BOCA RATON, Mar. 17, 2004- Shanghai Futures Exchange (SHFE) and the Chicago Mercantile Exchange Inc. (CME) today announced that the two exchanges have signed a licensing agreement allowing SHFE to adopt the Standard Portfolio Analysis of Risk (SPAN) system. Initially, SHFE will use it for internal research purposes. SHFE will formally introduce the system after a trial period under the pending aapproval of the China Securities Regulatory Commission.

The announcement follows a Memorandum of Understanding (MOU) signed one year ago in which SHFE and CME agreed to pursue joint business development initiatives in derivatives products, the first such agreement between SHFE and a North American exchange. Under the MOU, the two exchanges agreed to discuss a variety of issues, including cooperation related to product development, information sharing and market regulation.

"SHFE is proud to become the first exchange in Mainland China that adopts the international margin and risk management system,” said SHFE Chairperson Madam Wang Lihua, “This is one of steps SHFE takes to upgrade its risk management mechanism. This globally recognized system will help SHFE to better incorporate itself in the international futures market landscape.”

“We are pleased that our important relationship with SHFE has resulted in this agreement,” said CME Chairman Terry Duffy. “CME remains focused on long-term growth. By achieving common goals with SHFE, we are well positioned in the expansion of the Chinese marketplace.”

In 1988, CME developed and implemented the SPAN methodology for calculating performance bond requirements. SPAN was the first futures industry performance bond system ever to calculate requirements exclusively on the basis of overall portfolio risk. Today, SPAN has become the industry standard; the program is now the official performance bond mechanism employed by 45 exchanges and clearing organizations around the world.