Guide of Shanghai Gold ExchangeInternational Business

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Contents

Section 1: Introduction of Shanghai Gold Exchange ....................................................................................................................................3

1.1 AGlimpseofSGE .........................................................................................................................................................................3

1.2 MembershipStructure................................................................................................................................................................................. 4

1.3 BusinessStructure........................................................................................................................................................................................ 5

1.4 TradingHours.................................................................................................................................................................................................. 5

1.5 TradingFlow.................................................................................................................................................................................................... 7

1.6 WhyUs.............................................................................................................................................................................................................. 8

Section 2: SGE Products ......................................................................................................................................................................................10

2.1 PriceMatchingMarket...............................................................................................................................................................................10

2.1.1PhysicalTrading...............................................................................................................................................................................10

2.1.2DeferredTrading.............................................................................................................................................................................12

2.2 OTCMarket....................................................................................................................................................................................................15

2.3 LeasingMarket.............................................................................................................................................................................................16

Section 3: Clearing ................................................................................................................................................................................................17

3.1 PrinciplesofClearing.................................................................................................................................................................................17

3.2 ClearingTime................................................................................................................................................................................................17

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3.3 MarginPolicy.................................................................................................................................................................................................17

3.4 SeparatedFundsOperation....................................................................................................................................................................18

3.5 FTAccountSystem.....................................................................................................................................................................................19

Section 4: Delivery................................................................................................................................................................................................ 21

4.1 DeliveryStandard........................................................................................................................................................................................21

4.2 Delivery...........................................................................................................................................................................................................21

4.3 VaultingServices..........................................................................................................................................................................................21

Section 5: SGE Trading System ......................................................................................................................................................................... 23

5.1 InternationalMemberSystemAccessModel...................................................................................................................................23

5.2 InternationalMemberSecondarySystem..........................................................................................................................................24

Section 6: How to Become Our Member ..................................................................................................................................................... 25

6.1 TheRequirementsofSGEInternationalMember...........................................................................................................................25

6.2 ToApplyforOurMembershipYouShouldSubmit........................................................................................................................26

6.3 OtherRequirements..................................................................................................................................................................................27

Contact us: .............................................................................................................................................................................................................. 28

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Section 1: Introduction of Shanghai Gold Exchange

1.1 A Glimpse of SGE• SGEwasestablished inOctober2002byPeople’sBankofChina(“PBOC”)uponapprovalbyStateCounciland

supervisedbyPBOC.

• FoundedinSeptember2014,ShanghaiInternationalGoldExchange(“SGEI”)isregisteredinShanghaiPilotFreeTrade

ZoneandfullyownedbySGE.SGEIenables foreign institutionsand individuals toaccess toChinapreciousmetals

marketbasedonFTaccountsystem.SGEIisresponsibleforinternationalmarketdevelopment,internationalmembers’

managementandoffshoreinvestorservices.

• SGEprovides trading,clearing,deliveryandvaultingservicesofgold,silverandplatinum.Tradingproducts include

physicaltrading,deferredtrading,forward,swap,optionandleasing.

• SGEassumesfullresponsibilitiesunderSGEregulations.Ifonetradingpartydefaultswhenclearingordeliverybyall

meansofremediesunderSGEregulation,SGEwillguaranteetheotherparty’sinterestsandwillclaimthedefaultparty

ofpenalty.

• SGE isamembership-basedorganizationwith twobasic typesofmembers:DomesticMembersand International

Members.Domesticmembers includeFinancialMembers,GeneralMembers,ProprietaryMembersandSpecial

Members.Domesticmembershipcanbetransferred.InternationalMembersincludeFullMembers(TypeAMembers),

ProprietaryMembers(TypeBMembers),andSpecial InternationalMembers. InternationalMembershipcannotbe

transferredbutcanbewithdrawnandSGEIwillrefundthemembershipfeetothemember.

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1.2 Membership Structure

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1.3 Business Structure

SGEhasPriceMatchingMarket,OTCMarketandLeasingMarket.SGEperformscentralizedclearingservices to the

members,inaddition,SGEalsoprovidesdeliveryandvaultingservices.

