Chapter 1 GENERAL PROVISIONS

1.1 These Regulations are made in accordance with the General Exchange Regulations of Shanghai Futures Exchange to ensure the futures delivery and regulate physical delivery activities on the Shanghai Futures Exchange, or the Exchange.

1.2 These Regulations are applicable to the futures delivery on or through the Exchange, and are therefore binding on the Exchange, the members, clients and certified delivery warehouses.

 

Chapter 2 PROCEDURES OF DELIVERY

2.1 Physical delivery is referred to as the process that a futures contact is settled on maturity by an exchange of the ownership of the contract’s underlying commodity

2.2 After the last trading day of a futures contract, all the holders of open positions shall perform their obligations to the contract by the means of physical delivery. Physical delivery of a client shall be assigned to the carrying member who shall represent the client on all the dealings on or through the Exchange.

A client unable to provide or accept the Value-added Tax invoice, or the VAT invoice, is prohibited of entering into a physical delivery.

After the closing of the third trading day prior to the last trading day of a futures contract, a natural person client shall hold nil (0) open positions to the contract. As of the second trading day prior to the last trading day, any of the outstanding positions will be closed out by the Exchange.

2.3 Physical delivery shall be concluded within the delivery period that is specified in the futures contract. The delivery period is the five (5) business days succeeding the last trading day of the contract, as  named the first, second, third, fourth and fifth delivery day, and the fifth is the last delivery day.

2.4 Delivery procedures

    2.4.1 The first delivery day

        2.4.1.1 The buyer submits its intent. Within the day the buyer submits to the Exchange its intent for a commodity that specifies the name of commodity, grade or brand, quantity, name of the certified delivery warehouse.

        2.4.1.2 The seller presents the standard warrant (mill-based standard warrant is applicable to the rebar and wire rod futures contract). Within the day the seller posts the valid standard warrant whose carrying charges are paid out to the Exchange through the Standard Warrant System.

Provisions on the mill-based standard warrant shall be referred to in the Steel Mill Delivery Warehouse Regulations of Shanghai Futures Exchange (Trial).

    2.4.2 The Second Delivery Day

         The Exchange allocates the standard warrants. On the day the Exchange allocates to the buyer standard warrants in methodologies such as:

l  Temporal priority;

l  Quantity being rounded to the nearest integer;

l  Nearest matching; 

l  Coordinated allocation.

The standard warrants unable to be applied to the delivery against the futures contract of succeeding delivery month shall be allocated by the Exchange to the buyer on a pro rata basis by their proportion of the total delivery volume in the current month.

    2.4.3 The third delivery day

          2.4.3.1 The buyer makes payment and receives warrants. On the day the buyer shall make payment and receive the standard warrants at the Exchange by 14:00 hours.

        2.4.3.2 The seller receives payment. On the day the Exchange shall post the payment to the seller by 16:00 hours; however, under exceptional circumstances, the Exchange may prolong the payment.  

2.4.4 The fourth and fifth delivery day

     The seller submits the VAT invoice.

2.5 A standard warrant applied for physical delivery on or through the Exchange is circulated in the order of the following procedures:

(1) The seller client entrusts the standard warrants to the seller’s FCM member for dealings of physical delivery;

(2) The seller’s member submits the standard warrants to the Exchange;

(3) The Exchange allocates the standard warrants to the buyer’s member; and

(4) The buyer’s member distributes the standard warrants to the buyer client.

2.6 After the physical delivery is concluded, if the buyer has any dispute on the quality and quantity of the commodity (the disputed natural rubber shall stay in the certified delivery warehouses), the buyer shall submit a written request for a resolution to the Exchange by or on the 15^th business day of the month succeeding the spot month (if the date is a public holiday, it shall be postponed to the first business day after the holiday), and provide the quality assaying report issued by a quality assayer certified by the Exchange, as specified in the Appendix 2 to these Regulations whereas a list of certified assayers for lead futures shall be announced by the Exchange in due course. If the submission fails the time limit, the buyer shall be deemed to have no dispute on the commodity, for which the Exchange will not hear any more of such request. Nonetheless, provisions in the second section of this Rule 2.6 with regard to dispute on the quality and quantity of rebar and wire rod shall prevail.

After the physical delivery of rebar and wire rod is concluded, if the buyer has nay dispute on the quality and quantity of the commodity (the disputed commodity shall stay in the certified delivery warehouse), the buyer shall submit a written request for resolution to the Exchange by or on the 15^th business day of the month succeeding the spot month (if the date is a public holiday, it shall be postponed to the first business day after the holiday), and provide the quality assaying report issued by a quality assayer certified by the Exchange (a list of certified assayers for rebar and wire rod futures shall be announced by the Exchange in due course). Quality warranty of the delivered rebar and wire rod shall contain the last delivery day of this delivery. Even if the quality warranty expires before the final date for the submission of dispute request, the seller shall be responsible for the actual quality of this delivery provided that the commodity is found ineligible by the quality assaying.

