Laws of the People's Republic of China

China Banking Regulatory Commission

Detailed Rules of Implementation of Measures for the Administration of Pilot Currency Brokerage Companies Chapter I General Provisions

Chapter II Establishment of Institutions

Chapter III Administration of the Qualification for Assuming the Post of Director or Senior Manager

Chapter IV Risk Control and Supervision and Administration

Chapter V Supplementary Provisions

Chapter I General Provisions

Article 1

The present Detailed Rules are formulated according to Measures for the Administration of Pilot Currency Brokerage Companies t (hereinafter referred to as the Measures) and the relevant provisions.

Article 2

China Banking Regulatory Commission (hereinafter referred to as the CBRC) and the dispatched offices thereof shall carry out supervision and administration to currency brokerage companies according to the Measures and the present Detailed Rules.

Chapter II Establishment of Institutions

Article 3

An applicant who meets the requirements of Article 7 or 8 of the Measures and holds the largest proportion of shares in a currency brokerage company that will be established shall submit the materials as prescribed in Article 13 of the Measures to the banking regulatory bureau (an office as dispatched by the CBRC at the provincial level) where the currency brokerage company will be located . A non- preserving legal opinion that have no conflict with the relevant Chinese laws and regulations shall be made by a lawyer for the aforesaid materials.

Article 4

The term "currency brokerage company" as mentioned in paragraph 1, Article 7 of the Measures includes a legal-person institution that directly engages in the currency brokerage operation or its parent company that directly controls the shares thereof.

Article 5

An applicant shall submit the application materials for establishment preparation of a currency brokerage company according to the provisions of Article 13 of the Measures. Thereinto:

(1)

An Application for Establishment Preparation shall include such contents as the name, planned place of registration, registered capital, planned scope of business operation, names of capital contributors and their capital contributions respectively.

(2)

An Application Form for Establishment Preparation (see Attachment I for the format), an Application for Establishment Preparation, an Agreement on Joint Venture (or the Promoter's Agreement) which shall be conducted by all the capital contributors (or promoters)and signed by the legal representative and affixed with the entity seal. The proportion of capital contribution, rights and obligations of capital contributors (or promoters) shall be clarified in the Agreement on Joint Venture.

(3)

The constitution of a currency brokerage company shall at least include the following contents: name and domicile of the company, organizational structure, scope of business operation, registered capital, names of shareholders and amount of capital contributions, rights and obligations of shareholders, its legal representative, organization and the formation thereof, functions and power, rules of procedure, measures for distributing company profits, particulars of dissolution and measures for settlement.

(4)

A capital contributor within the Chinese territory shall provide a photocopy of its Business License (duplicate) (the photocopy shall be affirmed by the administrative department for industry and commerce and shall be affixed with the seal thereof); a capital contributor in a foreign country shall provide a photocopy of its Business License or any other financial business license, and the photocopy shall be notarized by an organization that has been recognized by the country or region where it is located or be accredited by the embassy (consulate) of the People's Republic of China in the relevant country or region.

(5)

Where an overseas capital contributor is subject to the supervision of the financial regulatory body of the country or region where it is located, an Opinion Letter of approval for the establishment of a currency brokerage company as prescribed in paragraph 5, Article 13 of the Measures shall be issued by the financial regulatory body or the financial industrial association. And

(6)

The basic information of a capital contributor includes its name, place of registration, legal representative, photocopy of its Business License, diagram of the organizational structure of the capital contributor and the group to which its belongs, roster of major shareholders who make capital contribution, roster of the branches of the capital contributor as well as roster of major associated enterprises, and business operation circumstance.

Article 6

An applicant that has obtained the license for establishment preparation of a currency brokerage company and applies for renewing the term for establishment preparation shall submit to the banking regulatory bureau the relevant materials such as an Application Form for Postponed (see Attachment II for the format) and a report on the application for postponed 1 months before the expiration of establishment preparation, wherein the reasons for postponed shall be explained and the report on the application for postponed shall bear the signatures of the legal representatives of all parties concerning capital contribution and be affixed with their entity seals.There shall be only one renewal with an extension of no more than 3 months.