1.4 Trading Hours

SGE isopen for trading fromMonday toFriday(excludingpublicholidays)with three tradingsessions(previousday

20:00-2:30,9:00-11:30,and13:30-15:30).Detailedscheduleisasfollows:

• TradingPlatform–Electronictradingtransactionsmatching

• SGEistheindependentclearinghouse

• DeliveryandVaultingServices -Physicaldelivery,ownership transfer registration,

vaultinganddistribution

• LeasingMarket–Leasing,registrationandownershiptransfer

• OTCMarket–Bilateralandwholesaletradingplatform

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　 Monday Tuesday to Friday

Market opening �9:�� of the previous Friday �9:�� of the previous day

Pre-order matching �9:�0-�9:�9 of the previous Friday

�9:�0-�9:�9 of the previous day

Night trading session �0:00 of the previous Friday-�:�0 of the previous Saturday

�0:00 of the previous day - �:�0 of the current day

Break betweentrading sessions

�:�0 of the previous Saturday- 9:00 of Monday �:�0 - 9:00

Morningtrading session 9:00 - ��:�0

Break between trading sessions ��:�0 - ��:�0

Afternoontrading session ��:�0 - ��:�0

Submission period of delivery tenders ��:00-��:�0

Termination of trading ��:�0

Submission period of delivery equalizer tenders

��:�� - ��:�0

Matching of delivery tenders ��:�0

Market close ��:��

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1.5 Trading Flow

NOTE: Only members who have gold import license can withdraw the bullion from the International vault and sell on the Main Board.

-Physicalproductsoninternationalboardarehighlightedinorange

-Deferredproductsarehighlightedinblue

-Therestarephysicalproductsonmainboard

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1.6 Why Us?

> Huge Market Scale

- A large number of market participants

SGEcurrentlyhas177DomesticMembers,around8,300 institutionalclientsand7.3million individualclients.

Currentlythereare52InternationalMemberswhichisincreasingsteadily.

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- Large trading volume

SGEhasbecome the largestphysical goldexchange for consecutive8years. Italso ranks the4th largestgold

exchangebygoldtradingvolumeintheworld.Thetradingvolumeofgoldhasreached18,500tonsin2014,with

averagedailyvolumeof76tons.Thetradingvolumeofsilverwasaround500,000tons in2014,withaverage

dailyvolumeof2,060tons.SGEhasbecomeoneoftheindispensableexchangesintheworld.

> Sustainably growing China economy

TheGDPgrowthrateofChinareached7.4%in2014.TheGDPhasexceeded10,000billionUSD,whichmakesChina

thesecond largesteconomy in theworldafter thatof theUnitedStates.With10.1%yearonyeargrowth, thePer

CapitaDisposableIncomehasreached3,227USD,whichshowsstrongpotentialforinstitutionsandindividualsgold

consumptionandinvestment.

> The liberalization of China financial market

With thedevelopmentofRMB internationalization, thefinancialmarketespecially thegoldmarket isaccelerating to

openuptotheworld.SGEIistheonlyaccessatthemomentforforeigninvestorstouseCNHtoinvestChinaGold

market.

> Diversified products, flexible trading methods and liquid market

SGEofferdiversifiedproducts,flexible tradingmethodsand liquidmarket to investors.SGE isendeavor toprovide

investorsall-roundandefficientservices,includingprice-matchingmarket,OTCmarketwithderivativessuchasoption,

swap,forwardtomeetdifferentneedsofinvestors.

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2.1 Price Matching Market PriceMatchingMarkethasthe largest tradingvolumeinSGEat thecurrentstage, ithas16tradingproducts intotal, in

which13areonmainboard,3areoninternationalboard.Theunderlyingtradingproductsaregold,silverandplatinum.

Therearephysicalanddeferredtradingproductsintermsofdeliveringtime.Deferredtradingproductscanbecategorized

tofixeddatemargintradingandnon-fixeddatemargintrading.

2.1.1 Physical Trading

• Physicaltradingisfullamounttrading,thecounterpartiesmusthavefullamountoffundsorphysicals.