2.7 The buyer shall follow the procedures that are provided in relevant rules and regulations to make the commodity for a delivery in the future.   

 

Chapter 3 MOVE-IN AND MOVE-OUT

3.1 The owner that is about to send goods to the certified delivery warehouse shall register a move-in application (delivery notice).

Name of commodity, grade or brand, trademark, quantity, sender, destined certified delivery warehouse shall be provided in the application with all necessary certificates.  

A client shall designate the carrying FCM member to undertake procedures with regard to the delivery notice or the move-in application.

3.2 Given the availability of storage capacity, the Exchange shall, in its discreet consideration of the owner’s intent, determine within 3 business days whether the move-in application be approved. The owner shall address goods to the destined warehouse and within the time limit that are specified in the approved move-in application. Delivery shall be prohibited if the Exchange does not grant the approval or the move-in exceeds the specified time limit.

3.3 Upon the arrival of goods at the warehouse, the certified delivery warehouse shall inspect it and verify its certificates, in compliance with the relevant rules and regulations of the Exchange. When the inspection and verification is done, the conclusions the warehouse draws thereon shall be entered into the Standard Warrant System by the warehouse. The warehouse shall issue standard warrants to the member if the member’s application for those warrants is approved by the Exchange.

The owner shall oversee in person the inspection on and verification to the arrived goods. Otherwise, it is deemed that the owner agrees with the certified delivery warehouse on the conclusions it draws of the inspection and verification.

3.4 If a legitimate holder of the standard warrants applies to take delivery, the certified delivery warehouse shall not make the delivery unless the warrants are verified valid and eligible. The owner may, in its sole discretion, take delivery by itself or consign the warehouse to send the commodity, in the latter of which the owner shall oversee the delivery at the warehouse; otherwise, it is deemed that the owner recognizes the goodness of the warehouse’s making delivery.

3.5 At the time when the warehouse sends the commodity, it shall fill out the Standard Warrant Move-out Confirmation, which is in   duplicates each of which is retained by the owner and the warehouse respectively, stamp GOODS DELIVERED on the standard warrants it receives back, match them with the corresponding warehousing records and keep them for the checks thereafter.

 

Chapter 4 COPPER CATHODE

4.1 Delivery unit: twenty five (25) tons

4.2 Delivery grades and qualifications are provided in the Copper Cathode Futures Contract of Shanghai Futures Exchange.

4.3 Delivery commodity

The delivery commodity shall be the goods of the producers and trademarks that are both registered with the Exchange.

4.4 Packaging for the delivery commodity

(1) Packaging: the copper cathode of each delivery unit shall be of the production of the one producer and of the one trademark, the one grade, the one shape and similar set weight. The registered producer may decide, in its sole discretion, the weight of each set provided that it facilitates the formation of a delivery unit. Each weight set shall be assembled with rust-resistant steel straps in a double parallel-cross manner (#) or other methods of a similar strength. The strapping shall be reliable, goods marks shall be eye-catching and fast attached and the set weight shall be visible. Each set weight shall not exceed four (4) tons.

(2) Among the arrived goods, sets or pieces with broken steel straps, severe rust or corrosion shall be reassembled with the specific steel straps before they are put to the delivery. Any costs incurring in the reassembly shall be borne by the owner.

4.5 Necessary certificates of the delivery goods

(1) Domestic product: the Product Quality Proof issued by the registered producer.

(2) Imported product: the Product Quality Proof, the Production Origin Proof, the Quality Assaying Report, the Customs Import Tariff Payment Certificate and the Customs VAT Levy Certificate. These certificates shall not serve valid unless they are verified by the Exchange.

If national policies on taxation or quality inspection change, the revised policies shall prevail, under which circumstances, the Exchange shall announce the renewed requirements for certificates with regard to the imported product.

4.6 Tolerance and scale difference: the underlying copper cathode of a standard warrant is twenty five (25) tons. Weight tolerance is plus or minus two percent (±2%). Scale difference is within plus or minus point 2 percent (±0.2%).

4.7 Within the delivery period, if the procedures respecting the dealings of the standard warrants, the VAT invoice, and payment are concluded by 14:00 hours on the current day, the Exchange shall refund on that day the margin funds on the delivery positions. If the procedures are concluded after 14:00 hours on the current day, the Exchange shall refund the margin funds on the following business day.

4.8 Delivery locations: certified delivery warehouses of the Exchange, as specified in the designated by the Exchange, as in the Appendix 3 to these Regulations.

 

Chapter 5 ALUMINUM INGOT

5.1 Delivery unit: twenty five (25) tons.

5.2 Delivery grades and qualifications are provided in the Aluminum Futures Contract of Shanghai Futures Exchange.

5.3 Delivery commodity

The delivery commodity shall be the goods of the producers and trademarks that are both registered with the Exchange.

