BUTADIENE RUBBER FUTURES RULES OF THE SHANGHAI FUTURES EXCHANGE

CHAPTER 1 GENERAL PROVISIONS

Article 1 These Butadiene Rubber Futures Rules are made in accordance with the General Exchange Rules of the Shanghai Futures Exchange, the SHFE Butadiene Rubber Futures Contract Specifications, and the relevant business rules to regulate business related to butadiene rubber futures at the Shanghai Futures Exchange (the “Exchange”).

Article 2 These Butadiene Rubber Futures Rules shall be observed by the Exchange, Members, Clients, Delivery Storage Facilities, Designated Inspection Agencies, Futures Margin Depository Institutions, and other participants of the futures market.

CHAPTER 2 TRADING

Article 3 Contract size for butadiene rubber futures is five (5) metric tons per lot.

Article 4 Price quotation of a butadiene rubber futures contract is Yuan (RMB)/metric ton.

Article 5 Minimum price fluctuation of a butadiene rubber futures contract is five (5) Yuan/metric ton.

Article 6 Listed contracts of butadiene rubber futures cover the most recent twelve (12) months.

Article 7 Trading hours of a butadiene rubber futures contract are 9:00 a.m. to 11:30 a.m., 1:30 p.m. to 3:00 p.m., and other hours specified by the Exchange.

Article 8 The last trading day of a butadiene rubber futures contract is the 15th day of the contract month. The last trading day will be postponed accordingly if it is a legal holiday in China, and will be subject to separate adjustment and announcement by the Exchange if it falls in the Spring Festival month or any other month specially designated by the Exchange.

Article 9 Contract symbol of butadiene rubber futures is BR.

Article 10 For the hedging and arbitrage quotas of a butadiene rubber futures contract, regular months extend from the day of listing to the last trading day of the second month before the delivery month, while nearby delivery months cover the month before the delivery month and the delivery month.

Article 11 An application for a regular month hedging quota of a butadiene rubber futures contract shall be submitted by the last trading day of the second month before the delivery month of the contract. Late applications will not be accepted by the Exchange.

An application for a nearby delivery month hedging quota of a butadiene rubber futures contract shall be submitted between the first trading day of the third month before the delivery month of the contract and the last trading day of the month before the delivery month. Late applications will not be accepted by the Exchange. An application for a nearby delivery month arbitrage quota of a butadiene rubber futures contract shall be submitted between the first trading day of the second month before the delivery month of the contract and the last trading day of the month before the delivery month. Late applications will not be accepted by the Exchange.

Article 12 Hedging quota of a butadiene rubber futures contract shall no longer be used in a revolving manner starting from the first trading day of the delivery month.

CHAPTER 3 DELIVERY

SECTION 1 GENERAL PROVISIONS

Article 13 A butadiene rubber futures contract may be physically delivered through an Exchange of Futures for Physicals (“EFP”) a delivery warehouse, or a delivery factory.

Butadiene rubber futures adopt duty-paid delivery.

Article 14 Grade and quality specifications are provided in the SHFE Butadiene Rubber Futures Contract Specifications.

Article 15 The butadiene rubber for physical delivery shall be certified by the Exchange. The list of certified butadiene rubber will be separately announced by the Exchange.

Article 16 Packaging

(i) Butadiene rubber underlying each standard warrant shall be of the same manufacturer, brand, grade (designation), and packaging specification and have their dates of production spanning no more than thirty (30) consecutive days. The earliest of such dates shall be taken as the date of production on the standard warrant.

(ii) Deliverable butadiene rubber shall meet the packaging requirements for commodities recognized by the Exchange. The outer packaging of each pack shall have a clearly recognizable label indicating the product name and other identifying information.

(iii) The outer packaging of deliverable butadiene rubber shall be polyethylene film, composite plastic woven bags, or other materials recognized by the Exchange. Each bag shall have a net weight of 25 kg or other weight recognized by the Exchange.

Article 17 Required documentation for deliverable commodity

(i) Domestic commodity: the certificate of inspection issued by a Designated Inspection Agency, and the certificate of quality issued by the manufacturer.

