Chapter 1 General

Article1.1 For the purpose of regulating bond transactions, maintaining the market order and protecting the legitimate rights and interests of trading members, this Rules have been formulated in accordance with the Measures for the Administration of Bond Transactions in the National Inter-Bank Bond Market (PBC Order [2000] No.2), the Provisions on the Administration of the Outright Repo in the National Inter-bank Bond Market (PBC Order [2004] No.1), the Interim Provisions on the Administration of Securities Lending in the National Inter-Bank Bond Market (PBC Document [2006] No.15), the Provisions on the Administration of National Inter-bank Bond Market Makers (PBC Document [2007] No.1) and other relevant rules and regulations.

Article1.2This Rules apply to trading activities conducted through the system of National Interbank Funding Center (hereinafter referred to as “CFETS”). Where it is not covered by this Rules, other relevant rules provided by CFETS shall apply.

Aforementioned bond refers to municipal bond, central bank bill, financial bond, corporate bond, RMB bond issued by foreign institutions and any other marketable securities with the permission to trade in the national bond market from PBC and with the character of repaying capital with interest.

This Rules shall apply to asset-backed securities.

Article1.3 The bond transaction herein includes cash bond transactions, pledged repo, outright repo and security lending.

Article1.4 CFETS offers quoting, dealing, risk management, clearing notice, information service and other services to market members. CFETS, subject to the supervision of the People’s Bank of China (PBC), also undertakes the responsibilities of market surveillance and statistics. Institutions connected to CFETS shall conduct bond transactions through CFETS system.

Article1.5 Trading members involved in bond transactionsshall be in compliance with the principles of fairness, honesty and self-discipline.

Chapter 2 Definition and Basic Rules

Article2.1 Trading System

Trading system refers to the computer processing system and data communication network operated by CFETS for the purposes of providing quotes and other ancillary services.

Article2.2 Trading Members

Article2.2.1 Trading members refer to institutional investors who have connected to CFETSand possess CFETS Transaction Account for all transactions in the CFETS systemin accordance with relevant provisions on the connectivity administration provided by CFETS.

Article2.2.2Trading members shall authorize system users in the CFETS system. Trading members shall conduct bond transactions in the trading system by its system user.

Article2.2.3 All operations conducted by trading members in the trading system are subject to records in the trading system database.

Article2.3 System User

Article2.3.1System user refers to accounts which are set up and controlled by trading members, for the purpose of conducting bond transactions and related operations, includingthe chief user and general users.

Article2.3.2 Trading members shall authorize people, who have obtained the CFETS RMB Trader Certificate, to conduct bond trading on behalf of it by operating the system user.

Article2.3.3 Any operation conducted in the trading system through the system user will be deemed as it is done by the trading member who owns the specific trading user, and any consequence arises out of aforementioned operations shall be borne by such trading member.

Article2.4 Trading Method

Trading method refers to the quoting and dealing methods of bond transactions, including Request for Trade(RFT) and Executed Streaming Prices(ESP). CFETS will prescribe it separately in case the trading system offers any other trading method.

Article2.5 Trading Element

Trading element refers to the specific term regarding the quoting and dealing of bond transactions, whose fixed name and relevant parameters are set in the trading system.

Article2.6 Trading Contract

Article2.6.1A complete trading contract between the trading parties is composed by the deal ticket, relevant master agreements (if any) and supplementary agreements (is any).

Article2.6.2 Deal Ticket

Article2.6.2.1 Deal ticket refers to the formatted written contract which is, after the deal is confirmed in trading system, automatically generated in accordance with the mutually agreed commitment of trading element made by the trading parties during the trading process, together with the profile information submitted by trading members to the trading system.

Article2.6.2.2Before the deal is done, the trading parties may agree on other uncovered issues in the supplementary terms. After the deal is done, the contents of the supplementary terms will be listed on the deal ticket. However, the supplementary terms shall not be inconsistent with other elements on the deal ticket.

Article2.6.3 The trading parties shall be legally abided by the deal ticket once it is generated.

