Laws of the People's Republic of China

No. 29

The Administrative Measures for the Securities Registration and Settlement are hereby promulgated and shall enter into effect as of July 1, 2007.

Chairman of China Securities Regulatory Commission, Shang Fulin

April 7, 2006

Administrative Measures for the Securities Registration and Settlement Chapter I General Provisions

Article 1

In order to regulate the securities registration and settlement activities, protect the lawful rights and interests of investors, maintain the securities registration and settlement order, guard against the securities registration and settlement risks and safeguarding the safe and efficient operation of the securities market, these Measures are formulated in accordance with the Securities Law, the Company Law and other laws and administrative regulations.

Article 2

These Measures shall be applied to the registration and settlement of stocks, bonds, shares of securities investment funds, as well as other securities and securities derivatives (hereinafter referred to as the securities) listed in the stock exchanges.

The registration and settlement business about the non-listed securities shall be carried out with reference to these Measures.

If there are separate provisions in the laws, administrative regulations or of China Securities Regulatory Commission (hereinafter referred to as CSRC) about the registration and settlement business about the foreign capital stocks listed in China, such provisions shall prevail.

Article 3

The principles of openness, fairness, equity, safety and efficiency shall be followed in the securities registration and settlement activities.

Article 4

Securities registration and settlement institutions are non-profitable legal persons that provide centralized registration, depository and settlement services for the securities trading.

The securities registration and settlement business shall be governed by the method of nationally centralized and unified operations, and be dealt with in the form of the centralized and unified processing by securities registration and settlement institutions.

The securities registration and settlement institutions shall carry out the industrial self-discipline management.

Article 5

The securities registration and settlement activities shall be subject to the laws, administrative regulations, the provisions of the CSRC and the business operational rules formulated by the securities registration and settlement institutions in accordance with law.

Article 6

The CSRC shall supervise and administer the securities registration and settlement institutions as well as securities registration and settlement activities according to law.

Chapter II Securities Registration and Settlement Institutions

Article 7

The establishment and dissolution of securities registration and settlement institutions shall be subject to the approval of the CSRC.

Article 8

A securities registration and settlement institution shall perform the functions as follows:

(1)

The establishment and management of securities accounts and settlement accounts;

(2)

The depository and transfer of securities;

(3)

The registration of the roster of securities holders as well as the registration of their rights and interests;

(4)

The liquidation and delivery of securities and capital as well as the relevant management;

(5)

The distribution of securities rights and interests upon the strength of the entrustment of issuers;

(6)

Providing the inquiry, information, consultancy and training services relating to the securities registration and settlement business according to law; and

(7)

Other businesses as approved by the CSRC.

Article 9

A securities registration and settlement institution shall not carry out any of the activities as follows:

(1)

The investments that are irrelevant to the securities registration and settlement business;

(2)

Purchasing non-self-use real estate;

(3)

Purchasing or selling securities not under Article 65 or 66 of these Measures; or

(4)

Other activities as prohibited by the laws, administrative regulations or the CSRC.

Article 10

The following matters of securities registration and settlement institutions shall be reported to the CSRC for approval:

(1)

The formulation or revision of Articles of association or business operational rules;

(2)

The important international cooperation and communication activities or the important affairs related to Hong Kong, Macao or Taiwan;

(3)

The formulation or adjustment of main charging items or rates related to the securities registration and settlement;

(4)

The appointment or removal of the chairman or deputy chairman of the board of directors, the general manager or deputy general manager; or

(5)

Other matters that shall be reported to the CSRC for approval.

The "business operational rules" as mentioned in the Item (1) of the preceding Paragraph means the rules about the securities registration and settlement business, such as the management of securities accounts, securities registration, securities custody and depository, securities settlement and management of settlement participants of the securities registration and settlement institutions.

Article 11

The following matters and documents of securities registration and settlement institutions shall be reported to the CSRC:

(1)

The detailed rules for the business operations;

(2)

The formulation or alteration of the business management rules, the business resumption plans and the emergency handling procedures;

(3)

The handling of the registration and settlement business related to new securities varieties or the alteration of the modes for registration and settlement business;

(4)

The acquisition or deprivation of the qualifications of settlement participants or settlement banks;

(5)

The discovery of significant business operational risks or technical risks, significant illegal or irregular acts, or the involvement in significant lawsuits;

(6)

The appointment or removal of the general manager of any subsidiary, the assistant of the general manager of the company, or the person-in-charge of a department of the company;

(7)

Annual work reports on the relevant business operations or the conditions on the implementation of the relevant state provisions;

(8)

Annual financial reports audited by an accountant firm, schemes on financial budgets and final accounts, projects with large expenses, the hiring or replacement of accountant firms;

(9)

The main business cooperation agreements reached with stock exchanges, and the sample formats of various business agreements reached with the securities issuers, settlement participants and settlement banks; and

(10)

Other matters and documents that the CSRC requires reporting.