(ii) Imported commodity: the certificate of inspection issued by a Designated Inspection Agency; the customs declaration form, certificate of VAT withholding by the customs, bill of lading, and certificate of quality of the physical commodity in question, and other relevant materials. These documents are deemed valid only after being verified by the Exchange.

If there has been any change to national policies on taxation, customs, or other relevant matters, the revised policies shall prevail. In such circumstance, the Exchange will separately announce the revised requirements for the documentation for imported products.

Article 18 Measuring and tolerance

The delivery weight of butadiene rubber shall be the net weight or content shown on its package. Domestic butadiene rubber underlying each standard warrant shall have no weight tolerance; and difference between standard warrant weight and actual delivery weight of imported butadiene rubber shall not exceed plus or minus five percent (±5%).

Article 19 Delivery unit of a butadiene rubber futures contract is ten (10) metric tons.

Article 20 Delivery period of a butadiene rubber futures contract is the two (2) consecutive business days immediately following the last trading day of the contract.

Article 21 The benchmark price for delivery settlement of a butadiene rubber futures contract is the arithmetic average of the settlement prices of that contract over the last five (5) trading days on which it was traded.

Article 22 Delivery venue: the delivery warehouses and delivery factories of the Exchange, to be separately announced by the Exchange.

Article 23 If standard warrants are used for an EFP and the EFP is settled via the Exchange, and a dispute over the quality of the deliverable commodities arises, the buyer shall submit a request for dispute resolution within twenty-five (25) days after the payment and the exchange of standard warrants, together with the quality assay report issued by a Designated Inspection Agency.

SECTION 2 WAREHOUSE DELIVERY

Article 24 Load-in and load-out inspection

(i) Butadiene rubber arriving at a delivery warehouse shall be inspected by a Designated Inspection Agency in terms of quality. The quality shall be that shown on the Quality Inspection Report issued by the Designated Inspection Agency; and a standard warrant may only be issued if the report indicates that the commodity meets the quality specifications prescribed by the Exchange. The owner shall ensure that the commodity loaded in meets the quality specifications prescribed by the Exchange.

(ii) The quality of the commodities shall be inspected using a sample test. Samples shall be taken only on the premise of the delivery warehouse and shall not be taken at stations or docks during the process of transportation to the warehouse. The sample size may not exceed one hundred (100) metric tons. Any excess over this amount shall be subject to additional sample test(s). Each inspection lot shall consist of butadiene rubber of the same manufacturer, brand, grade (designation), and packaging specifications.

(iii) The delivery warehouse shall cooperate with the Designated Inspection Agency in the inspection process, and shall verify that the quantity (weight) difference between load-in and load-out will not exceed plus or minus five percent (±5%), and that pound difference will not exceed plus or minus one percent (±1%).

Article 25 The butadiene rubber arriving at a delivery warehouse shall have complete and clean packaging. The delivery warehouse shall check the whole shipment at acceptance. Any commodity that sticks to its outer packaging due to rainwater, moisture, severe contamination, or severe packaging damage shall be rejected and not enter the delivery process.

In loading out, if the owner raises an objection against any butadiene rubber that sticks to its outer packaging due to packaging damage, the manufacturer, the delivery warehouse, and the seller or the first holder of the relevant standard warrants shall cooperate in handling the objection.

Article 26 Deliverable butadiene rubber underlying each standard warrant shall be stacked in storage areas which hold one hundred (100) metric tons each.

Article 27 Validity period of warehouse standard warrant

A butadiene rubber warehouse standard warrant shall be valid until June 30 of the year following the production year. Beyond that, the underlying butadiene rubber shall be unwarranted and converted to physicals.

Butadiene rubber intended for physical delivery shall be loaded into a delivery warehouse within six (6) months from the production date. Beyond that, the butadiene rubber shall not be used for physical delivery.

