Regulations Governing the Trading of Financial Derivatives by Bills Finance Companies Article 11

Except for transactions taken place on the futures exchange to which the provisions in the Futures Trading Act and applicable regulations apply, a bills finance company that conducts financial derivatives business as a business entity shall, before making trades on behalf of its customers, deliver the risk disclosure statement to the customers and inform them of the structure and features of the trade and possible risks, and shall not trade with the following parties, unless the counterparty is a financial institution:1. An institutional shareholder or the representative of an institutional shareholder elected as a director or supervisor of the bills finance company; and2. Shareholders of the bills finance company holding more than three percent (3%) of its paid-in capital, or an enterprise where the responsible person of the bills finance company acts as its director, supervisor or manager.Except for transactions taken place on the futures exchange, when a bills finance company engages in financial derivatives transactions with financial institutions having a relationship with the bills finance company as described in the preceding paragraph, the terms of the transactions shall not be more favorable than those with similar kind of counterparties, and such transactions shall have been approved by at least three fourths of the directors present in a board of directors’ meeting attended by at least two thirds of all directors, or shall fall within a specific line within which the management department is granted general authorization to engage in derivatives transactions.