Article 12

A securities registration and settlement institution shall properly keep the original vouchers as well as the relevant documents and materials about the registration, depository and settlement, which shall be kept for not less than 20 years.

Article 13

A securities registration and settlement institution shall manage the data and materials exclusively, which formulates for the securities registration and settlement business. Without the consent of the securities registration and settlement institution, any organization or individual may not use the data and materials under exclusive management for any commercial purpose.

Article 14

A securities registration and settlement institution and its staff members shall keep confidential the data and materials related to the securities registration and settlement business according to law.

A securities registration and settlement institution shall refuse the inquiry of the data and materials related to the securities registration and settlement, except for the circumstances as follows:

(1)

The securities holder inquires about his or its' own securities materials;

(2)

The securities issuer inquires about the roster of securities holders and the relevant materials;

(3)

The stock exchange requires the securities registration and settlement institution to provide the relevant data and materials in order to perform its functions according to law; or

(4)

The people's court, the people's procuratorate, the public security organ or the CSRC inquires or obtains evidences in the light of statutory conditions and procedures.

A securities registration and settlement institution shall take effective measures to facilitate the securities holders' inquiry about the holding records of their own securities.

Article 15

A securities registration and settlement institution shall make public its business operational rules, and the main charging items and rates related to the securities registration and settlement.

If a securities registration and settlement institution formulates or revises its business operational rules, adjusts the main charging items or rates related to the securities registration and settlement, it shall solicit the opinions of the relevant market participants.

Article 16

The staff members of securities registration and settlement institutions shall be dedicated to their posts, deal with affairs according to law, and shall not seek for unjustifiable interests by taking advantage of their posts or divulge the business secrets of relevant entities or individuals they have known.

If a securities registration and settlement institution violates the Securities Law or these Measures, the CSRC shall give it an administrative punishment; and the principal and other persons who are directly responsible for shall be subject to administrative punishments.

Chapter III Management of Securities Accounts

Article 17

An investor shall hold the securities through his securities accounts, and the securities accounts shall be used for recording the balance of securities held by the investor as well as the information on the change of securities.

Article 18

The securities shall be recorded in the securities accounts of the securities holders themselves, however, if any of the laws, administrative regulations or the CSRC prescribe that the securities may be recorded in the securities accounts of a nominal holder, such provisions shall prevail.

In order to perform their duties according to law, a securities registration and settlement institution may require a nominal holder to provide the relevant materials about the owners of securities rights and interests under its name.

Article 19

An investor shall submit an application to a securities registration and settlement institution to open a securities account.

Applying for opening a securities account, an investor shall ensure that the materials he/it submits for opening the account are true, accurate and integral.

Article 20

A securities registration and settlement institution may directly open securities accounts for investors, or may entrust securities companies to do so.

A securities registration and settlement institution shall follow the principles of facilitating investors and optimizing the allocation of account resources when opening securities accounts for investors.

Article 21

Where a securities company opens a securities account on commission, it shall apply to a securities registration and settlement institution for the acting qualification for opening accounts.

When opening securities accounts on commission, a securities company shall examine the authenticity, accuracy and integrity of the originals of valid identity cards and other account opening materials provided by the investors in the light of the business operational rules of the securities registration and settlement institution, and the relevant account opening materials shall be properly kept for not less than 20 years.

Article 22

The investor may not provide his/its securities account to any other person to use.

Article 23

According to the business operational rules, a securities registration and settlement institution shall supervise over the opening of securities accounts by the acting account opening institutions. If the acting account-opening institution violates the business operational rules, the securities registration and settlement institution may suspend or cancel its acting qualification for opening accounts in the light of the business operational rules, and ask the CSRC to suspend or cancel its relevant licensed securities business in accordance with the relevant provisions; and the principal and other persons held to be directly responsible shall singly or concurrently be subject to warning, fine, revocation of practicing qualifications or securities practicing qualifications, etc.