• At thecurrentstage,SGEhas launched11physicalproducts, including8goldcontracts,2silvercontractsand1

Section 2: SGE Products

SGEhasbuiltupanintegratedmarketwithPrice

MatchingMarket,OTCMarketandLeasingMarket.

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platinumcontract.Thedifferencesbetweenthemaretheunderlyingproduct,thetradingunitandfineness.

• Aftertheclearing,SGEwillcreditthesalesproceedstoseller’saccount,andthephysicalgoldtobuyer’saccounton

T+0.OnT+1,physicalgoldorcashcanbewithdrawnortransferred.

Bullion Product Board Commission* Settlement Vault Delivery Standard

Gold

Au99.95

Main Board

0.0��% of Settlement Amount

Delivery versus Payment

Certified Vault of Main Board

�kg gold ingot Finess no less than 99.9�%

Au99.99 �kg gold ingot Fineness no less than 99.99%

Au99.5 ��.�kg gold ingot Finess no less than 99.�%

Au100g �00g gold bar Finess no less than 99.99%

Au50g �0g gold bar Finess no less than 99.99%

iAu99.5

International Board

Delivery versus Payment

Certified Vault of International Board

��.�kg gold ingot Finess no less than 99.�%

iAu99.99 �kg gold ingot Fineness no less than 99.99%

iAu100g �00g gold bar Finess no less than 99.99%

SilverAg99.99

Main Board 0.0�% of Settlement Amount

Delivery versus Payment

Certified Vault of Main Board

��kg silver ingot Finess no less than 99.99%

Ag99.9 ��kg silver ingot Finess no less than 99.9%

Platinum Pt99.95 Main Board 0.0�% of Settlement Amount

Delivery versus Payment

Certified Vault of Main Board

0.�kg,�kg, �kg, �kg, �kg, �kg, �kg platinum ingot Finess no less than 99.9�%

Physical Trading Products

*Commissionvariesperthevolatilityofthemarket,pleaserefertotheannouncementpublishedonSGE’swebsite.

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2.1.2 Deferred Trading (or Margin Trading)

Deferred tradingallows investors toperformdeliveryon the transactiondayorpostpone toa laterdate.Meanwhile,

Deferred InterestsandDeliveryEqualizerare introduced toadjust imbalances in thesupplyanddemandofphysical

bullions.

* What is Deferred Interest? ** What is Delivery Equalizer?

Forexample, thereare100 lotsof longpositionand100 lotsof

shortposition.During thedelivery tenderperiodof sellingand

buyingphysicals,40lotsoflongpositionrequesttoreceivephysicals

butonly30 lotsaredelivered,10 lotsareunfulfilled.Therefore,

the restof70 lotsshortpositionshouldpaycompensation - the

DeferredInterest,tothe70lotslongposition.TheDeferredInterest

Rateis0.02%perdayoftradingvalueatthemoment.

DeliveryEqualizer is the thirdpartywhodelivers the10 lotsof

goldtomakeuptheshortfallbetweenreceivinganddeliveringthe

physicalgold.Thereforethedeliveryequalizerwillgainthedeferred

interestofthe10lotsofgold.

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a. What is T+D contract?

• T+Dcontractistradedonmargin.Investorscansubmittenderfordelivery,orpostponethedeliverydatetoanyday,

withdailysettlementofdeferred interests(0.02%of tradingvalueperday).Theunderlyingproductsaregoldand

silver.

• TrepresentsTrading,Drepresentsdays.Deliverydayisrollingeveryday.

• Underlying Products:

- Au(T+D),tradingunitis1kgperlot,deliverystandardis3kggoldingotwithfinenessnolessthan99.95%;Itcan

bereplacedwith1kggoldingotwithfinenessnolessthan99.99%;

- mAu(T+D),tradingunitis100gperlot,deliverystandardis1kggoldingotwithfinenessnolessthan99.99%;

- Ag(T+D),tradingunitis1kgperlot,deliverystandardis15kgsilveringotwithfinenessnolessthan99.99%.

Note: Due to tax policy on silver, International Members and International Clients cannot deliver Ag (T+D) at the current stage.