Article2.7 Basic Trading Parameters

Article2.7.1 The value of yield, interest rate and price is accurate to 4 digits after the decimal point. The trading amount and settlement amount are accurate to a hundredth of one RMB Yuan.

Article2.7.2 The determination of settlement date will be based on “next business day” rule. The day count convention for financing/securities loan is Act/365. The bond yield will be calculated in accordance with the calculation formula and parameters set by PBC.

Article2.8 Settlement Method

Settlement method refers to the methods in the bond transactions regarding the receipt and payment of capital, the delivery of bond and setting/discharging of pledge.

Article2.9 Listing Date and Delisting Date

CFETS will set the listing date (the first day to trade)and delisting date (the last the trade) in the trading system in accordance with the bond trading documents.

Article2.10 Trade day and Trading Hour

The trade day are from every Monday to Friday, except for the official holiday adjustments. The trading hour are 9:00-12:00 and 13:30-16:30 of every trade days. In case of alterations, CEFTS will issue public notice in advance.

Chapter 3 Trading Method and General Procedure

Article3.1RFTTrading Method

Article3.1.1RFTrefers to thetrading method in which the trading parties determine the trading price and other trading elements.The procedures of RFT are quotation, formatted conversation and dealing confirmation.

Article3.1.2The minimum trading amount of RFTis a face value of 100,000 Yuan, the tick size of trading amount is a face value of 100,000 Yuan.

Article3.1.3Quotation Method

Quotationmethods of the RFT include the intention quotation, the two-way quotation, and the dialogue quotation. The intention quotation and two-way quotationwill not directly result in dealconclusion, while the dialogue quotation, as an offer price, can be concluded directly once it is confirmed by the counterparty. The trading system will set corresponding trading method based upon the specific submarket of bond trading.

Article3.1.3.1The intention quotationsrefer to the quotations whichtrading members send to the entire market, a particular trading member and / or a system user to indicate their trading intentions. The taker may send a dialogue quotation to the maker in accordance with the intention quotation to carry out the formatted conversation.

Article3.1.3.2The two-way quotation refers to the quotations which trading members send to the entire market to indicatetheir intentions of buying / selling or borrowing / lending simultaneously. Trading members may send two-way quotations for two-wayquotationsupportedproducts and asset-backed securities.

Two-way-quotation supported products are the standard quotationproducts of which certain trading elements are pre-set by the trading system.

Article3.1.3.3The dialogue quotation refers to the quotations with specific and defined trading elements which trading members, for the purpose of deal conclusion, send to a particular system user. The takermay directlyconclude the transactionby confirming the quotation.

Article3.1.4The formatted conversation refers to thetrading negotiation process consisting of a series of dialogue quotations triggered by the trading member and its counterparty. Trading members may conduct quotations within the number of rounds allowed by the trading system. The formatted conversation shall be automatically ended in the event thata transaction is not concluded within the permitted rounds.

Article3.1.5Dealing

Article3.1.5.1Trading members may submit the request ofconfirming and concluding the transaction to the trading system after reaching an agreement on trading elements by the formatted conversation.

Article3.1.5.2If the transaction requesting for confirming and concluding meets the requirements of the trading rules and other risk management indicators, the trading system shall confirm the transaction.

Article3.2 ESPTrading Method

Article3.2.1 ESP refers to thetrading method in which the party who receives the named/anonymous order from the maker may confirmthe order and conclude the transaction,orthe deals are automatically concludedbythe matching of limit orders.

Article3.2.2Under ESPtrading method, the minimum trading amount is face value of 100,000 Yuan, the tick size of the trading amount is face value of 100,000 Yuan.

Article3.2.3 Quotation Method

Article3.2.3.1 Quotation methodofESP includes the marketmaking quotation (bilateral quotation) and the ESPquotation (unilateral quotation)

Article3.2.3.2The marketmaking quotation refers to the quotation method that the maker simultaneouslyquotes the bid and offer prices of a specific bond with certain amount. The market maker and the preparatorymarket maker may conduct bilateral quotations on the market-making bonds they have set. The ESP quotationrefers to the order of bid or offer price for a certain bond, together with its amount, which is sent by the maker.