5.4 Packaging for the delivery commodity

(1) Packaging: the aluminum ingot of each delivery unit shall be of the production of the one producer and of the one trademark, the one grade, the one shape and the one packaging unit (similar set weight). The registered producer may decide, in its sole discretion, the weight of each set provided that it facilitates the formation of a delivery unit. Rust-resistant steel straps with the specific size (30-32 * 0.9-1.0 mm) shall be applied to assemble the weight set in a double parallel-cross manner (#). The strapping shall be reliable, goods marks shall be eye-catching and fast attached, the smelting furnace serial number and set weight shall be visible. Each set weight shall not exceed two (2) tons.

(2) Among the arrived goods, sets or pieces with broken steel straps, severe rust or corrosion shall be reassembled with the specific steel straps before they are put to the delivery. Any costs incurring in the reassembly shall be borne by the owner.

(3) Each ingot of the domestic product weighs fifteen (15) kilograms plus or minus (±) two (2) kilograms or twenty (20) kilograms plus or minus (±) two (2) kilograms. The imported product shall be in shape of ingot and weighs per ingot between twelve (12) kilograms and twenty six (26) kilograms.

5.5 Necessary certificates of the delivery goods

(1) Domestic product: the Product Quality Proof issued by the registered producer.

(2) Imported product: the Product Quality Proof, the Production Origin Proof, the Quality Assaying Report, the Customs Import Tariff Payment Certificate and the Customs VAT Levy Certificate. These certificates shall not serve valid unless they are verified by the Exchange.

If national policies on taxation or quality inspection change, the revised policies shall prevail, under which circumstances, the Exchange shall announce the renewed requirements for certificates with regard to the imported product.

5.6 Tolerance and scale difference: the underlying aluminum ingot of a standard warrant is twenty five (25) tons. Weight tolerance is plus or minus two percent (±2%).

5.7 Scale difference is within plus or minus point 1 percent (±0.1%).

5.8 Within the delivery period, if the procedures respecting the dealings of the standard warrants, the VAT invoice, and payment are concluded by 14:00 hours on the current day, the Exchange shall refund on that day the margin funds on the delivery positions. If the procedures are concluded after 14:00 hours on the current day, the Exchange shall refund the margin funds on the following business day.

5.9 Delivery locations: certified delivery warehouses of the Exchange, as specified in the designated by the Exchange, as in the Appendix 3 to these Regulations.

 

Chapter 6 ZINC INGOT

6.1 Delivery unit: twenty five (25) tons.

6.2 Delivery grades and qualifications are provided in the Zinc Futures Contract of Shanghai Futures Exchange.

6.3 Delivery commodity

The delivery commodity shall be the goods of the producers and trademarks that are both registered with the Exchange.

6.4 Packaging for the delivery commodity

(1) Packaging: the zinc ingot of each delivery unit shall be of the production of the one producer and of the one trademark, the one grade, the one shape and the one packaging unit (similar set weight). The registered producer may decide, in its sole discretion, the weight of each set provided that it facilitates the formation of a delivery unit. Rust-resistant steel straps with the specific size (30-32 * 0.9-1.0 mm) shall be applied to assemble the weight set in a double parallel-cross manner (#). The strapping shall be reliable, goods marks shall be eye-catching and fast attached, the serial number and set weight shall be visible. Each set weight shall not exceed two (2) tons.

(2) Among the arrived goods, sets or pieces with broken steel straps, severe rust or corrosion shall be reassembled with the specific steel straps before they are put to the delivery. Any costs incurring in the reassembly shall be borne by the owner.

(3) Each ingot of the domestic product weighs eighteen (18) kilograms to thirty (30) kilograms

6.5 Necessary certificates of the delivery goods

(1) Domestic product: the Product Quality Proof issued by the registered producer.

(2) Imported product: the Product Quality Proof, the Production Origin Proof, the Quality Assaying Report, the Customs Import Tariff Payment Certificate and the Customs VAT Levy Certificate. These certificates shall not serve valid unless they are verified by the Exchange.

If national policies on taxation or quality inspection change, the revised policies shall prevail, under which circumstances, the Exchange shall announce the renewed requirements for certificates with regard to the imported product.

6.6 Tolerance and scale difference: the underlying zinc ingot of a standard warrant is twenty five (25) tons. Weight tolerance is plus or minus two percent (±2%). Scale difference is within plus or minus point 1 percent (±0.1%).

6.7 Within the delivery period, if the procedures respecting the dealings of the standard warrants, the VAT invoice, and payment are concluded by 14:00 hours on the current day, the Exchange shall refund on that day the margin funds on the delivery positions. If the procedures are concluded after 14:00 hours on the current day, the Exchange shall refund the margin funds on the following business day.