Article 28 After the physical delivery is completed, if the buyer has any dispute over the quality or quantity of the commodity (any butadiene rubber in dispute shall remain in the delivery warehouse), the buyer shall submit a written request to the Exchange for dispute resolution before the fifteenth (15) day (including that day) of the month following the delivery month (in case that day falls on a public holiday, the date shall be extended to the first business day after the holiday), together with the quality assay report issued by a Designated Inspection Agency. The validity period for each batch of the delivered butadiene rubber shall cover the last delivery day of that delivery. Even if the validity period expires before the final date for the submission of a request for dispute resolution, the seller shall be responsible for the delivered commodities in the event that they fail the quality assay.

SECTION 3 FACTORY DELIVERY

Article 29 The application and approval of a Factory, its rights and obligations, regulation, and other matters shall be governed by reference to applicable provisions in the Delivery Storage Facility Rules of the Shanghai Futures Exchange. The Exchange has the right to exempt an applicant from providing a letter of guarantee based on its financial position, risk management capability, and operational resilience.

Article 30 Application

Before issuing any factory standard warrants, a Factory shall submit an issuance notice to the Exchange, specifying such information as the product, name of the carrying Member, name of the owner, and the quantity of standard warrants to be issued.

Article 31 A factory standard warrant shall be valid until June 30 of the year following the warrant creation year.

Article 32 Application for taking delivery

(i) An owner who intends to take delivery shall submit an application through the Standard Warrant Management System to the intended Factory before the 20th day of the month preceding the proposed take-delivery month. The application shall specify such information as the brands and quantity of the commodity, the proposed take-delivery date, location, method, and plan (including daily quantity), as well as the identification and contact information of the delivery taker.

(ii) The Factory will confirm the owner’s application within three (3) business days of receiving it after considering, among others, the owner’s proposed take-delivery date, brands, and take-delivery location.

If the owner’s proposed take-delivery date coincides with that of other owners holding factory standard warrants and their total daily take-delivery quantity exceeds the daily shipment quantity of the Factory, then the Factory may make an overall arrangement for shipment considering the order of their submission of applications and their take-delivery plans. The Factory shall also provide the owner with a take-delivery time period to choose from and a corresponding shipment plan (including daily shipment quantity) within three (3) business days after the owner’s submission of application. If agreeing to the arrangement, the owner may choose one day from the said period as the take-delivery date and confirm the shipment plan. If not, the owner may renegotiate with the Factory until they agree on a take-delivery date and a shipment plan. If the negotiation fails, the Factory shall ship the commodity based on the order of take-delivery dates; if the take-delivery dates fall into the same day, the Factory shall ship the commodity based on the order of the submission of applications.

(iii) The Factory shall be exempt from any financial liability for any owner’s delay in taking delivery due to the coincidence described in sub-paragraph (ii), provided that the Factory shall timely report such delay and its causes to the Exchange for written record.

Article 33 Production date of load-out commodity

The production date of load-out commodity shall be within six (6) months before the take-delivery date confirmed by the owner and the Factory.

Article 34 Settlement for tolerance

The weight of load-out commodity shall be the net weight or content shown on its package.

Article 35 The Factory shall ensure that the load-out butadiene rubber meets the quality standards provided in the butadiene rubber futures contract of the Exchange. During the load-out of butadiene rubber, the Factory shall provide the certificate of quality to the owner.

Article 36 An owner shall take delivery at the Factory on the agreed take-delivery date according to the shipment plan. If the owner misses the agreed take-delivery date but takes delivery within fifteen (15) days (including the 15th day) thereafter or if the owner fails to take delivery according to the agreed daily take-delivery plan due to any reasons not attributable to the Factory, then the Factory shall remain responsible for the quality of the commodity according to the quality standards set out in the butadiene rubber futures contract, and shall make an overall shipment plan based on the take-delivery quantities of all owners until all corresponding commodities are shipped. The owner shall pay the overdue fee to the Factory.

Overdue fee = 3 yuan/metric ton per day × quantity of commodity that should have been taken × number of days overdue

Any shipment delay caused by the owner shall be resolved as agreed between the parties if they reach a separate agreement.

Article 37 If an owner fails to take delivery at the Factory within fifth (15) days (including the 15th day) after the agreed take-delivery date, which leads to the cancellation of its factory standard warrants, then the underlying commodities will be converted into physical products, and the owner shall pay an overdue fee to the Factory and negotiate details for taking delivery with the Factory.

