Chapter 1     GENERAL PROVISIONS

Article 2     Hedging positions include regular month hedging positions and nearby delivery month hedging positions.

Hedging positions for copper, aluminum, zinc, lead, nickel, tin, steel rebar, wire rod, hot-rolled coil, gold, silver, natural rubber, and bitumen, and bleached softwood kraft pulp (BSKP) futures include regular month hedging positions and nearby delivery month hedging positions. For the foregoing futures contracts, the term “regular month” as used herein means months during the period from the listing date till the final trading day of the second month prior to the delivery month, and the term “nearby delivery month” as used herein means the first month prior to the delivery month and the delivery month.

Hedging positions for fuel oil futures include regular month hedging positions and nearby delivery month hedging positions. For the fuel oil futures contract, the term “regular month” as used herein means months during the period from the listing date till the last trading day of the third month prior to the delivery month, and the term “nearby delivery” as used herein means the second month and the first month prior to the delivery month.

Article 3          These Hedging Rules shall be observed by the members and customers who engage in hedging activities on the Shanghai Futures Exchange (the “Exchange”).

Chapter 2     APPLICATION AND APPROVAL OF REGULAR MONTH HEDGING POSITIONS

    Article 8     Regular month hedging positions for copper, aluminum, zinc, lead, nickel, tin, steel rebar, wire rod, hot-rolled coil, gold, silver, natural rubber, and bitumen, and BSKP futures shall be applied for before the final trading day of the second month prior to the delivery month of the contract, and the Exchange will not accept any applications for regular month hedging positions after the expiry of such period. Each member or customer may each time apply for regular month hedging positions in various contracts.

Chapter 3     APPLICATION AND APPROVAL OF NEARBY MONTH HEDGING POSITIONS

Article 15     Nearby delivery month hedging positions for copper, aluminum, zinc, lead, nickel, tin, steel rebar, wire rod, hot-rolled coil, gold, silver, natural rubber, and bitumen, and BSKP futures shall be applied for during the period from the first trading day of the third month prior to the delivery month of the contract to the final trading day of the month prior to the delivery month, and the Exchange will not accept any applications for nearby delivery month hedging positions after the expiry of such period.

Article 18     If a non-FF member’s or a customer’s application for the nearby delivery month hedging positions for copper, aluminum, zinc, lead, nickel, tin, rebar, wire rod, hot-rolled coil, gold, silver, natural rubber, and bitumen, and BSKP futures is not approved by the Exchange, the lower of the regular month hedging positions approved and the position limit for such futures product shall be applied when such regular month hedging positions enter the month prior to the delivery month and the delivery month, and will be converted into nearby delivery month hedging positions under such standard. If the non-futures firm or the customer's application for nearby delivery month hedging positions is approved during the nearby delivery month, the approved nearby delivery month hedging positions shall become applicable.

If a non-FF member’s or a customer’s application for the nearby delivery month hedging positions for fuel oil futures is not approved by the Exchange, the lower of the regular month hedging positions approved and the position limit for such futures product shall be applied when such regular month hedging positions enter the second month and the first month prior to the delivery month, and will be converted into nearby delivery month hedging positions under such standard. If the non-futures firm or the customer's application for nearby delivery month hedging positions is approved during the nearby delivery month, the approved nearby delivery month hedging positions shall become applicable.

Chapter 4     HEDGING TRADING

Article 20     As of the first trading day of the delivery month of each copper, aluminum, zinc, lead, nickel, tin, steel rebar, wire rod, hot-rolled coil, gold, silver, natural rubber, and bitumen, and BSKP futures contract, each member or customer shall not open new positions as hedging positions in that contract when it has opened positions as hedging positions aggregately to the maximum of the hedging positions set forth by the Exchange for that member or customer.