CHAPTER 1 GENERAL PROVISIONS

Article 1 These General Clearing Rules are made in accordance with the Futures and Derivatives Law of the People’s Republic of China, the Regulations on the Administration of Futures Trading, the rules of the China Securities Regulatory Commission (“CSRC”) and other relevant state rules, and the Articles of Association of Shanghai Futures Exchange to regulate futures clearing activities, protect the lawful rights and interests of all parties in futures trading, maintain an orderly market, and safeguard the public interest.

Article 2 The Shanghai Futures Exchange (“Exchange”), placing public interest as its priority, maintains a fair, orderly, and transparent market and organizes futures clearing and its related activities.

Article 3 These Clearing Rules apply to futures clearing and its related activities organized by the Exchange.

The Exchange and its Members, Overseas Special Participants (“OSPs”), Overseas Intermediaries, Clients, Delivery Storage Facilities, futures margin depository institutions, other participants of the futures market, and their respective staff shall abide by these Clearing Rules.

Article 4 The Exchange exercises self-regulation of futures clearing and its related activities in accordance with relevant laws, administrative regulations, administrative rules, these Clearing Rules, and the relevant Rules of the Exchange.

CHAPTER 2 GENERAL RULES

Article 5 The Exchange establishes an internal clearing department to lawfully perform the functions of a futures clearing organization. The Exchange implements margin requirements, daily mark-to-market, the risk reserve system, and other clearing-related systems.

Article 6 The Exchange, in its capacity as a central counterparty, acts as the counterparty to all clearing participants, conducts net settlement, and provides performance guarantee for futures trading.

Article 7 The Exchange implements all-Member clearing. Members are clearing participants of the Exchange and the Exchange clears for Members.

Futures Firm Members (“FF Members”) clear for the OSPs, Overseas Intermediaries, and Clients that they provide brokerage services to.

Overseas Special Brokerage Participants (“OSBPs”) and Overseas Intermediaries clear for their Clients.

CHAPTER 3 DAILY CLEARING

Article 8 “Margin” refers to the asset collected by the Exchange from Members for clearing purposes and performance guarantee. The Exchange may adjust the margin requirements based on market conditions.

Margin may be in the form of cash and such liquid marketable securities as Chinese government bonds and standard warrants, as well as other assets specified by the CSRC. Posting foreign currencies or marketable securities as margin in accordance with the relevant rules is deemed as an authorization to the Exchange to transfer or handle the corresponding assets.

In trading any standardized options contract (“options contract”), the seller shall deposit margin and the buyer shall pay the premium. The rate and collection method for the premium will be separately prescribed by the Exchange.

Article 9 Margin is classified into clearing deposit and trading margin.

“Clearing deposit” is the portion of margin not presently in use to maintain open contracts; “trading margin” is the portion of margin presently in use to maintain open contracts. The minimum balance for the clearing deposit is determined by the Exchange.

Article 10 FF Members shall not collect margin from OSPs, Overseas Intermediaries, and Clients at a level below the margin requirements prescribed by the CSRC and the Exchange.

An FF Member has the right to adjust the margin rates for OSPs, Overseas Intermediaries, and Clients based on market conditions and their credit standing.

Article 11 Futures margin depository banks (“Depository Banks”) and other futures margin depository institutions are designated by the Exchange and provide margin custody, funds transfer, and other related services.

The Exchange has the right to supervise the futures clearing services of futures margin depository institutions.

Article 12 The Exchange opens a dedicated settlement account at each Depository Bank to deposit the margin and other relevant payments from Members. Misappropriation is prohibited.

Article 13 An FF Member shall open a margin account with a Depository Bank to deposit the margin paid by OSPs, Overseas Intermediaries, and Clients, shall keep such margin separate from its own funds, and shall not misappropriate such margin.

Article 14 Futures-related funds transfers between the Exchange and Members shall be conducted through the Exchange’s dedicated settlement account and Members’ Dedicated Fund Accounts.

The futures margin account opened by a Member at a Depository Bank branch designated by the Exchange is referred to as its Dedicated Fund Account.