Article 24

A securities company shall keep informed of the materials and the credit status of its clients, and supervise over the use of securities accounts of its clients. If a securities company finds that any of its clients commits any illegal act during the course of using the securities account, it shall handle it in the light of the business operational rules of the securities registration and settlement institution, and timely report it to the securities registration and settlement institution and the stock exchange. If any legal person establishes a securities account in any other's name or makes use of the securities account of any other's for purchasing and selling of securities, the securities company shall also report it to the CSRC, which shall punish it in accordance with law.

Article 25

If an investor commits the illegal act during the period of opening or using a securities account, the securities registration and settlement institution shall, according to law, take measures to limit the use of or write off the illegal securities account, etc.

Chapter IV Securities Registration

Article 26

An issuer of listed securities shall entrust a securities registration and settlement institution to deal with the registration of the securities it has issued.

A securities registration and settlement institution shall reach a securities registration and service agreement with the securities issuer that entrusts it to deal with the securities registration business and specify the rights and obligations of both parties.

A securities registration and settlement institution shall formulate and publish the model texts of securities registration and service agreements.

A securities registration and settlement institution may deal with the registration of listed governmental bonds according to the requirements of the competent department for government bonds.

Article 27

In accordance with the records of securities accounts, a securities registration and settlement institution shall confirm the facts of the securities holders' holding the securities, and implement the registration of the roster of securities holders.

Article 28

After the public issuance of securities, a securities issuer shall submit the roster of securities issuers that have issued the securities and other relevant materials to the securities registration and settlement institution. The securities registration and settlement institution shall deal with the initial registration of the roster of securities issuers based thereon.

A securities issuer shall guarantee the legality, truthfulness, accuracy and integrity of the materials it submits. A securities registration and settlement institution shall not be responsible for the losses and legal consequences incurred from the mistakes in the roster of securities issuers or other relevant materials made by the securities issuers.

Article 29

Where the securities are listed and traded in a stock exchange, the securities registration and settlement institution shall deal with the alteration registration of the roster of securities issuers according to the delivery results of the securities transactions.

If the securities are transferred by way of agreement-based transfer, inheritance, compulsory enforcement or administrative appropriation, the securities registration and settlement institution shall alter the balance of the relevant securities account in the light of its business operational rules, and deal with the corresponding alteration registration of the roster of securities issuers.

If the securities are mortgaged, locked or frozen and thus the rights of the owner thereof are limited, the securities registration and settlement institution shall indicate it on the roster of securities holder.

Article 30

A securities registration and settlement institution shall guarantee the truthfulness, accuracy and integrity of the roster of securities holders and the transfer registration records, and shall not disguise, forge or destroy any of them.

Article 31

In the light of its business operational rules and the agreements, a securities registration and settlement institution shall regularly circulate the roster of securities holders and other relevant materials to the securities issuers.

Article 32

If a securities issuer applies for providing the distribution of rights and interests and other agency services, it shall submit the relevant materials and pay the money to the securities registration and settlement institution in the light of the business operational rules and the agreement.

If a securities issuer fails to perform the aforesaid obligation in time, the securities registration and settlement institution has the right to delay or refuse the handling thereof, and the securities issuer shall issue an announcement and explain the relevant conditions in time.

Article 33

If a securities issuer or its liquidation group terminates the securities registration or other relevant service agreement, the securities registration and settlement institution shall provide it with the roster of securities holders and other registration materials according to law.

Chapter V Custody and Depository of Securities

Article 34

An investor shall entrust a securities company with the custody of its securities, and the securities company shall keep its own securities and the securities of its clients under its custody at a securities registration and settlement institution, except for being otherwise prescribed by the laws, administrative regulations or the CSRC.

Article 35

A securities registration and settlement institution shall set up general ledgers for the securities of the securities companies' clients and general ledgers for its own securities for the statistics of the securities of the securities companies' clients and its own securities.

A securities company shall entrust a securities registration and settlement institution to maintain for its clients' securities account and its own securities account, except for being otherwise prescribed by the laws, administrative regulations or the CSRC.

Article 36

When buying or selling securities, an investor shall conclude a securities trading, trusteeship and settlement agreement with a securities company.