6.8 Delivery locations: certified delivery warehouses of the Exchange, as specified in the designated by the Exchange, as in the Appendix 3 to these Regulations.

 

Chapter 7 LEAD INGOT

7.1 Delivery unit: twenty five (25) tons.

7.2 Delivery grades and qualifications are provided in the Lead Futures Contract of Shanghai Futures Exchange.

7.3 Delivery commodity

The delivery commodity shall be the goods of the producers and trademarks that are both registered with the Exchange.

7.4 Packaging for the delivery commodity

(1) Packaging: the lead ingot of each delivery unit shall be of the production of the one producer and of the one trademark, the one grade, the one shape and the one packaging unit (similar set weight). The registered producer may decide, in its sole discretion, the weight of each set provided that it facilitates the formation of a delivery unit.

Each set shall be assembled with rust and corrosion-resistant straps of proper strength as prescribed by the Exchange in due course. The strapping shall be reliable, goods marks shall be eye-catching and fast attached, which describes name of the production plant, product name, brand, serial number, net weight and date of production.

(2) Among the arrived goods, sets or pieces with broken steel straps, severe rust or corrosion shall be reassembled with the specific steel straps before they are put to the delivery. Any costs incurring in the reassembly shall be borne by the owner.

(3) Each ingot of the domestic product may weigh forty-eight (48) kilograms plus or minus (±) three (3) kilograms, forty-two (42) kilograms plus or minus (±) two (2) kilograms, forty (40) kilograms plus or minus (±) two (2) kilograms, twenty-four (24) kilograms plus or minus (±) one (1) kilogram.

7.5 Necessary certificates of the delivery goods

(1) Domestic product: the Product Quality Proof issued by the registered producer.

(2) Imported product: the Product Quality Proof, the Production Origin Proof, the Quality Assaying Report, the Customs Import Tariff Payment Certificate and the Customs VAT Levy Certificate. These certificates shall not serve valid unless they are verified by the Exchange.

If national policies on taxation or quality inspection change, the revised policies shall prevail, under which circumstances, the Exchange shall announce the renewed requirements for certificates with regard to the imported product.

7.6 Tolerance and scale difference: the underlying lead ingot of a standard warrant is twenty five (25) tons. Weight tolerance is plus or minus two percent (±2%). Scale difference is within plus or minus point 1 percent (±0.1%).

7.7 Within the delivery period, if the procedures respecting the dealings of the standard warrants, the VAT invoice, and payment are concluded by 14:00 hours on the current day, the Exchange shall refund on that day the margin funds on the delivery positions. If the procedures are concluded after 14:00 hours on the current day, the Exchange shall refund the margin funds on the following business day.

7.8 Delivery locations: the certified delivery warehouses of the Exchange, as announced by the Exchange in due course. Lead ingots for futures delivery shall be stored indoors.

 

Chapter 8 REBAR

8.1 Delivery unit: three hundred (300) tons

8.2 Delivery grades and qualifications are provided in the Rebar Futures Contract of Shanghai Futures Exchange.

8.3 Quality specifications  

The delivery commodity shall be the goods of the producers and trademarks that are both registered with the Exchange.

Rules provided in the National Standard GB 1499.2-2007—Steel for Steel Reinforced Concrete Part II: Hot-rolled Ribbed Steel Bar shall be applicable the shape, size, weight and tolerable difference of the delivery commodity.

Expiry of each delivery set shall be ninety (90) days as of the date of production. The standard warrant shall not be issued unless the commodity is entered into the certified delivery warehouse within thirty (30) days as of the production date.

Rebar for delivery at the delivery warehouse shall be nine (9) meter and/or twelve (12) meter in length.  

8.4 Packaging and stocking

Rules provided in the GB1499.2-2007—Steel for Steel Reinforced Concrete Part II: Hot-rolled Ribbed Steel Bar shall be applicable to the packaging, marking and the quality proof of the commodity.

The underlying rebar of a standard warrant shall be of the production of the one producer and of the one trademark, the one grade, the one

nominal diameter and the one length. The dates of production of the rebar to be delivered against a standard warrant shall not be over two (2) consecutive days apart and the earliest date shall be deemed as the date of production of the rebar under the warrant.

 The rebar under a standard warrant shall be stocked as one delivery unit.

8.5 Necessary certificates of the delivery goods

The Product Quality Proof issued by the registered producer shall be provided.

8.6 Measuring and tolerance

The commodity is measured in way of weighing. Tolerance for each standard warrant is plus or minus three percent (±3%). Scale difference is within plus or minus point three percent (±0.3%).

8.7 Within the delivery period, if the procedures respecting the dealings of the standard warrants, the VAT invoice, and payment are concluded by 14:00 hours on the current day, the Exchange shall refund on that day the margin funds on the delivery positions. If the procedures are concluded after 14:00 hours on the current day, the Exchange shall refund the margin funds on the following business day.