Article 15 Members may obtain settlement data through the prescribed methods upon the end of daily clearing. Each Member shall promptly check such data and, if it has objections, notify the Exchange within the time limit specified by the Exchange. Failure to raise objections within the specified time limit is deemed as the acceptance of the settlement data.

Article 16 FF Members, OSPs, and Overseas Intermediaries shall provide each of their Clients with a trade settlement report after daily clearing. Clients have the right to be informed of the contents of such report in the manners specified in the relevant agreements.

Article 17 “Daily mark-to-market” means that, after the end of the prescribed trading hours, the Exchange settles the profits and losses, trading margin, option premiums, transaction fees, and other monetary amounts for all contracts, completes the net transfers of payables and receivables, and increases or decreases Members’ clearing deposit balance accordingly.

Article 18 Any Member whose clearing deposit balance falls below the minimum level prescribed by the Exchange shall either deposit additional margin or voluntarily close out its positions.

The Member shall bring its clearing deposit balance up to the minimum level within the prescribed time limit. If shortfall persists and the clearing deposit balance remains below the minimum level, the Member shall not open new positions. If the balance falls below zero and the Member fails to close out positions voluntarily within the prescribed time limit, the Exchange will take risk control measures, such as forced position liquidation, against the Member.

The Exchange may, during the course of trading or at the end of a trading day and based on market risk conditions, issue margin calls to Members that have a high risk exposure.

CHAPTER 4 FINAL SETTLEMENT

Article 19 Upon the expiration of a futures contract, traders shall close out their open positions in the contract through physical delivery or cash settlement.

At the time specified in an options contract, the buyer is entitled to buy or sell the underlying asset at the agreed price or complete a cash settlement as agreed, and in each case the seller shall perform the corresponding obligations as agreed. The exercise and fulfillment of options contracts are organized by the Exchange.

Article 20 For physically delivered futures contracts, the Exchange shall organize the delivery of delivery payments and of standard warrants or other certificates of title to the underlying asset.

For cash-settled futures contracts, the Exchange shall transfer the profits and losses to the buyers’ and sellers’ accounts calculated based on the final settlement price.

Article 21 Any Member taking part in physical delivery shall make the delivery payment or deliver the underlying assets within the time limit prescribed by the Exchange.

Article 22 The final settlement price is the benchmark price for the final settlement of a futures contract.

Article 23 During physical delivery, failure by the seller’s Member to deliver the required quantity of standard warrants or other certificates of title to the underlying asset within the prescribed time limit, and failure by the buyer’s Member to make the delivery payment in full within the prescribed time limit, constitutes in each case a delivery default. If the Exchange has provided otherwise with respect to delivery default, those provisions shall prevail.

Article 24 In the event of a delivery default by a buyer or a seller, the Exchange may handle the default through liquidated damages, compensations, or other methods it prescribes, the specifics of which are governed by the relevant rules of the Exchange.

Article 25 An FF Member shall not refuse to perform its delivery obligations under a contract on the grounds of a default by an OSP, Overseas Intermediary, Client, or another trader to whom it provides clearing services. In the case of a non-performance of delivery obligations, the Exchange may enforce their performance.

CHAPTER 5 RISKS AND LIABILITIES

Article 26 In the event of an abnormal accumulation or rapid escalation of market risks or other abnormalities during futures trading, the Exchange may take the following emergency actions in accordance with its Rules, with a report immediately submitted to the CSRC:

(1) Adjusting the margin requirement;

(2) Adjusting the price limit;

(3) Adjusting the opening and closing time of the market;

(4) Setting or adjusting the trading limit or position limit;

(5) Limiting the opening of new positions;

(6) Limiting funds withdrawals;

(7) Requiring the close-out of positions within a specified time period;

(8) Carrying out forced position liquidation;

(9) Suspending trading; and

(10) Taking other emergency actions.