Article3.2.4Limit order refers to the unilateral bid/offer pricewhich is sent by a maker.Such order is not open to the market, and may be automatically matched with the ESP quotation meeting the dealing conditions.

Article3.2.5Dealing

Article3.2.5.1 ESP Trading method

The taker shall enter the bid/offer amount and choose a settlement method. The deal shall be done in accordance with the price and the amount quoted by the quoting party, and within the designated settlement method.

If the amount of tradingrequested by the price taker is less than the available amount of the ESP quotation, the trading shall be concluded in accordance with the requested amount by the price taker.If the amount of trading requested by the price taker is more than the available amount of the ESP quotation, the trading will be concluded in accordance with the available amount of the ESP quotation.

Article3.2.5.2 Limit order

The trading system will automatically match the limit order and the ESP quotationwhich meet its quotation conditions, and the price is equivalent to that of the ESP quotation.

If the amount of the limit order is less than or equal to the available amount of the ESP quotation, the trading shall be concluded in accordance with the amount of the limit order;if the amount of limit order is more than the available amount of the ESP quotation, the limit order can be concluded with multipleESP quotations, until the amount of limit order is reached, however such arrangement will not be carried out, if thelimit order is not allowed to split.

Article3.3Deal ticket

Article3.3.1A deal ticket contains the mutually agreed commitment of trading elements and other necessary content made by the trading parties during the trading process,

Article3.3.2The deal ticket automatically displays institution information and account information of both parties in accordance with the profile information submitted by both parties in the trading system.The institution information includes the name of the trading member and its legal representative, the domicile of company, the name of the system user, as well as the contact number and fax; account information includes the name of the cash account, bank of deposit, cash accountnumber, payment system number, bond custodian account name, bond custodian institution, bond custodian account number.

If a trading member has changedits institution information or account information,it shall submit the relevant document (with official seal) to CFETS, andsubmit the updated information to the trading system. CFETS shallinform the trading members of such changes. The trading member shall bear full legal responsibilities forthe authenticity, accuracy, legality and completeness of the submitted materials.

Article3.4Dealing AlterationandRevocation

Article3.4.1The deal ticket shall be legally binding on both trading parties and shall not be altered or revoked without authorization.

Article3.4.2In the event that the trading members indeed need to alter/revoke a concluded transaction,they shall submit applications for altering/revoking the deal ticket to CFETS in accordance with the CFETS emergency tradingrules.

Article3.5Trading parties shall have the trading cleared and settled based on the trading contract.

Chapter 4 Cash Bond Transaction

Article4.1Cash bond transaction refers to thetradingactivity whichthe trading member agrees to transfer its ownership of bonds at a specific price.

Article4.2The definitions of main trading elements ofthe Cash bond transactionare as follows:

(1) Clean price: The price of bonds,excluding the accrued interest, in Yuan per hundred Yuanof face value.

(2) Accrued interest: Accumulated interestper hundred Yuan payables by the issuer to the bondholderfrom the last coupon date (or the value date) to the settlement date, unit is Yuan per hundred Yuanof face value.

(3) Dirty price: dirty price=clean price+ accrued interest, expressed inYuan per hundred Yuanof face value.

(4) Term to maturity: the period from trade date to maturity date of the bond.

(5) Face value: the nominal value of the tradable bond, expressed inmillion Yuan.

(6) Trading amount: trading amount=clean price/100×total coupon amount×10000,expressed in Yuan

(7) Total amount of accrued interest: amount of accrued interest=accrued interest/100×face value×10000,expressed in Yuan.

(8) Settlement amount: settlement amount=trading amount+ total amount of accrued interest, expressed in Yuan.

(9)Settlement speed: The number of business days (N) between the trade date (T) and the settlement date, including T + 0 and T + 1.