A securities registration and settlement institution shall formulate and publish the necessary Articles of the securities registration and settlement in the securities trading, custody and settlement agreement. The necessary Articles shall include but not be limited to the contents as follows:

(1)

The securities company shall submit an application for the trading of securities upon the strength of the entrustment of its client and in the light of the securities trading rules, complete the delivery of securities and capital with its client according to the transaction results, and assume the corresponding obligations of delivery; while the client shall allow the securities company to entrust a securities registration and settlement institution to deal with the securities delivery between its/his securities account and the securities delivery account of the securities company after concentrated transactions;

(2)

If a pledge-type repurchase transaction is implemented, the investor and the securities company shall submit the pledged coupons for repurchase to the securities registration and settlement institution in the light of the business operational rules. The relationship of credits and debts between the investor and the securities company shall not affect the securities registration and settlement institution, which, in the light of the business operational rules, carries out its right to the pledged coupons as submitted by the securities company; and

(3)

The securities company may entrust the securities registration and settlement institution to transfer the net bought-in securities into its securities disposal account when a client defaults in the delivery of capital, and require the client to make up the capital within the stipulated time limit. The securities company may refuse to transfer the capital equivalent to the amount of defaulted securities to the client temporarily when a client defaults in the delivery of securities.

Article 37

A securities company shall report the matters concerning the establishment, alteration and termination of securities custody relationships with its clients to the securities registration and settlement institution.

The aforesaid matters shall be recorded down by the securities registration and settlement institution.

Article 38

If a client requires the securities company to transfer its/his securities to an other securities company for custody, the relevant securities company shall handle it according to the relevant business operational rules of the stock exchange and the securities registration and clearing institution, and shall not refuse to do so except for being otherwise prescribed by laws, administrative regulations or the CSRC.

Article 39

A securities company shall take effective measures to ensure the safety of the securities under custody, and shall not misappropriate or sell the aforesaid securities without authorization.

A securities registration and clearing institution shall take effective measures to ensure the safety of the securities it keeps, and shall not misappropriate or sell the aforesaid securities without authorization.

Article 40

The pledge, lock-up, freeze or deduction of securities shall be managed by the securities company, which entrusts the custody of the securities and the securities registration and settlement institution in the light of the relevant provisions as set down by the securities registration and settlement institution.

Chapter VI Liquidation and Delivery of Securities and Capital

Article 41

To participate in the centralized liquidation and delivery of securities and capital, a securities company shall apply to the securities registration and settlement institution for obtaining the qualification of a settlement participant, conclude a settlement agreement with the securities registration and settlement institution and specify the obligations and obligations of both parties.

If the securities company has not obtained the qualification of a settlement participant, it shall conclude an entrusted settlement agreement with a settlement participant so as to entrust the settlement participant for the centralized liquidation and delivery of securities and capital on its behalf.

The model texts of the settlement agreement and the entrusted settlement agreement shall be formulated and published by the securities registration and settlement institution.

Article 42

A securities registration and settlement institution shall choose a qualified commercial bank as the settlement bank for dealing with the capital transfer.

The conditions for settlement banks shall be prescribed by the securities registration and settlement institution.

Article 43

The settlement of securities and capital shall be governed by the principle of graded settlement. The securities registration and settlement institution shall take charge of dealing with the centralized liquidation and delivery between itself and the settlement participants; and the settlement participants shall be responsible for handling the centralized liquidation and delivery between themselves and their own clients.

Article 44

A securities registration and clearing institution shall establish an account of centralized securities delivery and an account of centralized capital delivery so as to deal with the centralized liquidation and delivery between itself and the settlement participants.

In accordance with the rules as set down by the securities registration and settlement institution, a settlement participant shall apply for opening an account of centralized securities delivery and an account of centralized capital delivery so as to deal with the delivery of securities and capital. A settlement participant engaging in the self-management business and the brokerage business simultaneously shall apply for opening an account of self-management securities and capital delivery and an account of the clients' securities and capital delivery separately for dealing with the self-management securities and capital delivery and the securities and capital delivery for the brokerage business.

Article 45

If a securities registration and settlement institution adopts the method of multi-lateral netting settlement, it shall act as a central counter party (CCP) of the settlement participants in accordance with the business operational rules, and deal with the liquidation and delivery by taking a settlement participant as a settlement unit in the light of the principle of delivery versus payment (DVP).

Article 46

The settlement agreement concluded by a securities registration and settlement institution and the settlement participant in the multi-lateral netting settlement shall include:

(1)

As to a securities exchange contract for which the settlement participant takes charge of settlement, the right of both settlement participants to the aforesaid contract to collect the securities or capital from the opposite party and the obligation of the aforesaid opposite party to pay the capital or securities shall be both transferred to the securities registration and settlement institution; and

(2)

The securities registration and settlement institution shall enjoy the right and perform the obligation of both settlement participants to the original contract to the opposite party after accepting the right and obligation prescribed in the preceding paragraph.

