Regulations Governing Internal Operating Systems and Procedures for Banks Conducting Financial Derivatives Business Article 25

A bank's promotional materials for its financial derivatives transaction services targeting customers other than professional institutional investorsand high net worth corporate investorsshould be clear, fair, and not misleading, and disclose the possible return on a product and associated risks with a balanced representation and in a conspicuous manner. A bank shall not use the fact that its financial derivatives business has been approved by the competent authority, filed with the competent authority for record or reference to mislead its customers into believing that the financial derivative product is guaranteed by the government.When a bank provides financial derivatives transaction services for customers other than professional institutional investorsand high net worth corporate investors, it shall not encourage or induce the customer to conduct trades through borrowing funds or debt financing, or approve a line of credit for financial derivatives transactions that is against customer's will and agree with the customer on situations under which the customer may draw on the credit line.When a bank offers a complex high-risk product to a customer who is neithera professional institutional investornor a high net worth corporate investor, the bank shall fully explain to the customer the important content of the financial derivative product and related services and contracts, including the important parts of the trading terms and conditions, and disclosure of associated risks. Unless the transaction is made in an automated manner not through counter service or the customer disagrees, a record of the above explanation and disclosure shall be retained by audio or video recording.The scope of explanation and the manner of audio or video recording mentioned in the preceding paragraph shall be drafted by the Bankers Association and submitted to the Commission for reference.