NOTIFICATION ON MARKET RISK CONTROL DURING THE DRAGON BOAT FESTIVAL 2014

Updated on May 23,2014

NOTIFICATION ON MARKET RISK CONTROL DURING THE DRAGON BOAT FESTIVAL 2014

FROM: The Shanghai Futures Exchange

TO: All Members, Certified Depository Banks for Futures Margin and Certified Delivery Warehouses

SUBJECT: Notification on Market Risk Control during the Dragon Boat Festival 2014

FILING SERIAL: SQF [2014] NO. 81

May 23, 2014

The Dragon Boat Festival 2014 is approaching. According to the market closing announcement issued by the Exchange, the futures market will be closed from May 31 through June 2. According to the Risk Management Rules of the Shanghai Futures Exchange, we decide to make the following adjustments to the trading margin requirements and price limits for some products around the Dragon Boat Festival.

I. Before the Dragon Boat Festival, current rules shall be applied to the trade margin requirements and position limits for each futures contrtact.

II. When the trading resumes on June 3, 2014, the trade margin requirements as from the closing and settlement on the first trading day when no price limit hitting occurs and the price limits as from the following trading day will be adjusted as below:

The trade margin requirements for zinc, lead, steel rebar and hot-rolled coil, bitumen futures contract will be adjusted from 6% to 5%, and their price limits will remain as 4%;

Current rules should be applicable to the trade margin requirements and price limits for aluminum, copper, wire rod, gold, natural rubber, fuel oil and silver futures contract.

The Risk Management Rules of the Shanghai Futures Exchange will be referred to for implementation of other regulations on trade margin and price limits.

III. All members are required to do well in implementing position limits for the related contracts, natural person’s open interest and integral multiple adjustment, and preparation for delivery on a timely basis. For the FU1406 contract, the last trading day is May 30 and the delivery day is June 3, June 4, June 5, June 6 and June 9. Please fully understand clients’ delivery intention, check the expiry date for the contract delivery warrants in advance and do well in the declaration and issuance of VAT invoice to effectively prevent delivery risk.

All members are required to properly conduct the risk prevetion work, duly increase margin requirement based on investors’ position and risk profile, strengthen the management over withdrawal and deposit of investor’s funds, remind investors of the importance of prudent operation and rational investment, and do a good job in technical system maintenance and network safety during the Dragon Boat Festival. Relevant certified depository banks for futures margin and certified delivery warehouses are required to focus on safety to ensure smooth market operation.