Article 47

When a securities registration and settlement institution implements multi-lateral netting liquidation, it shall compute the net amounts receivable and payable according to the netting of the securities and capital of the settlement participants, and notify the liquidation results to the settlement participants upon conclusion of the liquidation in time.

If a securities registration and settlement institution adopts the other settlement method, it shall implement the liquidation in accordance with the relevant business operational rules.

Article 48

Before conducting a centralized delivery, a settlement participant shall collect the securities and capital payable from its clients, and shall retain sufficient securities and capital in its securities delivery account and its capital delivery account.

The securities transfer between a settlement participant and its clients shall be dealt with by a securities registration and settlement institution on commission.

Article 49

In the period of a centralized delivery, a securities registration and settlement institution shall collect the capital and securities payable from the settlement participants at the time of delivery, and shall deliver the securities and capital receivable at the same time. The delivery may not be revoked after being completed.

If a settlement participant has not sufficiently performed the obligation of securities or capital delivery, it cannot obtain the corresponding capital or securities.

With respect to a settlement participant which engages in the self-management business and the brokerage business or asset management business simultaneously, the securities registration and settlement institution can use the capital in the self-management capital delivery account of the aforesaid settlement participant to complete the delivery if the capital in its client' capital delivery account is not sufficient.

Article 50

A settlement participant shall deliver the securities and capital receivable to its clients after conducting a centralized delivery.

The securities transfer between a settlement participant and its clients shall be dealt with by a securities registration and settlement institution on commission.

Article 51

A securities registration and settlement institution shall, in the settlement business operational rules, separately prescribe the time limits for the centralized delivery of securities and capital between the settlement participants and itself as well as the centralized delivery of securities and capital between a settlement participant and its clients.

A settlement participant shall accomplish the work of delivering the securities and capital within the prescribed time limit for delivery.

Article 52

Where the liquidation results are wrong because of the securities registration and settlement institution, the settlement participant may require the securities registration and settlement institution to make corrections after performing the obligation of delivery, and assume the direct losses it has suffered.

Chapter VII Risk Prevention and Handling of Delivery Default

Section I Risk Prevention and Control Measures

Article 53

A securities registration and settlement institution shall take the measures as follows so as to strengthen the risk prevention and control of the securities registration and settlement business:

(1)

Constituting perfect risk prevention rules and internal control rules;

(2)

Establishing a perfect technical system, and formulating technical standards and criteria that shall be observed by all settlement participants;

(3)

Establishing perfect entrance standards and risk evaluation system for the settlement participants and the settlement banks; and

(4)

Making backups for the settlement data and the technical system, and formulating business-related emergency dealing with procedures and operational procedures.

Article 54

A securities registration and settlement institution shall cooperate with the stock exchange, and establish a system against the risks characteristic of the securities market.

A securities registration and settlement institution shall make a business cooperation agreement with the stock exchange and specify the rights and obligations of both parties.

Article 55

A securities registration and settlement institution shall, in accordance with the principle of jointly assuming settlement risks, organize the settlement participants to establish a mutual protection fund for securities settlement in order to safeguard the continuous delivery under the circumstance of the defaulted delivery of any settlement participant.

The measures for the raising, use, management and repayment of the mutual protection fund for securities settlement shall be prescribed by the securities registration and settlement institution in its business operational rules.

Article 56

A securities registration and settlement institution may, in light of the risk situation of a clearing participant, take risk control measures, such as requiring the settlement participant to provide the delivery security, etc.

The specific standards for a settlement participant to provide delivery security shall, in the light of the risk situation of the settlement participant, be determined and adjusted by the securities registration and settlement institution.

A securities registration and settlement institution shall separate the delivery collaterals submitted by the settlement participants from its own assets, and strictly enforce the management of separate accounts on the basis of the settlement participants, and shall not misappropriate any of the collaterals.

Article 57

A settlement participant may deposit the securities settlement provisions in its fund delivery account for completing deliveries.

A securities registration and settlement institution shall separate the settlement provisions deposited by the settlement participants from its own capital, and strictly enforce the management of separate accounts on the basis of the settlement participants, and shall not misappropriate any of the provisions.

Article 58

A securities registration and settlement institution shall implement a pledge warehouse system for the pledge-type repurchase, and transfer the pledged coupons submitted by the settlement participants for the financial repurchase to the warehouse of pledges.

