Shanghai Futures Exchange ("SHFE") has recently hosted its Media Encounter & the 3rd Round Media Training of Year 2012 in Yunnan, through which it organizes field surveys for journalists at silver production and processing enterprises including Yunnan Copper and Sino-Platinum Metals, and initiates related enterprises to exchange views with journalists over such topics as silver futures functioning and how to utilize futures hedging by enterprises.

Mr. Huo Ruirong, Deputy General Manager of SHFE, firstly delivered a speech on the recent years' development of the Exchange. According to its Five-year Strategic Plan, SHFE has pressed forward the futures market development by keeping a foothold on the fundamental market situation while integrating both internal and external changes since the last year. First of all, the market witnesses a stable operation and steady growth. With a year-on-year increase of 15.18% over the first 5 months of this year, it also keeps pace with both physical and global market. Secondly, all varieties are traded briskly, resulting in the well-functioning of newly launched products. In particular, silver futures hassaw stable operation, active trading and controlled risks since it was launched on May 10th, 2012, and thereforepreliminarily showing its functions of price discovery and risk mitigation for enterprises through hedging . Thirdly, the investor mix has been gradually optimized to strengthen the effectiveness, stability and liquidity of the futures market. For instance, SHFE accepts Industrial and Commercial Bank of China, Bank of Communications, Industrial Bank Limited, China Minsheng Banking Corp., Bank of China, HSBC China and ANZ China as its proprietary trading members within the banking category, and UBS SDIC funds special account as its first special entity client.Fourthly, the Exchange has strengthened its IT infrastructure to perfect its risk control mechanism. As the first domestic futures exchange with an operating mode of Three Centers in Two Cities, SHFE has already comprehensively upgraded its data processing capability and market informatization level. Finally, SHFEhas enhanced its capability to serve industrial clients by optimizing the business operational management. With the trial running and facilitation of its new hedging measures, the Exchange has put all varieties under its uniform management and also pressed forward the electronization of hedging management.

According to Mr. Huo Ruirong, the Exchange will explore the effective thoughts and solution path to really implement its risk control measures with the theory that "holds the bottom line to prevent any systematic or regional risks".In particular, the Exchange willchange the three price limitation systems from a static state to a more dynamic mode, thus giving full play to the risk mitigation function of the second and the third price limitations. While strictly holding the bottom line of the market, the Exchange also focuses on the routine risk control and facilitates the continuous improvement of market operating quality by analyzing the market indexes movement, grasping the multifaceted risk state, rationally utilizing multiple risk control instruments and duly making pilot studies and predictions against market risks.

Mr. Huo pointed out that the Exchange will focus on the promotion of market functioning and the upgrading of the effectiveness of futures price as well as the interactivity between the futures and physical prices.The Exchange has further optimized its delivery process to shorten the deliverycircle and reduce the delivery costs for members since last year.Meanwhile, it has also successively adjusted the handling charges as per CSRC's uniform requirements and thus facilitated the members to better serve their industrial clients by improving the market liquidity and increasing the convenience of hedging trading. Next steps will be further improvement on the collection mode and mechanism for handling charges so as to satisfy the needs of physical industries and investors.

Mr. Huo stressed that SHFE will continuously make greater efforts in market reform and innovation. First of all, the Exchange will further post itself to serving a much wider and deeper range of physical economy. For instance, it will push forward the deposit banks to help enterprises solve financing issues through warrant pledges. Secondly, the Exchange will further improve its product series.In particular, it will mount on an all-out push for the launching of crude oil futures, make sufficient preparations for the list of options and actively carry forward the research and development of index products. Finally, the Exchange will continuously push forward the innovative development of its mechanisms and rules.For instances, it will fully implement theoverseas brand whole-process registraition, probethe establishment of continous trading system for all listed varieties, and explore the feasilibility and participation moded for the entry of major investors into the futures market, including oveaseas investors and institutional investors.

In addition, relevant participants from SHFE and Yunnan Copper also extended their analysis and views covering the the topics such as recent operation of Shanghai futures market, silver futures key points, hedging experience and cases for silver-related enterprises.

During the discussion, the representatives from more than 30 media all said that this encounter gave them an opportunity to walk through the plant workshops and have a dialogue with the enterprise management, which not only brings them the intuitive understanding of silver production and processing processes, but also enable them to obtain the in-depth experience on how to serve the physical encomony with siver futures and how to utilize futures instruments by enterprises. SHFE has deepened and promoted the market education through those interactive coperations in various forms such as media encounter, field survey on front-line enterprises and systematic training activities.These great efforts will help the media better communicate the positive functions of futures market to the public, guide the public to take an objective view on the market, and therefore press forward the market development, support the growth of market subjects such as the exchanges and futures companies, and facilitate the implementation and functioning of market measures.