Article 7

Where the work of establishment preparation is concluded, an applicant shall submit to the banking regulatory bureau the materials as prescribed by Article 17 of the Measures as well as the non- preserving legal opinion that have no conflict with the relevant Chinese laws and regulations issued by a lawyer for the aforesaid materials. Thereinto:

(1)

An Application Form for Business Start-up (see Attachment III for the format) and a report on the application for business start-up shall be issued by all the capital contributors (promoters) and bear the signature of their legal representatives and be affixed with their entity seals.

(2)

The content of the report on the application for business start-up shall include such matters as the explanation to completion of the work of establishment preparation, and etc.

(3)

The bylaws of started business operation and the internal risk control system, including the comprehensive, systematic and written policies, system and procedures as formulated concerning all business operations and management of the company. And

(4)

A security testing report on the trading place, equipment and system, including the original document of inspection and acceptance concerning its business place and the relevant facilities for operation issued by the departments of public security and fire control.

Article 8

The CBRC shall take charge of verifying the application for business start-up of a currency brokerage company as well as for its business scope. The CBRC shall take charge of issuing the Financial Business License to wholly foreign-funded currency brokerage companies and joint-venture currency brokerage companies. The banking regulatory bureaus shall take charge of issuing Financial Business License to Chinese-funded currency brokerage companies.After a decision on approval for the establishment of a currency brokerage company is made, the CBRC or the banking regulatory bureau shall issue a Financial Business License thereto within 10 days.

Article 9

The CBRC or the banking regulatory bureau shall inform a currency brokerage company to be established to go to the CBRC or the banking regulatory bureau to collect the Financial Business License with the following materials:

(1)

The approval documents issued by the CBRC;

(2)

An Introduction Letter of a financial institution;

(3)

The legal and valid identity certification of the person who collects the Financial Business License; and

(4)

Any other material as required by the CBRC or the banking regulatory bureau.

Article 10

A currency brokerage company shall publicly show its Financial Business License, business scope as well as person-in-charge in an eye-catching position of its business place. The CBRC and its dispatched offices shall carry out supervision and examination on the publication according to law.

Article 11

A wholly foreign-funded currency brokerage company or joint-venture currency brokerage company that has obtained the approval of the CBRC for its business start-up shall go to the Ministry of Commerce of the People's Republic of China to collect the Approval Certificate of the People's Republic of China for Foreign-funded Enterprises with the approval documents and the Financial Business License issued by the CBRC.

Article 12

In a currency brokerage company, 60% or more of its personnel shall have engaged in financial undertaking or the relevant business operation. The application materials concerning the business start-up of a new currency brokerage company shall include the proportion of the personnel who have engaged in financial undertaking or the relevant business operation among its practitioners.

Article 13

Such materials as application for establishment preparation and for business start-up that are submitted by an applicant shall be in triplicate and the Chinese texts thereof shall function as the basis.

Article 14

The procedures for examining the establishment preparation and business start-up of a branch of a currency brokerage company as well as the time limit of examination shall comply with those applied to the legal-person institution of a currency brokerage company.

Article 15

Where a currency brokerage company establishes a representative office, it shall submit the application materials to the banking regulatory bureau where its representative office is to be established according to the provisions of Article 28 of the Measures. The banking regulatory bureau shall, within 20 workdays after accepting the application materials, conclude the examination and report them to the CBRC. The CBRC shall, within 2 months after receiving the complete application materials, make a written decision on whether or not an approval shall be granted.

Chapter III Administration of the Qualification for Assuming the Post of Director or Senior Manager

Article 16

The directors and senior managers of a currency brokerage company include board chairman, vice board chairman, executive director, non-executive director, general manager, deputy general manager, chief financial officer (CFO), person-in-charge of the internal examination or inspection department, manager of its branch, chief executive director (CEO) of its representative office as well as the personnel who bear the same functions and duties of the aforesaid posts but in different titles in a currency brokerage company or who don't assume any of the aforesaid posts but have the decision-making power in the operation and management or play an important role in the risk control of a currency brokerage company.