8.8 Delivery locations: the delivery warehouses certified by the Exchange, and the mill-based warehouses that shall be certified and announced by the Exchange in due course.

 

Chapter 9 WIRE ROD

9.1 Delivery unit: three hundred (300) tons

9.2 Delivery grades and qualifications are provided in the Wire Rod Futures Contract of Shanghai Futures Exchange.

9.3 Quality specifications  

The delivery commodity shall be the goods of the producers and trademarks that are both registered with the Exchange.

Rules provided in the National Standard GB 1499.1-2008—Steel for Steel Reinforced Concrete Part I: Hot-rolled Plain and Round Steel Bar shall be applicable to the shape, size, weight and tolerable difference of the delivery commodity.

Expiry of each delivery set shall be ninety (90) days as of the date of production. The standard warrant shall not be issued unless the commodity is entered into the certified delivery warehouse within thirty (30) days as of the production date.

9.4 Packaging and stocking

Rules provided in the GB1499.1-2008—Steel for Steel Reinforced Concrete Part I: Hot-rolled Plain and Round Steel Bar shall be applicable to the coiled delivery, packaging, marking and the quality proof of the commodity.

The underlying wire rod of a standard warrant shall be of the production of the one producer and of the one trademark, the one grade and the one nominal diameter. The dates of production of the wire rod to be delivered against a standard warrant shall not be over two (2) consecutive days apart and the earliest date shall be deemed as the date of production of the wire rod under the warrant.

 The wire rod under a standard warrant shall be stocked as one delivery unit.

9.5 Necessary certificates of the delivery goods

The Product Quality Proof issued by the registered producer shall be provided.

9.6 Tolerance and scale difference

The commodity is measured in way of weighing. Tolerance for each standard warrant is plus or minus three percent (±3%). Scale difference is within plus or minus point three percent (±0.3%).

9.7 Within the delivery period, if the procedures respecting the dealings of the standard warrants, the VAT invoice, and payment are concluded by 14:00 hours on the current day, the Exchange shall refund on that day the margin funds on the delivery positions. If the procedures are concluded after 14:00 hours on the current day, the Exchange shall refund the margin funds on the following business day.

9.8 Delivery locations: the delivery warehouses certified by the Exchange, and the mill-based warehouses that shall be certified and announced by the Exchange in due course.

 

Chapter 10 NATURAL RUBBER

10.1 Delivery unit: five (5) tons.

10.2 Delivery grades and qualifications are provided in the Natural Rubber Futures Contract of Shanghai Futures Exchange.

10.3 Origins of production and price differences for the delivery commodity are provided in the Appendix 1 to theseRegulations.

10.4 Packaging

(1) Domestic product (SCR WF) shall be wrapped by polyethylene film and polypropylene bag. Each pack net weighs thirty three point three (33.3) kilograms, thirty (30) packs forming a ton. No tolerance is applied to weight. The size of a pack shall be six hundred and seventy (670) × three hundred and thirty (330) × two hundred (200) millimeters. On the surface of the pack the specifications of the commodity shall be carried to indicate the grade, net weight, name or signifier code of producer, date of production, production license number and so forth.  

(2) The imported RSS 3 rubber shall be in packs covered with rubber sheets. Packs of each delivery set shall be of the same weight. The standard weight of a pack shall be one hundred and eleven point one one (111.11) kilograms, nine (9) packs forming a ton. No tolerance is applied to weight. The sub-standard packs shall be measured by their actual weights, a scale difference within plus or minus point 2 percent (±0.2%) and a tolerance of plus or minus three percent (±3%) is applied.  

10.5 Necessary certificates of the delivery goods

(1) Domestic product (SCR WF): the originals of the Quality Inspection Certificate (or the Testing /Appraisal Report) on the actual delivery goods issued by a national quality testing organization that is certified by the Exchange , as specified in the Appendix 2 to these Regulations, shall be provided at the time of delivery.

(2) The imported RSS 3: the originals of the official or duplicate version of the Declaration to the Customs on Import Goods, the Quality Assaying Report and the photocopy of the Foreign Trade Contract, the Customs Import Tariff Payment Certificate and the Customs VAT Levy Certificate.

(3) Sample test is applied to the goods inspection. Samples shall be taken in the premises of the certified delivery warehouse after the completion of entry. Samples shall not be taken in the process of transportation, such as at the railway station, or at the port. A set for a sample test is of no more than one hundred (100) tons, in excess of which additional sample tests shall be applied.  

If national policies on taxation or quality inspection change, the revised policies shall prevail, under which circumstances, the Exchange shall announce the renewed requirements for certificates with regard to the imported product.