Overdue fee = 35 yuan/metric ton × quantity of commodity that should have been taken

Article 38 If an owner takes delivery on the agreed take-delivery date at the Factory, but the Factory fails to ship the commodity according to the agreed shipment plan but still completes the shipment within fifteen (15) days (including the 15th day) after the agreed take-delivery date, then the Factory shall pay compensation to the owner.

Compensation = 50 yuan/metric ton × quantity of commodity that should have been shipped according to the daily shipment plan

Article 39 If the Factory fails to complete the shipment according to the daily shipment plan within fifteen (15) days (including the 15th day) after the agreed take-delivery date, the owner may choose either of the followings:

(i) On the 15th day after the agreed take-delivery date, the owner may notify the Factory that it will cease accepting any commodity that should have been shipped from the 16th day after the agreed take-delivery date, and the Factory shall refund the corresponding commodity payment and pay additional compensation to the owner.

Refunded commodity payment and additional compensation = compensation settlement price × quantity of commodity that should have been shipped × 120%

The compensation settlement price is the settlement price of the corresponding nearest month futures contract of the Exchange on the trading day preceding the 16th day after the agreed take-delivery date.

(ii) If on the 15th day after the agreed take-delivery date, the owner fails to notify the Factory that it will cease accepting any commodity that should have been shipped, the parties shall negotiate the details on taking delivery of such commodity.

Article 40 If a Factory commits any default described in Article 38 or 39, it shall first pay compensation or refund corresponding commodity payment together with additional compensation directly to the owner. If the Factory fails to make the payment in full or in part, the Exchange shall pay the deficient amount to the owner:

(i) with the guarantees provided by the Factory; or

(ii) with the Exchange’s funds and recourse to the Factory by such means as legal proceedings.

Article 41 If an owner commits any default described in Article 36 or 37, it shall first pay overdue fee directly to the Factory. If the owner fails to make the payment in full or in part, the Factory may recourse to the owner by such means as legal proceedings.

Article 42 If any losses are incurred to either a Factory or an owner due to any event described in Articles 36, 37, 38, or 39, and both parties agree to reach a separate agreement, such agreement shall prevail. The agreement shall be filed with the Exchange for record.

Article 43 Upon agreement, a Factory and a holder of factory standard warrants may choose to consult with each other to determine a shipment date and plan at the submission of a take-delivery application. In this case, the corresponding factory standard warrants shall be canceled unless otherwise prescribed by the Exchange.

Article 44 Quality dispute resolution

A delivery taker who disputes the quality of any delivered commodity, which shall be at the take-delivery location of the Factory, shall submit to the Exchange a written objection, accompanied by the quality inspection results issued by a Designated Inspection Agency, within twenty (20) business days following the cancellation of corresponding warrants; failing which, the delivery taker shall be deemed to have no objection over the delivered commodity and the Exchange will no longer handle any objection regarding any commodity thus delivered.

CHAPTER 4 RISK MANAGEMENT

Article 45 The minimum trading margin for a butadiene rubber futures contract is 7%.

Article 46 The stage-based trading margin rates for butadiene rubber futures are as follows:

Stage of Trading	Trading Margin
As of listing	7%
As of the first trading day of the month prior to the delivery month	10%
As of the first trading day of the delivery month	15%
As of the second trading day prior to the last trading day	20%

 

Article 47 The range of price limit for a butadiene rubber futures contract is within ±5% of its settlement price of the preceding trading day.

Article 48 Percentage-based Position Limit and fixed-amount Position Limit for each butadiene rubber futures contract at different stages of trading for an FF Member, a non-FF Member and a Client are as follows (in lots):

	From the date of listing to the delivery month		From the date of listing to the last trading day of the second month prior to the delivery month			First month prior to the delivery month		Delivery month
	Total open interest	Percentage-based position limit (%)	Total open interest	Percentage-based Position Limit (%) and fixed-amount position limit (in lots)		Fixed-amount position limit (in lots)		Fixed-amount position limit (in lots)
		FF Member		Non-FF Member	Client	Non-FF Member	Client	Non-FF Member	Client
butadiene rubber	≥10,000	25	≥10,000	10	10	300	300	60	60
			＜10,000	1,000	1,000

 

Note: total open interest and the fixed-amount position limit are based on long or short positions; Percentage-based position limit for the FF Member is the baseline limit.