Article 59

The following capital and securities collected by a securities registration and settlement institution can only be used for the liquidation and delivery of the closed securities transactions in accordance with the business operational rules, and shall not be implemented by force:

(1)

The securities settlement risk fund and the mutual protection fund for securities settlement collected by the securities registration and settlement institution, as well as the capital and securities for delivery security, such as the delivery collaterals and the pledged coupons for the purpose of the repurchase;

(2)

The securities and capital in the securities centralized delivery account, capital centralized delivery account and special payment account as established by the securities registration and settlement institution in accordance with these Measures, as well as the securities and capital in other special delivery accounts as established thereby in light of the business operational rules;

(3)

The securities in the securities delivery account, securities disposal account and other settlement accounts of the settlement participants, as well as the capital payable determined in the light of the transactions results in the capital delivery account of the settlement participants;

(4)

The securities and capital payable of the investors at the stage of delivery as determined in the light of the transactions results; and

(5)

The capital in the special deposition account for settlement provisions and in the special capital assessment account for the issuance of new shares as opened by the securities registration and settlement institution at the bank, as well as the debt interests, dividends and bonuses, etc. the issuers plan to distribute to the investors.

Article 60

A securities registration and settlement institution may, in light of the requirements for organizing and managing the securities registration and clearing business, apply for the credit quota according to the relevant provisions, or apply for loans by using the securities in the special liquidation account for the purpose of safeguarding the continuous and normal operation of the securities registration and settlement business.

Section II Handling of Defaulted Centralized Delivery

Article 61

A securities registration and settlement institution shall establish a special settlement account for depositing the securities and capital that will not be delivered or deducted for the time being when the settlement participant breaches the contract.

Article 62

When a settlement participant defaults in any capital delivery, it shall be handled in the light of the following procedures:

(1)

The defaulting settlement participant shall issue a transfer instruction of securities delivery to the securities registration and settlement institution, and specify the types and amount of the securities equivalent to the amount of the delivered capital as well as the corresponding securities account in all the securities receivable of the aforesaid settlement participant on the current day for the securities registration and settlement institution to transfer to the settlement participant; and shall specify the types and amount of the securities equivalent to the amount of inadequate capital for the securities registration and settlement institution not to deliver them to the settlement participant for the time being.

(2)

If the securities registration and settlement institution receives any valid transfer instruction of securities delivery within the prescribed time limit, it shall, according to the settlement business operational rules, deliver the corresponding securities to the settlement participant, and transfer the securities that will not be delivered for the time being to the special settlement account, and notify the aforesaid settlement participant to make up the capital or submit the delivery security within the prescribed time limit.

If the securities registration and settlement institution fails to receive any valid transfer instruction of security delivery within the prescribed time limit because of the serious delivery default of the settlement participant, the securities registration and settlement institution shall transfer all the securities that will be delivered to the settlement participant into the special settlement account and not to deliver them to the settlement participant, and notify the settlement participant to make up the capital or submit the delivery security within the prescribed time limit.

Where the securities that will not be delivered for the time being, the capital to be made up or the delivery security is not enough for making up the defaulted amount, the securities registration and settlement institution may deduct the self-management securities of the aforesaid settlement participant, and notify it to the settlement participant after transferring them into the special settlement account.

Article 63

When a settlement participant defaults in the capital delivery, the securities registration and settlement institution shall use the capital in the light of the following sequential order to complete the capital delivery with the opposite settlement participant:

(1)

The part of cash in the collaterals provided by the defaulting settlement participant;

(2)

The part paid by the defaulting settlement participant in the mutual protection fund for securities settlement;

(3)

The part paid by other settlement participants in the mutual protection fund for securities settlement;

(4)

The securities settlement risk fund; and

(5)

Other capital.

Article 64

When a settlement participant defaults in any securities delivery, the securities registration and settlement institution has the right not to deliver the capital receivable equivalent to the defaulted amount for the time being.

The securities registration and settlement institution shall transfer the capital that will not be transferred for the time being into the special settlement account, and notify it to the aforesaid settlement participant. And the settlement participant shall make up the securities within the prescribed time limit or provide a security as recognized by the securities registration and settlement institution.

Article 65

If a settlement participant defaults in any securities delivery, the securities registration and settlement institution may use the following securities to complete the securities delivery to the opposite settlement participant:

(1)

The same securities for offsetting submitted by the defaulting settlement participant;

(2)

The same securities purchased by entrusting the securities company with the capital in the special settlement account; and

(3)

The same securities from other sources.

