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Article 1. In order to protect the legitimate rights and interests of those participants who engage in the forward transactions of bonds in the national inter-bank bond market (hereinafter referred to as participants) and clarify the rights and obligations of both parties to the forward transactions of bonds, this Agreement is concluded by participants on the basis of equality and free will according to such laws, administrative regulations and ministerial rules as the Law of the People's Republic of China on the People's Bank of China, the Contract Law of the People's Republic of China and the Provisions Governing the Forward Transactions of Bonds in the National Inter-bank Bond Market. Article 2. As a forward transaction of bonds may face some risk, both parties to a transaction shall comprehend the relevant laws, administrative regulations and ministerial rules and evaluate their own financial status and internal control system in a prudent manner so as to decide whether or not to engage themselves in the forward transaction of bonds. Article 3. Definition (1) Forward Transaction Of Bonds (hereinafter referred to as the forward transactions): The same definition of forward transactions as prescribed in the Provisions Governing the Forward Transactions of Bonds in the National Inter-bank Bond Market; (2) Target Bond: The target asset of a forward transaction that is identified by bond codes and bond instruments in the contact; (3) Quantity Of Target Bond: The total face value of the target bond and the measurement unit thereof is 10,000 yuan; (4) Buyer: The party who buys the target bond in both parties to a transaction; (5) Seller: The party who sells the target bond in both parties to a transaction; (6) Trade Day: The date when the contract is concluded by both parties to a transaction; (7) Settlement Day: The day when the delivery of bonds and payment of funds shall be conducted as agreed on by both parties to a transaction; (8) Term Of A Forward Transaction: The actual number of days from the trade day to the settlement day, including the trade date but excluding the settlement date; (9) Net Price Of A Forward Transaction: The net price of the target bond as delivered at the settlement day that is agreed on by both parties to a transaction on the trade day, and the measurement unit thereof is 1 yuan/100 yuan in face value; (10) Interests Due On The Settlement Day: The interests that a bond issuer shall pay to bond holders that are calculated in the face value of 100 yuan and are accumulated from the latest coupon day (or value day) to the settlement day (excluding the settlement day), the measurement unit of which shall be 1 yuan/ 100 yuan in face value; (11) Settled Amount: The amount of funds that is paid to the seller by the buyer when a forward transaction is settled. Settlement Amount= (Net price of the forward transaction + Interests due on the settlement day) x Amount of the target bond/100, the measurement unit of which is yuan; (12) Settlement Method: The method of bond delivery and fund payment that are agreed on by both parties to a transaction, including three categories: delivery versus payment, payment upon sight of bonds and delivery of bonds upon sight of payment. (13) Bond Account: The account that is opened in the China Government Securities Depository Trust & Clearing Co. Ltd (hereinafter referred to as the CGSDTC) for the bond delivery of a forward transaction by both parties concerned; (14) Capital Account: The account used for the payment of fund for a forward transaction, the fundamental factors of which are the name of the opening bank, the name of the account and the account number. Article 4. Any forward transaction as conducted by both parties shall be carried out through the trading system of the National Interbank Funding Center(hereinafter referred to as the NIFC). Where both parties conclude a written transaction contract for each transaction through the trading system of the NIFC (the certificate of a transaction as generated by the trading system of the NIFC), the supplementary contract thereof may be concluded according to actual need. However, the supplementary contract thereof shall not conflict with the present Agreement. A complete contract of a forward transaction shall consist of the present Agreement and a written transaction contract and the supplementary contract as well. The contract of a forward transaction shall be effective upon the conclusion of the transaction contract. Article 5. In order to ensure the performance of a forward transaction contract, both parties concerned may provide a deposit or guarantee securities through negotiations in light of the credit status of their trading counterpart: (1) Where both parities to a transaction agree upon any deposit (coupons), they shall clarify the amount, quantity, type, date of delivery, means of delivery and means of storage of the deposit (coupons); (2) The deposit may be kept by both parties themselves, or may be kept in a whole packet. The deposit as kept in a whole packet shall be kept by the NIFC or the CGSCTC as an agent. The NIFC or the CGSCTC shall open a special fund account for keeping the