10. 6 Period of validity

(1) Domestic product (SCR WF) is valid for delivery at the warehouse to the last delivery month of the second (2^nd) year after the year of its production. Beyond that time, the rubber shall be unwarranted and converted to be physical goods. If the domestic rubber produced in the current year is to be applied to the physical delivery, it shall be entered into the warehouse no later than the sixth month (excluding June) of the succeeding year; otherwise, it shall not be put to delivery.

(2) The imported RSS 3 is valid for delivery at the warehouse to the eighteenth (18^th) month as of the issuance ofthe Quality Assaying Report. Beyond that time, the rubber shall be converted to be physical goods. The RSS 3 applied for physical delivery shall be entered into the warehouse within the sixth month as of the issuance of the Quality Assaying Report; otherwise, it shall not be put to delivery.

(3) The Quality Assaying Report and the Quality Inspection Certificate (or the Testing /Appraisal Report) of the rubber at the warehouse are valid to the ninetieth (90^th) day as of their issuance. After they expire, the corresponding commodity shall not be put to delivery unless it is inspected and verified anew.

10.7 The natural rubber inbound to warehouses shall be dry and clean. The certified delivery warehouse shall open packs by ten percent (10%) of the entire goods for inspection and then it shall sew up those packs. The warehouse shall reject the move-in if defective features are detected such as cracking, drenching, damp, mildew, blackening, severe contamination, and the goods of those features shall not be put to delivery.

10.8 The natural rubber that is delivered against a standard warrant shall be of the same delivery set and of the same production origin.

10.9 After receiving the buying member’s payment for the delivery, the Exchange shall, after receiving the buying member’s payment for the delivery, refund it its margin fund on the delivery positions. The Exchange shall, in its sole discretion, withhold the margin fund of the selling member on the delivery positions and if no disputes on quality arise the Exchange will refund the margin funds to the selling member on the first business day after the fifteenth (15^th) date of the month succeeding the delivery month.

10.10 Delivery locations: the certified delivery warehouses of the Exchange, as provided in the Appendix 3.

 

Chapter 11 EXCHANE OF FUTURES FOR PHYSICALS

11.1 The Exchange of Futures for Physicals, or the EFP, is the process that the members (clients) who hold opposite positions to the same delivery month futures contract apply to the Exchange and, with the Exchange’s approval, close out such positions through the Exchange and at the price that is fixed by the Exchange, and post the standard warrants that are in conformity with the quantity, product and direction of the underlying commodity of the contract at the mutually agreed price. 

11.2 The EFP is exercisable as of the first business day after the last trading day of the previous month to the delivery month of the EFP contract to the second business day (the day is included) prior to the last business day of the EFP contract delivery month. Nonetheless, the EFP application shall not be processed for the last three business days of the first month prior to the EFP contract delivery month.

After the buying and selling members (clients) holding opposition positions to the same delivery month futures contract agree with each other, they shall present an EFP application to the Exchange and fill out at the Exchange, including filling out the standard EFP application form, as provided in the Appendix 4, by 14:00 hours of each business day within the time specified above in this Rule 11.2

For the delivery against the substandard warrants, photocopies of relevant sales contract and claim for delivery shall be provided.

11.3 An EFP shall be applied to all the historical positions to all the listed contracts on the Exchange but not to the positions open on the application date. 

11.4 The delivery settlement price to an EFP shall be the mutually agreed price between the buying and selling member (clients).

11.5 The positions of the buyer and seller to the EFP contract shall be closed out by the Exchange by 15:00 hours of the application date at the settlement price of the EFP contract on the trading day prior to the application date.

11.6 The performance bond on the EFP positions shall be figured to the settlement price of the EFP contract on the trading day prior to the application date.

11.7 All the notes, papers including payment, warrants shall be concluded exchange on or through the Exchange by the 14:00 hours of the business day after the application date.

11.8 The delivery payment pertaining to an EFP shall be posted through the in-house fund transfer system.

11.9 The seller shall submit the VAT invoice to the Exchange within seven days as of the conclusion of the EFP procedures but no later than the last but two business day of the current month. If the seller submits the VAT invoice by 14:00 hours, the Exchange shall, in its sole discretion, refund the corresponding margin funds to the seller; if the seller submits the VAT invoice after 14:00 hours, the Exchange shall refund the margin funds at its clearing cycle on the next business day. The Exchange shall issue the VAT invoice to the buyer on the next business day after it receives the VAT invoice from the seller.

Failure to submit the VAT invoice shall be subject to the provisions in the Clearing Regulations of Shanghai Futures Exchange.

11.10 Failure to conclude the settlement and delivery within the time as specified in Rule 11.7 shall be subject to the provisions with regard to delivery default in these Regulations. If disputes on the quality of goods arise, the buyer shall request for a dispute resolution within twenty five (25) days as of the exchange of notes and papers, and provide with the request a Quality Assaying Report issued by a quality assayer certified by the Exchange.