Article 17

To obtain the qualification for assuming the post of director and senior manager in a currency brokerage company, a candidate shall have sound consciousness of observing laws and regulations, be familiar with the laws, administrative regulations and rules on post assumption and shall not have any serious illegal or rule-breaking record.Where a candidate is under any of the following circumstances, he shall not be approved to obtain the qualification for post-assumption:

(1)

Having any record of intentional crime;

(2)

Having assumed the post of legal-person representative of an organization that has been taken over, cancelled, merged or has been declared bankruptcy;

(3)

His qualification for assuming the post of director or senior manager has been cancelled by any supervisory institution or any other financial regulatory body for accumulatively 10 years or more;

(4)

Having been imposed upon any other administrative punishment other than the punishment of canceling its qualification for post-assumption by any supervisory institution or any other financial regulatory body for 3 times; or

(5)

Having engaged in any fabrication of false account, business operation that is not recorded in its account or any other activity intended to violate the accounting system, or instigated or indulged the institution where he works to do so.

Article 18

To obtain the qualification for assuming the post of director or senior manager in a currency brokerage company, a person shall be creditworthy, diligent and dutiful and have good personal fame.

Article 19

A currency brokerage company shall formulate clear and clarified internal policies and procedures so as to guarantee that the directors and senior managers whom it is about to appoint or has already appointed meet the requirements for post-assumption qualification as prescribed in the present Detailed Rules.The CBRC as well as its dispatched offices may carry out examination on the aforesaid policies and procedures of currency brokerage companies.

Article 20

To obtain the qualification for assuming the post of director or senior manager in a currency brokerage company, a candidate shall have the relevant knowledge, experience and capability compatible with the post to be assumed. A candidate who applies for the qualification for assuming the post of director shall meet the following conditions:

(1)

Having a work experience for more than 5 years on law, economy, finance, financial management or any other aspect conducive to performing the functions and duties of a director;

(2)

Being able to employ the financial statements and statistical statements of a financial institution to judge the situation of business operation, management and risk thereof; and

(3)

Being well understand of the corporate governance structure, constitution as well as the functions and duties of the board of directors of the company where he is to work.When applying for the qualification for assuming the post of senior manager at any level, a candidate shall be well understand of the functions and duties of the post to be assumed, the management frame, profit-making mode, risk management as well as the internal control system of the organization where he is to work.When applying for the qualification for assuming the post of director or senior manager at any level, a candidate shall further meet the following conditions:

(1)

To assume the post of board chairman, executive director or general manager, shall have an academic background of university graduate or above, the relevant work experience on financial undertaking for more than 10 years or on the relevant business for more than 15 years (in particular, work experience on finance for more than 5 years) as well as the experience of holding the post of manager in the operation department or holding any equivalent post at or above the manager level for more than 3 years;

(2)

To assume the post of vice board chairman, deputy general manager or manager of a branch, shall have an academic background of university graduate or above, the relevant work experience on financial undertaking for more than 5 years or on the relevant business for more than 10 years (in particular, work experience on finance for more than 3 years) as well as the experience of holding the post of manager in the operation department or holding any equivalent post at or above the manager level for more than 2 years;

(3)

To assume the post of CFO, shall have an academic background of university graduate or above and the relevant work experience on financial management, accounting or auditing for more than 6 years;

(4)

To assume the post of CEO of a representative office, shall have an academic background of university graduate or above and the relevant work experience on finance undertaking or on the relevant business for more than 3 years; and

(5)

Where a candidate fails to have an academic background of university graduate or above, he shall obtain the qualification for certified public accountant, public registered auditor or the qualification for senior professional technical title relating to the post to be assumed and a practicing experience for more than 4 years shall be added in addition.Where a candidate who has been the person-in-charge of an organization that is taken over, cancelled or announced bankruptcy for consecutive losses or serious losses fails to prove that he is not basically responsible for the aforesaid circumstances, the post-assumption qualification thereof shall not be verified.

