of access to ZISP as a supervisory measure:

(1)        violating the rules on client suitability;

(2)        failing to pay relevant fees and charges to the Exchange as required;

(3)        releasing trading information without the permission of the Exchange; or

(4)        committing any other act that violates laws, regulations, or the relevant rules of the China Securities Regulatory Commission or the Exchange.

Article 35        The Exchange has the right to require a client to explain an abnormal transaction that is suspected of being a vehicle for shifting funds or obtaining improper interests and, if an illegal or criminal act is suspected, to refer the case to the competent authorities in accordance with the law.

Article 36        Any client that fails to make payment or complete delivery in full, on time, and in accordance with the relevant agreement will be deemed to have committed a default and shall assume the liabilities for default. The Exchange is entitled to revoke a client’s access to ZISP for frequent or serious acts of default.

Article 37        The Exchange may record a clients’ defaults and violations in the ZISP’s integrity database, the specifics of which will be separately prescribed by the Exchange.

Chapter 7    Ancillary Provisions

Article 38        The Exchange holds exclusive right to the trading information on ZISP. Without the consent of the Exchange, no individual, legal entity, or other types of organization may use such trading information for commercial purposes. Such trading information is managed and released by the Exchange. The Exchange may commercialize and manage the trading information independently, in collaboration with a third party, or delegating it to a third party.

Article 39        Any matter not covered by these Rules is governed by the other relevant rules of the Exchange.

Article 40        The Exchange reserves the right to interpret these Rules.

Article 41        These Rules take effect on December 1, 2022.

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