Article 49 For contracts in butadiene rubber futures, by the close of the last trading day of the month prior to the delivery month, each Member or each Client shall adjust their speculative positions held through the Member, to multiples of two (2) lots and a one-day delay is allowed under special market conditions; in the delivery month, the speculative positions as well as newly opened and closed-out positions shall be held in multiples of two (2) lots.

Article 50 If the Exchange makes a forced position reduction to a butadiene rubber futures contract, the amount of the unfilled orders subject to the order fill, positions eligible to fill the unfilled orders, and the principles and methods for the order fill of unfilled orders shall be determined as follows:

(i) Amount of the unfilled orders subject to the order fill. The term “amount of unfilled orders subject to the order fill” means the total amount of all the unfilled orders submitted after the close of the base date at the limit price into the central order book by each Client who has incurred losses on net positions in the contract of an average level of no less than eight percent (8%) for butadiene rubber futures contracts, of the settlement price of the base date.

(ii) Positions eligible to fill the unfilled orders. The positions eligible to fill the unfilled orders include the net positions, on which the Client, as calculated using the above formula stipulated in the Risk Management Rules of the Shanghai Futures Exchange, records average gains for speculative purposes or for hedging purposes at no less than eight percent (8%).

(iii) Principles for the order fill of unfilled orders. The order fill of unfilled orders shall take place in the order of the following four levels with regard to the amount of gains and whether such positions are speculative or hedging:

Level 1: Unfilled orders shall be filled with the speculative positions eligible to fill the unfilled orders of any Client with average gains on net positions of no less than eight percent (8%) of the settlement price on the base date for the contracts in butadiene rubber futures, or the Speculative Position Gains of Over 8%;

Level 2: Unfilled orders shall be filled with the speculative positions eligible to fill the unfilled orders of any Client with average gains on net positions of no less than four percent (4%) but no more than eight percent (8%) of the settlement price on the base date for contracts with respect to butadiene rubber futures, or the Speculative Position Gains of Over 4%;

Level 3: Unfilled orders shall be filled with the speculative positions eligible to fill the unfilled orders of a Client with average gains on net positions of no more than four percent (4%) of the settlement price on the base date for contracts in butadiene rubber futures, or the Speculative Position Gains Below 4%; and

Level 4: Unfilled orders shall be filled with the hedging positions eligible to fill the unfilled orders of a Client with average gains on net positions of no less than eight percent (8%) of the settlement price on the base date for contracts in butadiene rubber futures, or the Hedging Position Gains of Over 8%.

(iv) Methods for the order fill of unfilled orders. If the amount of the Speculative Position Gains of Over 8% is greater than or equal to that of the unfilled orders, the unfilled orders shall be filled pro rata to the amount of the Speculative Position Gains of Over 8%. If the amount of the Speculative Position Gains of Over 8% is smaller than that of the unfilled orders, the Speculative Position Gains of Over 8% shall be filled pro rata to the amount of the unfilled orders. The residual unfilled orders, if any, shall be filled with the Speculative Positions Gains of Over 4% in the same manner as the foregoing, and if there are still orders remaining, the outstanding unfilled orders shall be filled to the Speculative Position Gains of Below 4%, and so to the Hedging Position Gains of Over 8%. Unfilled orders which eventually remain after all the order fills described above, if any, shall not be filled at all.

CHAPTER 5 MISCELLANEOUS

Article 51 Matters not covered herein shall be governed by the applicable business rules of the Exchange.

Article 52 Any violations of these Butadiene Rubber Futures Rules will be handled by the Exchange in accordance with the Enforcement Rules of the Shanghai Futures Exchange.

Article 53 The Exchange reserves the right to interpret these Butadiene Rubber Futures Rules.

Article 54 These Butadiene Rubber Futures Rules take effect on October 23, 2024.