Article 21

The CBRC or its dispatched office may, after inspecting and recognizing that a candidate does have the relevant knowledge, experience and capability compatible with the post to be assumed, make a decision on properly easing the requirements for practice term limitation.

Article 22

A currency brokerage company shall report to the local banking regulatory bureau the complete application materials of post-assumption qualification before a selected candidate assumes his post. The CBRC or its dispatched office shall, within 30 workdays as of receiving the complete application materials, make a decision on approval or disapproval and shall reply to the currency brokerage company in written form.

Article 23

A currency brokerage company shall submit to the local banking regulatory bureau complete paper application materials in triplicate, which shall at least include:

(1)

A letter for approving on the qualification for a candidate to assume his post, including the statements on the title, functions and duties as well as power of the new post;

(2)

A report on reviewing whether or not a selected candidate meets the requirements for post-assumption qualification according to the internal policies and procedures prescribed in Article 19 of the present Detailed Rules, including the way, evidence and conclusion of the reviewing.;

(3)

An Application Form for Post-assumption Qualification as filled out by a selected candidate (see Attachment IV for the specific format);

(4)

The photocopy of the identity certification of a selected candidate as well as the certification document of his academic background (academic degree);

(5)

A statement, bearing the signature of a selected candidate, that he has not been under any circumstance prescribed by the present Detailed Rules where the post-assumption qualification shall not be approved;

(6)

A detailed statement, bearing the signature of a selected candidate, on his practice experience;

(7)

A detailed statement, bearing the signature of a selected candidate, on his plan for performing his functions and duties; and

(8)

Any other material as required by the CBRC or the banking regulatory bureau.The aforesaid application materials mentioned in items (1), (2) and (3) shall bear the signature of the signer authorized by the currency brokerage company or the official seal of that company.The banking regulatory bureau may, according to the requirements of the real situation, require the relevant institution to provide the corresponding electronic texts.

Article 24

After the banking regulatory bureau receives the application materials for post-assumption qualification and if it's necessary for the relevant currency brokerage company to supplement and correct the materials as submitted, the bureau shall inform the currency brokerage company within 5 workdays. Where the banking regulatory bureau files no demurral within 5 workdays as of receiving the application materials for post-assumption qualification, it shall be deemed that the banking regulatory bureau has accepted the application.A currency brokerage company shall, if it's required so, supplement and correct its application materials within the time limit as prescribed by the banking regulatory bureau. Where any company fails to make supplementation and correction within the time limit, the banking regulatory bureau may make a decision on refusing to accept the application materials, return them to the relevant company as well as refuse to accept the same application of the said company within 3 months therefrom.

Article 25

The CBRC or its dispatched office may, according to the requirements of the real situation, carry out on-the-spot investigation or have a talk with the selected candidate so as to judge whether or not he meets the requirements for post-assumption qualification as prescribed in the present Detailed Rules.Where a talk is held, the relevant record shall be confirmed by the selected candidate and be guaranteed the authenticity of his state . The record shall be part of the basis for the CBRC or its dispatched office to examine the post-assumption qualification.

Article 26

Without the approval of the CBRC or its dispatched office, none of the senior managers in a currency brokerage company such as the board chairman, vice board chairman, executive director, general manager, deputy manager, CFO, and principal of the department of internal examination or inspection shall hold any concurrent post in any Party or government organ or post of senior manager in any other profit-making organization within their tenure.

Article 27

The board chairman of a currency brokerage company shall not hold the concurrent post of general manager therein. A director shall not hold the concurrent post of senior manager of any other profit-making organization that has any interest conflict with his company.

Article 28

Where any board chairman or general manager of a currency brokerage company fails to perform his functions and duties due to any reason for 1consecutive month or more, he shall authorize other senior manager to perform the functions and duties on his behalf and shall report it to the dispatched office of the local banking regulatory bureau for archival filing in advance. Where anyone fails to perform his functions and duties for 3 consecutive months, he shall be replaced.

Article 29

Where any board chairman or senior manager of a currency brokerage company resigns from his company, an auditing report thereon shall be produced by the currency brokerage company or a external auditing organization recognized in written form by currency brokerage company and shall be affixed with the seal of the organization that produced the report .