deposits in the local branch of the People's Bank of China and shall conclude a separate contract with both parties to the forward transaction so as to determine the respective rights and obligations for the pooled storage of the deposits and the settlement process. The margin and the interests thereof shall belong to the provider of the margin and shall not be appropriated by the NIFC or the CGSCTC. The guarantee securities shall go through the registration of pledge in the bond account of the provider; (3) Both parties to a transaction shall submit or super-add their own deposits (guarantee securities) to the account as agreed to according to the agreement; (4) Both parties to a transaction shall return the deposits and the interests thereof in full amount to the fund account as agreed to or discharge the pledge on the workday next to the day when the fund and bond are settled. Article 6. Both parties to a transaction shall, on the trade day or the following workday, sent the settlement order of the forward transaction that is complete in content and compatible to the CGSCTC in a timely manner and shall pay (or deliver) the fund in full amount (or bond in full amount) to the fund (bond) account of the other party to the transaction on the settlement day. Article 7. A breach is constituted when either of the parties to a transaction has any of the following acts: (1) Where the buyer or seller fails to send the settlement order of the forward transaction on the day as agreed to in the contract; (2) Where there is any agreement on the provision of deposits (coupons) but the buyer or seller fails to provide (pledge) the deposits (coupons) in full amount to the account as agreed to; (3) Where the settlement method as agreed to is delivery versus payment: 1.The seller shall be deemed to have breached the contract when he fails to have enough bonds for delivery on the settlement day or, although he has enough bonds, he fails to deliver them to the bond account as designated by the buyer; 2.The buyer shall be deemed to have breached the contract where the seller has enough bonds for delivery but fails to have enough fund for payment or although he has enough fund yet fails to make the payment to the fund account as designated by the seller; (4) Where the settlement method as agreed to by both parties is payment upon sight of bonds: 1.The seller shall be deemed to have breached the contract when he fails to have enough bonds for delivery; 2.The buyer shall be deemed to have breached the contract in the event that the seller has enough bonds for delivery, while the buyer fails to make the payment in full amount as agreed to or although he has made the payment in full amount, he fails to send the recognition order of payment; 3.The seller shall be deemed to have breached the contact where the buyer has made the payment in full amount as agreed to and has sent the order to confirm the payment, but the seller fails to make the settlement of bonds in full amount to the bond account as designated by the seller; (5) Where the settlement as agreed to by both parties is the delivery of bonds upon sight of payment: 1.The buyer shall be deemed to have breached the contract where he fails to make the payment in full amount to the fund account as designated by the seller on the settlement day; 2.The seller shall be deemed to have breached the contract where the buyer has made the payment in full amount to the fund account as designated by the seller, but the seller fails to make the delivery of bonds in full amount to the bond account as designated by the buyer; (6) Where the buyer or the seller, after the payment of funds and delivery of bonds are concluded, fails to return the deposits and the interests thereof to the fund account as agreed to or fails to discharge pledge of the guarantee securities. Article 8. In the event of any breach in a forward transaction, both parties shall seek resolution primarily through negotiation. Where no agreement may be reached on the handling of breach within 2 workdays after the facts and liabilities of the breach are clarified, the following relevant articles of breach settlement shall be performed: (1) Where either party to a transaction has any breach as described in item (1) or (2) of Article 7, the party in no breach has the right to require the party in breach to continue the performance of the contract and has the right to require the party in breach to compensate for the actual losses incurred from the delayed performance of the contract. The party in no breach also has the right to inform the party in breach of terminating the contract in written form and has the right to require the party in breach to compensate for the losses as incurred from the breach and indemnify the relevant reasonable expenses in the duration of the breach; (2) Where either party to a transaction has any breach as described in item (3), (4) or (5) of Article 7, the party in no breach has the right to require the party in breach to continue the performance of the contract and has the right to require the party in breach to compensate for the actual losses incurred from the delayed performance of the contract. The party in no breach also has the right to