(10) Settlement date: the date for bond delivery and cash payment. Settlement date= trade date +settlement speed.

(11) Settlement methods include delivery Versus payment(DVP), delivery after payment(DAP) and payment after delivery.

(12) Principal per hundred Yuan: the amount of principal to be repaid, expressed in Yuanper hundred Yuanof face value(only applies to asset-backed securities).

(13)Principal amount: principal amount= principal amount per hundred Yuan/100×total coupon amount×10000(only applied to asset-backed securities)

Article4.3The cash bond transaction is traded bythe clean price and settled bythe dirty price. Asset-backed securities are quoted with the corresponding principal amount based on the principal amount per hundred Yuan.

Article4.4Trading methods of the cash bond transaction include the RFT and ESP. The quotation methods forRFT are the intention quotation, the two-way quotation (only applied to asset-backed securities) and the dialogue quotation. The quotation methods forESP arethe marketmaking quotation, the ESP quotation and the limit order.

Article4.5Market Making and Market Making for Trial

Article4.5.1Market makers are financial institutions who are authorized by PBC to conduct market makingin the inter-bank bond market withthe prescribed rights and obligations to provide liquidity.

Article4.5.2Market making refers to the behavior that the PBC-authorized market makersconductbilateral quotation on the market making bonds to the whole market and fulfilling the dealing obligation in cash bond trading.

Article4.5.3The market maker shall provide continuous bilateral quotations on market making bonds in accordance with the relevant provisions, and the bid-offer spread should be within the reasonable scope. The trading system would indicate the market maker when the following events happen:

(1) The face value of one or both sides of the bilateral quotation is less than the minimum market making amount prescribed by PBC.

(2) The time gap between bilateral quotations on market-making bonds is close to the period prescribed by PBC and the market maker does not update the quotation;

(3) The time gap between bilateral quotations on market-making bonds exceeds the period prescribed by PBC and the market maker does not update the quotation;

Article4.5.4The trading system provides marketmakers with the following facilities:

(1) The marketmaker may set the market-making threshold amount for each market-making bond. The trading system shall issue an early warning to the marketmaker if the trading amount of a market-making bond exceeds its threshold.

(2) The market maker may set parameters such as the total coupon value for market-making quotation display and dealing.

(3) Displaythe market-making quotation information of its own and of the market.

CFETS shall publicize it separately in case marketmakers are provided with additional or different facilities.

Article4.5.5Financial institutions intending to conduct trial market-making shall submit written applications to CFETS. Upon receiving of such applications, CFETS shall enable thetrial market-making function for the applicant and make a public announcement within two working days. Trial market makersshall submit market-making quotations actively. If a trial market maker does not provide market-making quotation for 20 consecutive days, CFETS may issue a written notification to stop its market-making function, and shall not accept its reapplication in three months.

Article 4.5.6Market makers and trial market makers shall submit and maintain the information of market-making bonds in the trading systemin time.

Article 4.6Deal tickets of cash bond transactionsshall contain the following information: deal date, transaction number, institutional information of both trading parties, bond code, bond name, clean price, total coupon value, bond yield, trading amount, accrued interest, total amount of accrued interest, dirty price, settlement date, settlement amount, settlement method, supplementary terms (if any), transaction serial number, account information of bothtrading parties and etc.

In addition to the contents mentioned above, deal tickets of asset-backed securitiesinclude the principal amount and the principal amount per hundred yuan, while excluding yield.

Chapter 5 Pledged Repo

Article 5.1 Pledged repo is a short-term financing activity where bonds are used by trading parties as a pledge of rights. It refers to a financing activity in which the borrower (sell repo party) pledges bonds to the lender (reverse repo party) for funds, while agreeing upon that the sell repo party shall repay the amount of funds calculated at the specific repo rate to the reverse repo party and the reverse repo party shall release the pledge and deliver the pledged bondsto the sell repo party on a future date.

Article 5.2 Trading members who conduct the pledged repo transactions through the trading system, shall sign the repurchase master agreement in accordance with requirementsof PBC.