Article 30

A currency brokerage company may issue a formal employment (appointment) document only after its selected candidate has obtained the post-assumption qualification as approved by the CBRC or its dispatched office, and thereafter may the relevant person begin to perform his functions and duties.A currency brokerage company shall, within 3 months after the CBRC or its dispatched office issues the approval document of post-assumption qualification, submit the photocopy of the employment (appointment) document to the banking regulatory bureau for archival filing.

Article 31

The other provisions on the approval, termination, daily administration and legal liabilities of post-assumption qualification of directors and senior managers of currency brokerage companies shall be implemented according to the relevant provisions of the CBRC.

Chapter IV Risk Control and Supervision and Administration

Article 32

A currency brokerage company shall establish a comprehensive risk management system, focusing on risk control and including the following contents:

(1)

A currency brokerage company shall establish the board of directors and the independent departments of internal examination and regulation compatibility.

(2)

A currency brokerage company shall establish sound corporate governance and an organizational structure with reasonable work division, clarified functions and duties and clearly specified reporting relations as well as a scientific and highly-efficient mechanism for decision-making, incentive and restriction. And

(3)

A currency brokerage company shall, according to the provisions of the Measures, carry out its operation according to law and the principles of impartiality, fairness, creditworthiness and confidentiality for clients, establish and improve an internal control system and report it to the local banking regulatory bureau for archival filing.

Article 33

A currency brokerage company shall, according to the provisions of Article 46 of the Measures, improve its facilities and preserve the complete trading information. The company shall formulate a emergency plan for any special circumstance of malfunction of communications circuit or trading system and shall make back-up of trading information materials in a different place on a daily basis so as to guarantee the smooth proceeding of transaction as well as the intactness and security of information materials.

Article 34

A currency brokerage company shall formulate and implement a reasonable marketing plan according to the requirements of its business operation.

Article 35

A currency brokerage company shall carry out its business operation on a stable basis. In the case of any loss resulting from the market situation, the company shall formulate effective measures therefor in a timely manner, adjust its operating policy and control the corporation scale so as to cease the loss and begin to turn out a profit as soon as possible. For a currency brokerage company, its losses in the first year shall not exceed 50% its registered capital and the total amount of losses in the first 3 years shall not exceed 30% its registered capital. For any branch of a currency brokerage company, its losses in the first year shall not exceed 30% its working capital and the total amount of losses in the first 3 years shall not exceed 10% its working capital.

Article 36

Where a currency brokerage company or any of its branches operates at a loss which exceeds the amount as prescribed in the aforesaid provisions of Article 35 due to the market situation, it shall report it to the CBRC or its dispatched office in a timely manner and supplement its registered capital and working capital in a timely manner.

Article 37

A currency brokerage company shall, according to Articles 48, 49 and 50 of the Measures as well as the relevant regulatory provisions of the CBRC or its dispatched office, report to the local banking regulatory bureau its financial statements, reports on the implementation of all regulatory indicators as well as other materials as required by the CBRC or its dispatched office that all bear the signature of its legal representative on a periodic basis. The legal representative of a currency brokerage company shall bear the final liabilities for the authenticity of the aforesaid materials.

Article 38

The CBRC and its dispatched offices shall, by means of on-the-spot examination or not-on-the-spot examination, carry out an overall examination on the implementation of the risk management system of a currency brokerage company focusing on the legal-person governance structure and internal control system. Where any currency brokerage company fails to meet the regulatory requirements, the CBRC or its dispatched office may require it to make rectification and correction, suspend part of or all of its business operation or stop its business for rectification.The CBRC and its dispatched offices may designate any intermediary organ that has the relevant qualifications to conduct on-the-spot examination on a currency brokerage company.

Chapter V Supplementary Provisions

Article 39

The term "currency brokerage operation" refers to the business operation as prescribed in Articles 33 and 34 of the Measures.

Article 40

The present Detailed Rules shall come into force as of the day of promulgation and the power to interpret it shall remain with the CBRC.

China Banking Regulatory Commission

November 8, 2005