Article 66

If a settlement participant fails to make up the capital or securities within the prescribed time limit, the securities registration and settlement institution may dispose the collaterals provided by the defaulting settlement participant or the pledged coupons for repurchase in the warehouse of pledges, or sell out the securities in the special settlement account.

The proceeds incurred from the disposal mentioned in the preceding paragraph shall be used to make up the capital, securities and the relevant fees owned by the defaulting settlement participant; where there is a surplus, the securities registration and settlement institution shall return them to the relevant defaulting settlement participant; and where there is a deficit, the securities registration and settlement institution shall recourse the insufficient part against the relevant defaulting settlement participant.

As to the securities or capital that cannot be recovered within the prescribed time limit, the securities registration and settlement institution may use the mutual protection fund for securities settlement or the securities settlement risk fund to make them up. After it uses the mutual protection fund for securities settlement or the securities settlement risk fund to make up the losses, the securities registration and settlement institution shall continue the recovery against the defaulting settlement participant.

Article 67

If a settlement participant defaults in the capital delivery or securities delivery, the securities registration and settlement institution may collect a fine for breach of contract in the light of the relevant provisions. The fine for breach of contract as collected by the securities registration and settlement institution shall be incorporated into the securities settlement risk fund.

Article 68

If a settlement participant is guilty of the serious delivery default; the securities registration and settlement institution may handle it in the light of the procedures as follows:

(1)

Suspending or terminating part or all of its settlement business, terminating and canceling the qualification as a settlement participant and requiring the stock exchange to take measures to stop the transaction; and

(2)

Requesting the CSRC to suspend or cancel the relevant licensed securities business in the light of the relevant provisions, and apply one or more of punishments such as warning, fine, revocation of practicing qualifications and securities practicing qualifications to the principal and other persons held to be directly responsible.

The specific measures for the securities registration and settlement institution to request the stock exchange to adopt the measure of suspending transactions shall be formulated by the securities registration and settlement institution cooperating with the stock exchange, and be reported to the CSRC for approval.

Article 69

If a securities registration and settlement institution uses the mutual protection fund for securities settlement or the securities settlement risk fund in accordance with law, or applies any of the measures mentioned in the preceding Article to the defaulting settlement participant, it shall indicate it in its annual report.

Section III Handling of Defaulted Delivery between Settlement Participants and Their Clients

Article 70

In light of the provisions on securities registration and a settlement institution, a settlement participant may apply to a securities registration and settlement institution for opening a securities disposal account for the purpose of depositing the securities that will not be delivered to its clients for the time being.

Article 71

According to the risk situation of its clients, a settlement participant may adopt risk control measures, such as requiring the clients to provide a delivery security.

The specific standards provided by a client on a delivery security shall be specified by the settlement participant and the client in the agreement on securities trading, custody and settlement.

Article 72

The settlement participant may give an instruction to the client when a client fails to hand the capital delivery, and entrust the securities registration and settlement institution to transfer the client's securities of net purchase to its securities disposal account, and request the client to make up the capital within a stipulated time limit.

Article 73

When a client defaults in any securities delivery, the settlement participant may not transfer the capital equivalent to the defaulted amount of securities delivery to the client temporarily.

Article 74

If, within the prescribed time limit, a defaulting client fails to make up the capital or securities, the settlement participant may sell the corresponding securities in the securities disposal account or purchase sufficient securities with the capital that will not be delivered temporarily.

The proceeds incurred from the disposal mentioned in the preceding paragraph shall be used to make up the capital, securities and the relevant fees owned by the defaulting client; and if it has surplus, the settlement participant shall return them to the client; if it has deficit, the settlement participant has the right to continue the recourse against the client.

Article 75

If a settlement participant fails to timely pay the capital receivable of a client to the client or fails to timely entrust a securities registration and settlement institution to transfer the securities receivable of the client from its securities delivery account to its account of the clients' securities, the settlement participant shall be responsible for breach of contract to the client, and shall be responsible for compensation to the client if it causes losses to the client.

Article 76

If a client defaults in making delivery to the settlement participant, the settlement participant shall not refuse to perform the obligation of delivery to the securities registration and settlement institution, and shall not affect the centralized delivery of securities and capital that has been completed or in progress or the securities transfer made by the securities registration and settlement institution handles on commission.