Features:

Margin Trading: Trading through margin payment of 7% of total trading value for gold and 9% for silver which increase the

capital efficiency.

Flexible delivery: Tender for delivery can be postponed to any day.

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b. What is T+N Contract?

• Au(T+N)istradedonmargin,andthedeferredinterestsischargedonceayearonafixeddate.Thedeferredinterest

rateis6%oftradingvalueperannum.

• Au(T+N)iscomposedoftwocontracts,Au(T+N1)andAu(T+N2).

• TrepresentsTrading,Nrepresentsafixeddate;1,2representsthecontract’ssequencenumber.

• Underlying Product:Tradingunitis100ganddeliverystandardis1kggoldingot,withfinenessnolessthan99.99%.

Features:

- Deferredinterestisonlychargedonceayearwhichmitigatestheuncertaintyoftradingcost.

- Deferredinterestisnotchargedifthepositionisclosedoutbeforethedeliverydate.

Au(T+N1)

Au(T+N2)

Deferredinterestischargedon15thofJune,nodeferredinterestschargedforholdingpositionsintherestoftheyear.

Deferred interest ischargedon15thofDecember,nodeferred interestschargedforholdingpositionsintherestoftheyear.

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Deferred Trading Products

2.2 OTC MarketOTCMarketisanimportantsupplementtoPriceMatchingMarket.Thecounterpartiescanconfirmtradingvaluebilaterally

ontheelectronicplatformandclearthroughSGE.Ithasgoldspottrading,forward,swapandoption.

Bullion Product Trading Unit

Minimum Price

Fluctuation

Daily price limit

Trading Commission

Trading Margin Settlement

Settlement Day of

Deferred Interests

Deferred Trading Rate

Default Rate Vault Delivery

Standard

Gold

Au(T+D) �kg/lot RMB0.0�/g

Settlement Price of the previous trading day

±�%

0.0�% of trading value

�% Daily Mark

to Market

Each Calendar

Day

0.0�% of the trading value on daily basis

�% of the trading value

Certified Vault

of Main Board

�kg gold ingot, fineness

no less than 99.9�%

mAu(T+D) �00g/lot RMB0.0�/g0.0�% of the trading value on daily basis

�kg gold ingot, fineness

no less than 99.99%

Au(T+N1) �00g/lot

RMB0.0�/g

��th of June

�% of the trading value

�kg gold ingot, fineness

no less than 99.99%Au(T+N2) �00g/lot ��th of

December

Silver Ag(T+D) �kg/lot RMB�/kgSettlement Price of the previous trading day

±�%

0.0�% of trading value

9% Daily Mark to Market

Each Calendar Day

0.0�% of the trading value on daily basis

��kg silver ingot, fineness no less than

99.99%

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2.3 Leasing Market• SGEoffersleasing,pledge,non-tradingphysicaltransferservicestoInternationalMembersandClients.

• InternationalMembersandClientscandogold leasing,pledge, locationswapand theothernon-tradingphysical

transferwiththedeliverableproductsoninternationalboardwitheachother.InternationalMembersandClientscan

alsodogoldleasing,swaplocationandnon-tradingphysicaltransferofdeliverableproductsonmainboard.

• Forgoldleasing,InternationalMembersandClientscanborrowthedeliverableproductsoninternationalboardandmain

boardfromDomesticMembersandClients.InternationalMembersandClientscanlendtheinternationalboarddeliverable

productstoDomesticMembersandClientswhohavegoldimportlicense.UponapprovalbySGE,InternationalMembers

andClientscanlendthedeliverableproductsonthemainboardtoDomesticMembersandClients.