Disputes concerning quality of the delivery goods against substandard warrants shall be resolved by and among the interested members, of which the Exchange is exempt from any warranty responsibilities.

11.11 Any ill-willed EFP behavior shall be subject to the sanctions as provided in the Enforcement Regulations of Shanghai Futures Exchange.

11.12 The Exchange shall make a timely disclosure of information on the EFP.

 

Chapter 12 CHARGES AND FEES

12.1 Parties to a physical delivery shall pay delivery fees to the Exchange by the rates as follows:

l  Copper: two (2) yuan/ton;

l  Aluminum: two (2) yuan/ton;

l  Zinc: two (2) yuan/ton;

l  Rebar and wire rod: one (1) yuan/ton;

l  Natural rubber: four (4) yuan/ton; and

l  Lead: to be set forth and announce by the Exchange in due course.

12.2 Items and rates for the carrying charges for the move-in and storage shall be verified and approved by the Exchange.

12.3 Regular items and methods of charges by the certified delivery warehouse are as follows:

(1) Move-in fees, move-out fees, loading fees, packaging fees, pick-up fees, ownership transfer fees, consignment fees, fast track fees, special working charges, warrants printing fees, and other charges recognized and approved by the Exchange. The warehouse shall present to the owner legitimate documents that specify fees charged on the actual items of service. The owner shall, after verifying and recognizing the goodness of those documents, pay them out at one time.

(2) Warehousing fees are charged on a daily basis. The warehousing fees chargeable prior to the last delivery day (the day is included) shall be borne by the seller, while the fees thereafter by the buyer. The certified delivery warehouse will note the date of payment on the standard warrants when the fees are paid. The owner shall make the payment by the end of each month at the certified delivery warehouse. Advance payment is allowed.

Charges and fees of the certified delivery warehouse for natural rubber shall be set forth and announced by the Exchange in due course.

Charges and fees of the certified delivery warehouse for copper, aluminum and zinc shall be set forth and announced by the Exchange in due course.

Charges and fees of the certified delivery warehouse for rebar and wire rod shall be set forth and announced by the Exchange in due course.

Charges and fees of the certified delivery warehouse for lead shall be set forth and announced by the Exchange in due course.

 

Chapter 13 DEFAULT

13.1 Any of the following acts constitute a default on delivery:

(1) A seller fails to present standard warrants in sufficient amount within the specified time limit;

(2) A buyer fails to make payment in sufficient amount within the specified time limit; or

(3) The goods a seller delivers does not comply with the specified grades and qualifications.

13.2 In calculating the buyer’s amounts of insolvent contracts, a deposit of twenty percent (20%) of the value of the contracts shall be reserved for default fines and indemnifications.

The following formulas shall be followed to count the insolvent amounts:

SAD=ASWD– ASWP

BAD=(PD – PM)÷(1-20%)÷DSP÷TU

where

SAD=Seller’s Amounts (in lot) Defaulted

ASWD=Amounts (in lot) of Standard Warrants Due

ASWP=Amounts (in lot) of Standard Warrants Post

BAD=Buyer’s Amounts (in lot) Defaulted

PD=Payment Due

PM=Payment Made

DSP=Delivery Settlement Price

TU=Trading Unit

13.3 If a default exists, the Exchange shall, by 1630 hours of the default date, notify the party who commits the default, or the defaulter, and the party who is defaulted on, or the defaultee.

The defaultee shall, by 11:00 hours of the business trading day, submit to the Exchange a written intent on whether to terminate or continue the delivery. Failure to submit the intent within the specified time limit shall be deemed by the Exchange as intent for termination on the part of the defaultee.

13.4 In the event of a default, the defaulter shall post a default deposit in sum of five percent (5%) of the nominal value of the defaulted amounts, and the following methods shall be applied:

(1) If the seller defaults, the buyer may opt for any of the following actions:

a. Terminate delivery. The Exchange shall refund the payment to the buyer; or

b. Continue delivery. The Exchange shall, on the next business day after it rules the seller defaults, call for a public procurement for the standard warrants and apply the bid within seven business days. If the procurement proves successful, the Exchange shall present the procured standard warrants to the buyer; otherwise, the seller shall make payment to the buyer in sum of fifteen percent (15%) of the nominal value of the defaulted amounts as indemnifications, the Exchange shall return the delivery payment to the buyer and the delivery is terminated. The seller shall bear all the losses and costs due to or arising in the public procurement.

(2) If the buyer defaults, the seller may opt for any of the following actions:

a. Terminate delivery. The Exchange shall return the standard warrants to the seller.

b. Continue delivery. The Exchange shall, on the next business day after it rules the buyer defaults, call for a public sale of the standard warrants and apply the sale within seven business days. If the sale proves successful, the Exchange posts the delivery payment to the seller; otherwise, the buyer shall make payment to the seller in sum of fifteen percent (15%) of the nominal value of the defaulted amounts to the seller, the Exchange shall return the standard warrants to the seller and the delivery is terminated. The buyer shall bear all the losses and costs due to or arising in the public sale.