If consecutive price limit hits in the same direction occur with respect to the futures price, the Exchange may take such measures as adjusting the price limit, adjusting the trading margin requirement, limiting funds withdrawals, limiting funds deposits, setting or adjusting the trading limit, adjusting transaction fee rates, carrying out forced position liquidation, and carrying out forced position reduction to defuse the trading risks.

The Exchange shall promptly lift the emergency actions once the abnormalities specified in the first and second paragraphs of this Article are resolved.

Article 27 In the event of any of the following emergencies during futures trading that disrupts the normal course of trading or undermines the fairness of the market, the Exchange may take emergency actions to mitigate risks, with a report promptly submitted to the CSRC:

(1) Trading, clearing, delivery, exercise and fulfillment of options, or other market activities cannot proceed as normal due to such reasons as force majeure, unforeseen event, major technical failure, or major human error;

(2) A Member experiences a clearing or delivery crisis that is causing or will soon cause a material impact on the market;

(3) A circumstance specified in paragraph 2 of Article 26 of these Clearing Rules occurs and the corresponding actions fail to mitigate the risks; or

(4) Other circumstances specified by the Exchange have occurred.

Article 28 An FF Member is liable for the performance of futures trades conducted by the OSBPs, Overseas Intermediaries, and Clients to whom it provides clearing services. After bearing such liability, it may seek recourse against the responsible persons in accordance with laws, administrative regulations, administrative rules, and the Rules of the Exchange.

Non-Futures Firm Members, Overseas Special Non-Brokerage Participants, and Clients are fully liable for their futures trading activities.

Article 29 If a Member is unable to fulfill its obligations and responsibilities under a contract, the Exchange is entitled to take the following safeguards:

(1) Suspending the Member from opening new positions;

(2) Duly carrying out forced position liquidation and use the margin released therefrom for performance and compensation;

(3) Lawfully disposing of the assets used as margin;

(4) Drawing on the Exchange’s Risk Reserve; and

(5) Drawing on the Exchange’s own funds.

The Exchange will acquire the corresponding right of recourse against the defaulting Member upon taking measure (4) or (5).

Article 30 The Exchange shall provision for, manage, and use the Risk Reserve and the General Risk Reserve in accordance with the relevant rules.

The Risk Reserve is a fund established by the Exchange to provide financial guarantees for the normal operations of the futures market and to cover losses arising from unforeseeable risks of the Exchange.

The General Risk Reserve is a special fund provisioned from the Exchange’s after-tax profits to prevent and resolve the risks incurred from its business activities, ensure the Exchange can function as a central counterparty, and cover unidentified potential losses or deficits.

Article 31 In relation to the futures trading and clearing activities organized by the Exchange, the legal status of the act of trading, clearing, delivery, and exercise and fulfillment of options contracts and the relevant assets, including any executed trading orders, closed futures positions, collected margin and premium, assets transferred or being used as margin, and standard warrants already paired for delivery, as well as the measures taken by the Exchange to resolve defaults, shall not be suspended, revoked, or voided by the entry into bankruptcy proceedings of any Member.

Article 32 If a Member enters into bankruptcy proceedings, the Exchange may perform net settlement with respect to its open contracts in accordance with the Rules of the Exchange.

Article 33 If a futures margin depository institution becomes bankrupt or is involved in any debtor-creditor dispute, funds such as margin and premium shall not be part of its bankruptcy estate or of the assets subject to seal-up, freeze, seizure, or enforcement.

Article 34 If a Delivery Storage Facility becomes bankrupt or is involved in any debtor-creditor dispute, futures commodities deposited by futures market participants that are not owned by the Delivery Storage Facility, shall not be part of the Delivery Storage Facility’s bankruptcy estate or of the assets subject to seal-up, freeze, seizure, or enforcement.

CHAPTER 6 MISCELLANEOUS

Article 35 The Exchange may make specific Rules in accordance with these Clearing Rules.

Article 36 The Exchange reserves the right to interpret these Clearing Rules.

Article 37 These GeneralClearing Rules and any amendment thereto are subject to the approval of the Members’ Assembly of the Exchange and the approval of the CSRC.