Spot Forward Swap Option

Product PAu99.9�, PAu99.99,iPAu99.99, iPAu99.�,iPAu�00g OAu99.99,OAu99.9�

Trading Unit Agreed trading amount via bilateral trading

Delivery Type Physical Delivery/Cash Delivery

Trading Hours 9:00-��:00

Trading System SGE price asking trading system and the other SGE designated trading system

Transaction Fee

PAu99.95, PAu99.99: Physical Delivery-0.0��% Cash Delivery-Exempted temporarily iPAu99.99, iPAu99.5, iPAu100g: Physical&Cash Delivery- Exempted temporarily

PAu99.95, PAu99.99: Physical Delivery-0.0�% Cash Delivery-Exempted temporarily iPAu99.99, iPAu99.5, iPAu100g: Physical&Cash Delivery-Exempted temporarily

Option Registration fee is temporarily exempted. Exercise fee is charged based on the underlying product

OTC Market Products

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Section 3: Clearing

3.1 Principles of Clearing• TheSGEIfollowsthe“netting,separated,andmulti-stepped”principlesforclearingfunds.

• “Netting”meansInternationalMemberstonetthedifferenceofproceedsandpaymentswithSGEI.

• “Separated”means fundsof InternationalClientsand InternationalMembersareseparatelydeposited indifferent

accounts.AllthefundsofinternationalclientsareinthecustodywithSGEIspecifiedaccountinclosedloop.

• “Multi-stepped”meansSGEI isresponsibleforclearingfor InternationalMemberswhoassumestheresponsibilityto

clearfortheirownclients.

3.2 Clearing TimeClearingtimestartsat15:30,T+0clearingmeansupondeliveryorclearing,thefundiscreditedtoseller’saccountand

debitedfrombuyer’saccountonsameday.OnT+1,thefundistransferredtoseller’saccountwhichcanbewithdrawn.

3.3 Margin Policy• TheClearingMargin is the fundwhichany InternationalMember is required todeposit into theSGEI’sSettlement

Accountforclearingpurpose.

• TheTradingMarginisthemoneydepositedintotheSGEI’sSettlementAccountbyanInternationalMembertohold

positionof the trades.Currentlymargins forgold is7%andsilver9%of total tradingvalue.Themarginwillbe

adjustedperthevolatilityofthemarket.

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• TheSGEIimposesaminimumbalancerequirementforClearingMarginonInternationalMembers.Theminimumbalance

requirementforbrokeragetradingisRMB5million,theminimumbalancerequirementforproptradingisRMB500,000.

3.4 Separated Funds Operation

Any transaction involving fundsof an International

Cl ient wi l l be handled in a c losed loop. The

InternationalClient’sAccount, itscarryingInternational

Member’s Brokerage Account, and the SGEI’s

SettlementAccountwill be linked togetherby the

InternationalClient’s trading code. Fundsof such

InternationalClientwillbetransferredfollowingpreset

directionswithin theSeparated FundsTransaction

system,andwillbetransferredintooroutoftheSGEI’

sSettlementAccount in full through theBrokerage

Account of i ts carrying International Member.

Brokerage Account should not retain any funds

belongingtoInternationalClients.

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3.5 FT Account System

FT Account System

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• FTAccountSystemisoffshoreRMB(CNH)andforeigncurrenciesaccountsystemdesignedbyPBOCinShanghai

PilotFreeTradeZone.AllInternationalMembersandClientsmustopenFTaccount(s).

• Currentlythereare7settlementbankscertifiedbySGEI,InternationalMembersandInternationalClientscanchoose

oneofthemtoopenFTaccount(s).

7 Settlement Banks are as below:

-BankofChina

-IndustrialandCommercialBankofChina

-ChinaConstructionBank

-AgricultureBankofChina

-BankofCommunications

-ShanghaiPudongDevelopmentBank

-ChinaMerchantsBank

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Section 4: Delivery

4.1 Delivery Standard: SGEstrictlyobeys the regulationsof “AntiMoneyLaundering,Anti-TerroristFinancing,Anti-TaxEvasion”byPBOC,and

prevents “ConflictGold” to flow intoChinaGoldMarket.SGEIonlyadmitsgoldbullionsby refinersonLBMAGood

DeliveryList.

4.2 Delivery: SGEhas established a complete vaulting structurewith safe and fast logistic system. SGE alsohasbuilt up a

comprehensivemanagementsystemandoperationrulesofphysicaldeliveryandload-in&load-outmanagement.