The Exchange’s obligations to guarantee the delivery shall be dismissed with the termination of the delivery.

13.5 The procurement price shall not be greater than one hundred and twenty five percent (125%) of the delivery settlement price and the sale price no lower than seventy five percent (75%) of the delivery settlement price.

13.6 In the event of the buyer and seller default simultaneously, the Exchange shall terminate the delivery and fine both sides in sum of five percent (5%) of the nominal value of the defaulted amounts.

13.7 If a member commits a partial delivery default, the standard warrants or the payment the defaulter member receives may be applied to the resolution of the default.

13.8 If a member intends to commit a default on physical delivery, it shall be brought subject to sanctions provided in the Enforcement Regulations of Shanghai Futures Exchange.

13.9 The member involved in a default and the certified delivery warehouses are obligated to provide evidences, materials and information with regard to the default. The member’s failure to provide those evidences, materials and information will not impede the establishment of recognition of the facts of a default.

13.10 Disputes between the owner and the certified delivery warehouse on the conclusions of goods inspection shall be resolved by taking a joint inspection that both parties participate in. A certified quality assayer of the Exchange can be approached for a re-inspection and the conclusions made of the re-inspection will be referred to in the resolution of disputes.

 

Chapter 14 OTHERS

14.1 Provisions with regard to fuel oil, gold shall be set forth and announced by the Exchange in due course.

14.2 Rules and regulations applicable to trading of spot contracts and standard warrants shall be made in due course.

14.3 Any violations of these Regulations shall be subject to the sanctions as provided in the Enforcement of Shanghai Futures Exchange.

14.4 The Shanghai Futures Exchange reserves the right to interpret these Regulations.

14.5 These Regulations are effective as of March 24, 2011.

 

The Appendix 1  Producing locations of natural rubber approved of delivery by the Exchange and premium and discount rates

The Appendix 2  Quality appraisers on copper, aluminum, zinc, natural rubber designated by the Exchange

The Appendix 3  Delivery warehouses designated by the Exchange

The Appendix 4 Application form of EFP of the Shanghai Futures Exchange

Appendix I

 

Producing locations of natural rubber approved of delivery by the Exchange and premium and discount rates

 

Rubber type	Production location	Grade, premium and discount
SCR WF	Yunnan Plantations, HainanPlantations	Standard
RSS3	Thailand, Malaysia, Indonesia,Sri Lanka	Standard

 

Appendix II

Quality appraisers on copper, aluminum, zinc, natural rubber designated by the Exchange

 

Name	Product
Technical Center for Industrial Products and Raw Materials Inspection, Shanghai Entry-Exit Inspection and Quarantine Bureau	Copper, aluminum, zinc, rubber
Shandong Co., Ltd. Of China Certification & Inspection Group	Rubber
Center of Supervision, Inspection and Testing for the Quality of Natural Rubber under Ministry of Agriculture of the People’s Republic of China (Hainan)	Rubber
Station of Supervision and Inspection for the Quality of Natural Rubber and Coffee Products of Yunnan Province (Kunming)	Rubber
East China Center of Quality Inspection ofChina Non-ferrous Metals Industry	Copper, aluminum, zinc
South China Center of Quality Inspection ofChina Non-ferrous Metals Industry	Copper, aluminum, zinc
Tianjin Co., Ltd. of China Certification & Inspection Group	Rubber
China Certification & Inspection Group Inspection Co., Ltd.	Copper, aluminum, zinc
Shanghai Zhong Chu Material Inspection Co., Ltd.	Copper, aluminum, zinc

 

Appendix III

Delivery warehouses designated by the Exchange

(Updated on January 31, 2011)

Appendix IV

Application form of EFP of the Shanghai Futures Exchange

 

Date of Application  MM/DD/YY

We, as the buyer and seller, bound by the Detailed Rules on Delivery of the Shanghai Futures Exchange, apply hereby on the following details

 

Product		Contract
Lots for Delivery		Tons of Delivery
Delivery Settlement Price	(yuan/ton)
Buyer Member (Badge No.)		Seller Member (Badge No.)
Buyer Client Name		Seller Client Name
Buyer Client Code		Seller Client Code
Nature of Buyer Positions		Nature of Seller Positions
*Delivery Point of Non-standard Warrants		*Brand of Non-standard Warrant
*Non-standard Warrant Code		*Amounts of Non-standard Warrants (tons)
*Reasons for delivery of non-standard warrants

Note: *Only applicable in delivery of non-standard warrants. For a delivery of non-standard warrants, photocopies of relevant trading contracts and delivery claim statement shall be provided.

 

Buyer member stamp                       Seller member stamp