Article 5.3 Essential transaction elements of pledged repo are defined as follows:

(1) Repo Rate: cost of capital in the form of annual rate.

(2) Repo Period: the period of funds lending agreed by both parties. The repo period ranges from the minimum 1 day to the maximum 365 days. If PBC adjusts the limitation of repo period, the trading system will make adjustments accordingly.

(3) Pledged Bond: bonds pledged by sell repo party to reverse repo party, which are labeled by the bond codes and bond names in deal tickets.

(4) Total Coupon Value: the total coupon value of pledged bonds, whose unit is 10,000 yuan.

(5) Hair Cut: the ratio of the amount of funds for lending to thetotal coupon value of the bond.

(6) Trading Amount (first settlement amount): the amount of funding/fund-providing, whose unit is yuan. Trading amount ≤total coupon value of bond 1* hair cut 1+total coupon value of bond2* hair cut 2+⋯+total coupon value of bond N* hair cut N

(7) DueSettlement Amount: due settlement amount=first settlement amount+accrued interest, whose unit is yuan.

(8) Clearing Speed: the number of working days (N) between the deal date (T) and the first settlement date, including T + 0 and T + 1.

(9) First Settlement Date: the date when pledged bonds are registered and the reverse repo party transfers the funds to the designated bank account of the sell repo party. First settlement date = deal date + clearing speed.

(10) DueSettlement Date: the date when the sell repo party shall transfer the funds to the designated bank account of the reverse repo party and the reverse repo party shall release the pledged rights on the pledged bonds. Due settlement date = first settlement date + repo period (the settlement date will be postponed to the next working day, in case that the original one is holiday).

(11) ActualHoldingDays: actualholding days = due settlement date – first settlement date

(12) Accrued Interest: the total amount of interest which the sell repo party shall pay for funding. Accrued interest = Trading amount * Repo rate * Actual holding days/365

(13) Trading Variety: tenors defined by the trading system.

Article 5.4 The trading methodof pledged repo adopts RFT, including the intention quotation, dialogue quotation and two-way quotation.

Article 5.5The sell repo party shall provide adequate amount of pledged bonds on the first settlement date and the hair cut shall comply with the requirement of PBC.

Article 5.6 During the repo period, both parties shall not use the pledged bonds. After the repo is due, the sell repo party shall fully repay the funds according to the contract, and the reverse repo party shall release the pledged rights of the pledged bonds.The repo shall not be rolled over by any means.

Article 5.7Deal tickets of pledged repo contain the following contents: deal date, transaction number, institutional informationof the trading parties, repo rate, repo period, bond code, bond name, total coupon value, hair cut, amount of total coupon value, trading amount, accrued interest, due settlement amount, first settlement method, due settlement method, first settlement date, due settlement date, actual holding days, supplementary terms (if any), trading variety, trading serial number, account information of the trading parties, etc.

Chapter 6 Outright Repo

Article 6.1 Outright repo refers to a trading activity that a bondholder (sell repo party) sells bonds to a buyer (reverse repo party), while the two parties simultaneously agree upon that thesell repo party shall buy from the reverse repo party the same amount of such bondson a future date.

Article 6.2 Trading members who conduct the outright repo transaction through the trading system, shall sign the repurchase master agreement in accordance with the requirement of PBC.

Article 6.3Essential transaction elements of the outright repo are defined as follows:

(1) Repo Rate: reference rate calculated according to first settlement amount, due settlement amount, repo period and other elements,which cannot be negative.

(2) Repo Period: the period of funds lending agreed by both parties. The repo period ranges from the minimum 1 day to the maximum 91 days. If PBC adjusts the limit of repo period, the trading system will make adjustments accordingly.

(3) UnderlyingBond: the underlying bonds of outright repo, labeled by the bond code and the bond name in deal tickets.

(4) InitialCleanPrice: the clean price of the bonds which the sell repo party sells to the reverse repo party, whose unit is one yuan per hundred yuan of coupon value.

