Notice of the launch of the GEMS-2 Trading System

Date: 2017-04-27

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Dear Members and customers,

Shanghai Gold Exchange (“SGE”) GEMS-2 trading system will be launched on May 2nd, 2017. Adjustments are listed as below:

I. Price Matching Trading:

Introduce the concept of Seat as the principle business unit of each member. Convert the concept of former propriety account and brokerage account to propriety seat and brokerage seat. Split the former trader code starts from the letter g (eg: gab888) to a trader code starts from the letter p represent its propriety seat (eg.pab8888), and a trader code starts from letter b represent its brokerage seat (eg: bab8888). The initial password of the digital certificate remains the same as before.

Adding 3 new market orders on the basis of the former limit order: five best prices fill-or-kill orders (five best prices FOK orders), five best prices fill-and-kill orders (five best prices FAK order) and five best prices immediate-to-limit orders.

The system will check the fund and inventory in time for any member who has applied for take delivery or delivery tender of the deferred contract. Any failure application after the check shall be eliminated from the system.

II. Price Asking Trading

Trading hours for the online price asking trades for trading parties who trade through the SGE designated price asking platforms are 9:00-11:30 and 13:30-15:30. When trading parties complete an offline price asking trade, such parties shall submit a registration to SGE. Registration hours are 9:00-17:00, subject to the specifications of the price asking system.

Trading parties shall maintain sufficient funds or bullion in their designated funds accounts or Bullion Accounts by day-end clearing. If the price asking trades cannot be performed due to shortfall in funds or bullion, SGE will designate such trade(s) as in default trade(s).

III. Clearing and Delivery
The adjustment of inventory deduction order from traded inventory first, load-in inventory afterwards to load-in inventory first, traded inventory afterwards.

The calculation of the withdrawal of Load-in Inventory has been adjusted to: new Cumulative Weight of Load-in Inventory = original Cumulative Weight of Load-in Inventory − load-out weight × (Storage Fee Days − 1);

The calculation of the Load-in Differential Weight has been adjusted to: Load-in Differential Weight = (Load-in Inventory sold ÷ total Load-in Inventory before sale) × Load-in Differential Weight not yet cleared before sale.

For lease, pledge and inventory swap business, SGE will freeze the inventory submit by the transferor in the GEMS-2 system, the bullion will be transferred in the system after the review and approval of SGE.

For gold lease, leasing parties may delegate SGE to clear lease interest on their behalf. To use this service, the parties shall specify in their bullion return request the amount of lease interest to be paid by the lessee; SGE will collect and remit the lease interest during day-end clearing.

The relevant function of the deposit vault has been transferred to the Member Service Platform and the Vault Service Platform of GEMS-2 Trading System. The calculation of storage fee adjusts from “fee calculates in accordance with actual storage date” to “fee calculates in accordance with Cumulative Weight”. The former terminology of “Transfer Fee” has been adjusted to “Bullion Moving Fee”, with the fee schedule remains as the same as before. All members and customers shall pay for such fee to the IB Certified Vault for participating in Vault Transfer, Inventory Swap, and Safe Deposit Vault OTC trades.

Members shall login Member Service Platform of the GEMS-2 Trading System for international board physical deliveries.

Departments of SGE and SGEI shall be responsible to explain any other uncovered matters.

Shanghai Gold Exchange

April 27th, 2017

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