Article 77

The relationship of settlement rights and obligations between a securities company that has not obtained the qualification of a settlement participant and its clients shall be governed by these Measures by analogy.

Chapter VIII Supplementary Provisions

Article 78

The terms as follows shall have the following meanings when being used in these Measures:

The "registration" means such an act whereby the securities registration and settlement institution accepts the entrustment of securities issuers and confirms the securities holding of securities holders by establishing and maintaining the roster of securities holders.

The "custody" means such an act whereby the securities company accepts the entrustment of its clients for keeping the securities for them and providing the commissioned collection of bonuses and other right maintenance services.

The "trust" means such an act whereby the securities registration and settlement institution accepts the entrustment of securities companies for the centralized keeping of their clients' securities and their self-management securities and for providing the commissioned collection of bonuses and other right-maintaining services.

The "settlement" means the liquidation and delivery.

The "liquidation" means the act of calculating the receivable and payable amount of securities and capital according to the fixed rules.

The "delivery" means the act of transferring the securities and capital in accordance with the fixed settlement results so as to implement the relevant credits and liabilities.

The "nominal holders" means the institutions that are designated by others and hold securities on their behalf.

The "settlement participants" means the securities companies or other institutions that are approved by the securities registration and settlement institution and eligible for participating in the centralized liquidation and delivery.

The "central counter party (CCP)" means the subjects that act as a counter party of all the buyers and sellers at the same time and that shall ensure the smooth completion of delivery during the course of settlement.

The "delivery versus payment (DVP)" means that the securities will be delivered when and only when the capital has been delivered and the capital will be delivered when and only when the securities have been delivered during the course of delivery between the securities registration and settlement institution and the settlement participant.

The "multi-lateral netting settlement" means the process wherein the securities registration and settlement institution offsets the securities or capital receivable and payable for all the transactions closed with each settlement participant against margins, calculates the corresponding net amount of securities or capital receivable and payable of each settlement participant, and then implements delivery with each settlement participant according to the net amount of the securities or capital receivable and payable.

The "securities centralized delivery accounts" means the settlement accounts opened by a securities registration and settlement institution for handling multi-lateral delivery business and used for the securities transfer between settlement participants and securities registration and settlement institutions.

The "capital centralized delivery accounts" means the settlement accounts opened by a securities registration and settlement institution for handling multi-lateral delivery business and used for the capital transfer between settlement participants and securities registration and settlement institutions.

The "securities delivery accounts of settlement participants" means the settlement accounts opened upon the application of a settlement participant filed to the securities registration and settlement institution for the securities delivery. As to the settlement participants that concurrently engage in the self-management and the brokerage business or asset management business simultaneity, their securities delivery accounts shall include the self-management securities delivery accounts and the clients' securities delivery accounts.

The "capital delivery accounts of settlement participants" means the settlement accounts opened upon the application of settlement participants filed to the securities registration and settlement institutions for the capital delivery. As to the settlement participants that concurrently engage in the self-management and the brokerage business or asset management business simultaneity, their capital delivery accounts shall include the self-management capital delivery accounts and the clients' capital delivery accounts.

The "special payment accounts" means the settlement accounts opened by the securities registration and settlement institution for depositing the securities and capital that have not been delivered or deducted for the time being by the securities registration and settlement institution when the settlement participants default in delivery.

The "securities disposal accounts" means the settlement accounts opened upon the application of settlement participants filed to the securities registration and settlement institutions for depositing the securities that the securities companies will not deliver to their clients for the time being when the clients default in delivery.

The "warehouse of pledges" means the special account for keeping pledges as opened by the securities registration and settlement institution for depositing the pledged coupons for repurchases and other pledged products submitted by the settlement participants.

The "securities settlement provisions" means the capital that the settlement participants deposit in their capital delivery accounts for completing capital deliveries.

The "mutual protection fund for securities settlement" means the capital that is paid by all the settlement participants for making up funds under the circumstances of inadequate fluidity and where any loss is incurred by a delivery default.

Article 79

The institutions other than the securities companies approved by the CSRC may accept the entrustment of securities registration and settlement institutions for opening securities accounts for investors, accept the entrustment of investors for the custody of their securities, and may for becoming the settlement participants and dealing with the settlement and delivery of securities and capital for clients, and the relevant securities registration and settlement business shall be dealt with by referring to these Measures.

Article 80

The power to interpret and revise these Measure shall remain with the CSRC.

Article 81

These Measures shall enter into effect as of July 1, 2007.