(5) Due CleanPrice: the clean price of the bonds which thesell repo party purchase from the reverse repo party, whose unit is one yuanper hundred yuan of coupon value.

(6) Total CouponValue: the total coupon value of the underlying bonds, whose unit is 10,000 yuan.

(7) Trading Amount: Trading amount = clean price/100 * total coupon value *10000, whose unit is yuan.

(8) InitialAccrued Interest: interest calculated at one hundred yuan coupon value from the last payment date (or value date) to the first settlement date, which bond issuers shall pay to bondholders. The unit is one yuanper hundred yuan of coupon value.

(9) InitialDirtyPrice: initialdirty price = initialclean price + initial accrued interest, whose unit is one yuan per every hundred yuan of coupon value.

(10) DueAccrued Interest: interest calculated at one hundred yuan coupon value from the last payment date (or value date) to the due settlement date, which bond issuers shall pay to bondholders. The unit is one yuanper every hundred yuan of coupon value.

(11) Due DirtyPrice: due dirty price = due clean price + due accrued interest, whose unit is one yuan per every hundred yuan of coupon value. The amount of due clean price and the new accrued interest during the repo period shall be greater than that of the initialclean price.

(12) Clearing Speed: the number of working days (N) between the deal date (T) and the first settlement date, including T + 0 and T + 1.

(13) First Settlement Date: the date when the sell repo party sells bonds to the reverse repo party and thus obtain the funds. First settlement date = deal date + clearing speed.

(14) DueSettlement Date: the date when the sell repo party repurchases the bonds from the reverse repo party and returns the corresponding funds. Due settlement date = first settlement date + repo period (the settlement date will be postponed to the next working day, in case that the original one is holiday).

(15) ActualHoldingDays: actualholding days = due settlement date – first settlement date.

(16) Total Amount of InitialAccrued Interest: total amount of initial accrued interest = initial accrued interest/100 * total coupon value * 10000, whose unit is yuan.

(17) Total Amount of DueAccrued Interest: total amount of due accrued interest = due accrued interest/100 * total coupon value * 10000, whose unit is yuan.

(18) First Settlement Amount: first settlement amount = initialclean price/100 * total coupon value * 10000 + total amount of initial accrued interest, whose unit is yuan.

(19) DueSettlement Amount: due settlement amount = due clean price/100 * total coupon value * 10000 + total amount of due accrued interest, whose unit is yuan.

(20) Trading Variety: tenors defined by the trading system.

Article 6.4 Outright repo is traded at the clean price and settled at the dirty price.

Article 6.5The trading methodof outright repo adoptsRFT, including intention quotation and dialogue quotation.

Article 6.6 After the transaction is concluded, both parties shall not roll over or redeem it in advance.

Article 6.7 During the repo period or after it is due, both parties shall not replace the bonds or conduct cash settlement.

Article 6.8 The trading system sets the pre-deal estimate and control of the following risk management indicators to measure the risk of outright repo. The trading system will not confirm the transaction, in the event that it does not comply with any of the following criteria.

(1) For each repo party, the outstanding amount of each bond to be repurchased shall be less than 20% of the amount of such bond in circulation.

(2) For each repo party, the total outstanding amount of the bonds to be repurchased shall be less than 200% of the amount of total proprietary bonds in custodyof suchparty.

If PBC adjusts the limit of the above-mentionedoutstanding amount, the trading system will make adjustments accordingly.

Article 6.9Deal tickets of outright repos contain the following contents: deal date, transaction number, institutional information of the trading parties, bond code, bond name, initialclean price, due clean price, repo period, total coupon value, hair cut, trading amount, repo rate, initial accrued interest, due accrued interest, first yield, due yield, initialdirty price, due dirty price, due settlement amount, first settlement method, due settlement method, first settlement date, due settlement date, actualholding days, supplementary terms (if any), label of changes in margin/secured bonds, account information of the trading parties, trading serial number, collateral information of trading parties, etc.