4.3 Vaulting Services: InternationalBoardCertifiedVaultoffersTransactionVaultingServicesandSafeDepositVaultingServices.TransactionVaulting

Servicesrefer to themanagementservices forphysicalbullions tradingonSGE.SafeDepositVaultingServicesrefer to

themanagementservicesforphysicalbullionsnottradingonSGE.PhysicalbullionsdepositedintotheSafeDepositVault

willbeseparatelystoredandaccountedfortheInternationalMemberorClient.Thereare58vaultsformainboardallover

China,inwhich56forgoldand2forsilver.OnevaultforinternationalboardinShanghai.

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Procedures for Entry into a Bonded Zone

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Section 5: SGE Trading System

5.1 International Member System Access Model

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5.2 International Member Secondary System

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Section 6: How to Become Our Member

6.1 The Requirements of SGE International Member 1.BealegalentitydulyregisteredoutsidethePRC(includingthoseregisteredinHongKong,MacaoorTaiwan)orwithina

regionotherwiserecognizedbySGE

2.AcknowledgeandundertaketoabidebytheArticlesofAssociationoftheSGE,theArticlesofAssociationofSGEI,rules

andmeasuresofSGEandtheSGEIgoverningtheirrespectivebusinessactivitiesandagreetosubmittothesupervisionof

itsactivitiesbySGEandtheSGEI

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3.Havecompetitiveindustrybackgroundorposition(thismayrefertoitself,itsparentcompanyorheadquarters)

4. TheregisteredcapitalorthenetassetsoftheapplicantisnotlessthanUS$10million(oranequivalentamountinRMB

orothercurrency)

5. Incompliancewiththelawandhavenorecordofseriousviolationsinthelatesttwoyears

6.MeetanyrequirementsasotherwiseprescribedbySGE

6.2 To Apply for Our Membership You Should SubmitAnapplicantisrequiredtosubmitthefollowingdocuments(inoneoriginalcopyandthreeduplicates):

1.Awrittenapplicationwithsignatureofitslegalrepresentativeoranauthorizedsignatory,andphotocopyofIDdocument

ofsuchlegalrepresentative/authorizedsignatoryandpowerofattorneyoftheauthorizedsignatory(ifapplicable)

2. Statementongoldbusinessoperationsofitsparentcompanyorheadquarters

3. Photocopyofbusinesslicense

4.Photocopyofitsfinancialbusinesslicense(ifapplicable)

5. PhotocopyofArticlesofAssociationandcorporateinternalcontrolprocedures

6. ThelatestauditedfinancialstatementoftheApplicant

7. Statementastowhethertheapplicanthaseverbeensubjectedtomaterialsanctionsbyregulatoryauthoritiesinthelast

year

8.AnyotherdocumentsasotherwiserequiredbySGE

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6.3 Other Requirements Within30workingdaysofreceivingthenoticeofapprovalfromSGE,theapplicantshould:

1. Paymembershipfeeandannualfee

a)MembershipfeeofRMB2.8millionforTypeAMembersandRMB1.6millionforTypeBMembers

b)AnnualfeeofRMB50,000

2.OpenanaccounttobeusedexclusivelyforclearingpurposesatanSGEI’scertifiedsettlementbank

3.Undertaketheproceduresforauthorizationoftherelevantdesignatedstaffandretaintheirspecimensignaturesforsuch

purpose

4.Completeanyproceduresasotherwiserequired

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Contact us:

Shanghai International Gold Exchange

Address: 42/F,BankofChinaTower,200YinchengRoadCentral,Pudong,ShanghaiTel:+86-21-20899599Fax: +86-21-20899499Web:http://www.en.sge.com.cn

Hugh Gong SeniorOfficer,MarketandStrategyDept.Tel:+86-21-20899530Mob:+8618602111416Email:gongzhi@sge.com.cn

Julia Zhu SeniorOfficer,MarketandStrategyDept.Tel:+86-21-20899535Mob:+8613816939923Email:zhuyi@sge.com.cn

Lila Lu MarketExecutiveDirector,SGEITel:+86-21-20899555Email:lilalu@sge.com.cn

Fred Wu AssistantGeneralManager,MarketandStrategyDept.Tel:+86-21-20899531Mob:+8618017769330Email:wuyf@sge.com.cn

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