inform the party in breach of terminating the contract in written form and has the right to require the party in breach to compensate for the losses as incurred from the breach and indemnify the relevant reasonable expenses in the duration of the breach. Where the party in no breach has made the payment (or delivery) of funds (bonds) to the fund (bond) account as designated by the party in breach, it has the right to require the party in breach to return the payment and the interests thereof in full amount or the bonds on the workday following the day when the party in breach receives the written notice from the party in no breach and has the right to require the party in breach to make relevant compensation; (3) Where either party to a transaction has any breach as described in item (6) of Article 7, the party in no breach has the right to require the party in breach to return the deposit and the interests thereof to the account as agreed to within a prescribed period or discharge the pledge of the guarantee securities, and has the right to require the party in breach to compensate for the losses as incurred from the delay of returning the deposit and the interests thereof or the delay of discharging the pledge of the guarantee securities; (4) In item (1) of the preset Article, the losses as incurred from a breach shall be the deposit between the settlement amount of a forward transaction as concluded by the party in no breach through bid invitation of the NIFC or the CGSDTC on the day when the contract is terminated and the settlement amount of the original forward transaction, where the two transactions are of the same mature day, the same target bond and quantity; (5) In item (2) of the present Article, the loss as incurred by the delay of the contract shall be calculated according to the following formula: Loss Incurred By The Delayed Performance Of The Contract (delayed payment of funds) = Settlement amount x (Compensatory interest rate x Number of the delayed days for the injection of funds into the account/360 + Penalty interest rate x Number of the delayed days for the injection of funds into the account) Loss Incurred From The Delayed Performance Of The Contract (delayed delivery of funds) = Settlement amount x Penalty interest x Number of the delayed days for the injection of bonds into the account + Max{Market value of the target bond on the settlement day - Market value of the target bond on the delivery day, 0} The loss incurred from the termination of a contract shall be the margin between the settlement amount and the market value of the target bond on the day when the contract is terminated. In particular, the market value of the target bond on the settlement day (or the actual delivery day) shall be determined through negotiations by both parties. Where no agreement is reached through negotiation, the market value of the target bond on the settlement day (or the actual delivery day) shall be calculated in light of the yield rate of identical bonds with the same residual term on the settlement day (or the actual delivery day). The market value of the target bond on the termination day of the contract shall be determined by the purchase and sale through the bid invitation of the NIFC or the CGSDIC. The party in breach shall return the payment and the interests thereof or discharge the pledge of bonds before the deadline of the workday next to the day when he receives the written notice from the party in no breach. The relevant loss as claimed by the party in no breach from the party in breach shall be calculated according to the following formula: Compensation Amount = Settlement amount x Penalty interest rate x Number of fund occupation days (6) The loss as incurred by the delayed return as described in item (3) of the present Article shall be calculated according to the following formula: Loss Incurred From The Delayed Return (deposit as delayed for return) = Margin amount x (Compensatory interest rate x Number of the delayed days for the injection of margin into account/360 + Penalty interest rate x Number of the delayed days for the injection of margin into account) Loss Incurred From Delayed Return (guarantee securities as delayed for return) = Market value of guarantee securities on the workday next to the settlement day x Penalty interest rate x Number of the delayed days for the injection of bonds into account + Max {Market value of the guarantee securities on the workday next to the settlement day - Market value of the guarantee securities on the actual return day, 0} In particular, the market value of the guarantee securities on the workday next to the settlement day (or the actual return day) shall be determined through negotiations by both parties. Where the negotiation results in no agreement, the market value of securities on the workday next to the settlement day (or the actual return day) shall be calculated in light of the yield rate of identical bonds on the workday next to the settlement day (or the actual return day) with an identical residual term; (7) In item (1), (2), (3) or (4) of the present Article, where the party in breach has provided the deposit, all items of compensation and expiation shall be deducted from