Chapter 7 Securities Lending

Article 7.1Securities lending refers to the financing activity that the borrower borrows bonds from a lender by using a certain amount of bonds as pledges and by paying the securities lending fee, while the two parties agree upon a future date when the underlying borrowed bonds shall be returned and the lender shall release the pledge rights of the pledged bonds.

Article 7.2Essential trading elements of the securities lending are defined as follows:

(1) Lending Rate: the cost of securities lending in the form of annual rate. The lending rate shall be adopted as quotation for securities lending.

(2) Lending Period: the period of securities lending agreed by both parties. The lending period ranges from the minimum 1 day to the maximum 365 days. If PBCshall adjust the limit of lending term, the trading system will make adjustments accordingly.

(3) Underlying Bond: bond lent by the lender to the borrower, labeled by bond code and bond name in the deal ticket.

(4) Total CouponValue: total coupon value of the underlying bond, whose unit is 10,000 yuan.

(5) Lending Fee: the fee that borrowers shall pay to lenders when the securities lending is due. Lending fee = lending rate * total coupon value * 10000 * actualholding days/365, whose unit is yuan.

(6) PledgedBonds: bonds pledged by borrowers to lenders as the guarantee to return the underlying bonds when the transaction is due.

(7) Clearing Speed: the number of working days (N) between the deal date (T) and the first settlement date, including T + 0 and T + 1.

(8) First Settlement Date: the date when pledged bonds are registered and lenders transfer the underlying bonds to borrowers. First settlement date = deal date + clearing speed.

(9) DueSettlement Date: the date when borrowers transfer the underlying bonds back to lenders, pay lending fees and release the pledged rights of the pledged bonds. Due settlement date = first settlement date + lending period (the settlement date will be postponed to the next working day, in case that the original one is holiday).

(10) ActualHoldingDays: the number of days in which borrowers hold the underlying bonds. Actualholding days = due settlement date – first settlement date

(11) First Settlement Method: delivery versus delivery (DVD).

(12) DueSettlement Method: including delivery-payment-delivery (DPD), delivery versus delivery (DVD) or delivery versus payment (DVP).

(13) Trading Variety: tenors defined by the trading system.

Article 7.3Securities lending shall adopt the RFT trading method, including intention quotation and dialogue quotation.

Article 7.4 Borrowers shall provide lenders with an adequate amount of pledged bonds,whichshall be borrowers’ own bonds that are registered and deposited in the inter-bank bond market depository and settlement institutions.

Article 7.5 If the underlying bonds pay interests during the lending period, borrowers shall transfer the full amount of accrued interest of the underlying bonds to capital accountsof lenders at the payment date. On the next working day of each payment date, the trading system will calculate the total amount of borrowers’ accrued interest till the next payment dateautomatically, and display it in the original deal ticket. Both parties may print the deal ticket again.

Article 7.6For a single trading member, if the outstanding borrowing amountof securities lending exceeds 30% of the total amount of bondsin its custody, or if the outstanding borrowing amount of securities lending for a single bond exceeds 15% of this bond’s issuedamount, the trading member shall submit written reports and explain the reason for every increase of 5%.

Article 7.7 During the securities lending period, both parties can replace the pledged bonds upon mutual agreement and shall amend the contract through the trading system.

Article 7.8 During the securities lending period, if both parties agree to terminate the contract in advance or settle the deal in cash when it is due, they shall amend the contract and enter into supplementary terms through the trading system.

Article 7.9Deal tickets of securities lending contain the following contents: deal date, transaction number, institutional information of trading parties, underlying bond code, underlying bond name, total coupon value of underlying bond, lending period, lending rate, lending fee, dispute resolutions, supplementary terms (if any), first settlement date, due settlement date, first settlement method, due settlement method, actualholding days, trading variety, information of interest payment, collateral (pledge) details, account information of trading parties, trading serial number, etc.

Chapter 8 Market Surveillance

Article 8.1 CFETS undertakes the responsibility of inter-bank bond market surveillance and shall report the transaction-related conditions to PBC in accordance with its requirements.

Article 8.2 CFETS shall preset the thresholds for trading amount and trading variety in the trading system in accordance with PBC regulations. In case that any bond transaction does not comply with the aforementioned PBC regulations, the trading system shall either notify the end user or not confirm such transaction.

Article 8.3 Trading members may report to CFETS, in case they discover any potential transaction default or violation of market rules. CFETS may inquire the trading parties to verify certain situations. Trading members shall cooperate with CFETS in such investigations and submit relevant materials and proofs.

Article 8.4 CFETS may inquire related trading members in case of potential unusual trading activities. Such trading members shall provide corresponding explanationsand reports in accordance with the requirements of CFETS and PBC.

Article 8.5Upon discovery of any violation of market rules from trading members, CFETScan require such trading member to cease the behaviorimmediately andmay, regarding the seriousness of such circumstances, take disciplinary actions to the trading member such as circulating a notice of criticism, suspending trading permission or terminating the connectivity to the trading system, together with reporting to PBC in accordance with relevant rules.

Article 8.6 The violation of market rules refers to:

(1) Activities which violate the relevant regulations and provisions of PBC;

(2) Frequent submission of quotes which are not based on its authentic transaction intention, or quotes deviatingseriously from current market dealt priceand misleading other trading members;

(3) Unilaterally alterations or terminationsof deal tickets without permission;

(4) Delayed submission of alterations in important materials or information to the trading system, which has caused negative effect on transactions;

(5) Willfully or negligently allowing people without trading certificates to conduct quotations and dealing;

(6) Willfully damaging the trading system or disturbing the trading system by operating it without following the CFETS trading system operation guide;

(7) Failing to pay fees according to rules and regulations; or

(8) Other activities that violate the rules.

Chapter 9 Trading Related Services

Article9.1 CFETS offers information services to the trading members through the trading system, information services system, CFETS official website(Chinamoney.com) and authorized information service vendors. CFETS may adjust the methods and contents of information services in accordance with the requirement of PBC and the demand of market development.

Article9.2 In case that CFETS offers information services to a trading member or authorizes an information service vendor to provide service to trading members, such trading member and information service vendor shall enter into the information service agreement or the authorization agreement with CFETS and thus subject to relevant CFETS provisions on information service administration.

Article9.3 Without the written permission provided by CFETS, neither an institution nor a person shall publish, use, disseminate or operate any information of CFETS. Institutions or people with the authorization to use informationfrom CFETS shall not disseminate such information or offer it to any other institution or person for usage.

Article9.4 CFETS provides risk management services for trading members. The trading system will conduct a pre-transaction examination or issue an earlytransaction warning based onthe threshold amount set by the trading member. In case the transaction amount exceeds the preset threshold amount, the trading system will either notify the end user or not confirm such transaction.

Article9.5 In case of failing to place quotes, conclude deals or print deal tickets through the trading system, trading members may apply for emergency services to CFETS in accordance with the Emergency Service Rules on National Interbank Funding Center RMB Transaction.

Chapter 10 Fee Arrangement

Article10.1 Trading members using servicesof CFETS shall pay relevant fees to CFETS.

Article10.2Detailed items, standards, and rules ofrelevant fees shall be in compliance with relevant documents issued by CFETS and relevant agreements reached between the trading members.

Chapter 11 Miscellaneous

Article11.1 In case of force majeure, CFETS may declare the suspension of transactions partially or completely after the approval of PBC. CFETS will resume market activities after the aforementioned condition is released.

Article11.2 CFETS reserves the rights of interpretation and amendment of all rules above.

Article11.3 All rulesabove shall come into effect upon the day of promulgation. The original Rules for Bond Transactions of the National Inter-bank Bond Market, the Rules for Securities Lending Transaction, the Operation Rules for Asset-Backed Securities and the Interim Rules for Market Making Operations of the National Inter-bank Bond Marketshall be revoked simultaneously.