the deposit and the interests thereof as provided by the party in breach in priority, the underpayment may be claimed to the party in breach and the residual part shall be returned to the party in breach. Where the party in breach provides guarantee securities, the party in no breach may, in this case, determine the value of the guarantee securities in light of the price as set through negotiations by both parties on the termination day of contract, or the party in no breach may entrust the NCIBL or the CGSDTC to sell the guarantee securities through bid invitation (the party in no breach shall submit the confirmation document regarding facts and responsibilities of the breach (the original version)). All items of compensation and expiation shall be deducted in priority from the value of the guarantee securities as determined or the amount as generated from the guarantee securities as sold, the underpayment may be claimed to the party in breach and the residual part shall be returned to the party in breach; (8) Where the party in no breach who has provided the deposit (guarantee securities) informs the party in breach of the termination of contract in written form, the party in no breach has the right to require the party in breach to return the margin and the interests thereof as provided in full amount or discharge the pledge of the guarantee securities in a timely manner and has the right to draw in penalty interests from the party in breach. The penalty shall be calculated according to the following formula: Penalty Interests = Amount of margin (or Total face value of the guarantee securities) x Number of margin (securities) occupation days (9) Under the present Agreement, the compensatory interest rate and the interest rate shall be calculated in light of the reserve ratio of the excessive savings of the financial institution in the People's Bank of China; the penalty interest rate may be concluded by both parties to a transaction, the maximum of which shall not exceed 0.06% of the daily interest rate. Where there is no penalty interest rate as concluded by both parties to a transaction, the penalty interest rate shall be 0.06% of the daily interest rate; (10) All items of breach compensation (or expiation) as concluded by the present Article may be applicable to the party in breach in a separate or integrated manner. Article 9. Where both parties fail to reach an agreement on the confirmation of breach facts and/or responsibilities; or both parties have reached an agreement on the confirmation of breach facts and responsibilities but haven't reached an agreement on the settlement of the breach and at the same time, fail to resolve it according to the stipulations of the present Agreement on the settlement of a breach, either party of the transaction may lodge an application for arbitration to the arbitration organ according to the arbitration clause therein. Where there is no such arbitration clause or the arbitration clause is ineffective, either party may lodge a lawsuit in the People's Court. Article 10. Where any forward transaction fails to be carried out due to force majeure, the compensatory responsibilities may be partly or wholly exempted in light of the impact of the force majeure, unless it is otherwise provided for by law. Where force majeure disappears, both parties to a transaction shall continue to perform the contract, unless both parties have agreed on the termination. Article 11. Where both parties to a transaction maliciously collude with each other by breaching the contract on purpose so as to achieve their improper purposes, it shall be publicized by the NIFC and the CGSDTC. In the event of any circumstance as described in Article 9 of the present Agreement, and either party to a transaction files an application for arbitration or lodges a litigation to the people's court, it shall, before 12:00am of the workday next to the day when it receives the judgment of the arbitration or litigation, send the final result to the NIFC and the CGSDTC, which shall announce the final result as received on the very day. Article 12. Where the qualification of either party to a transaction to engage in a forward transaction in the national inter-bank bond market is terminated or suspended, the forward contract that has been concluded shall continue to be performed and the relevant articles of the present Agreement shall be carried out. Article 13. The present Agreement shall be an open agreement and shall come into force upon the subscription of the participants. There shall be one original version and N+2 copies of the present Agreement so as to ensure that each participant has one copy and two copies are sent to the NIFC and the CGSDTC respectively for archival filing. THE SIGNATURE PAGE OF THE PRIMARY AGREEMENT OF BOND FORWARD TRANSACTIONS This entity has read through the content of the "Primary Agreement of Bond Forward Transactions in the National Inter-bank Bond Market" and agrees to abide by it. Name of the Subscription Entity: Name of the Legal Representative or the Authorized Person: Signature: Time of Signature (Year /Month/ Date): Seal of the Entity: Telephone Number: Address: |
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