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fuel oil futures delivery regulations of shanghai futures exchange (trial)-凯发k8娱乐官网入口

the shanghai futures exchange
(amended)
chapter 1    general provisions
article 1     these fuel oil futures delivery rules (these “delivery rules”), formulated in accordance with the general exchange rules of the shanghai futures exchange and related implementing rules, are designed to ensure the smooth delivery of fuel oil futures at shanghai futures exchange (“shfe” or the “exchange”) and regulate physical delivery activities.
article 2     these delivery rules shall apply to delivery against fuel oil futures contracts on the exchange. the exchange and all members, customers, and s shall abide by these delivery rules.
article 3     delivery against fuel oil futures contracts are conducted by bonded delivery, which refers to the delivery of the underlying fuel oil which is stored, under bonded status and customs supervision, in bonded tanks at designated delivery oil depots.
delivery against fuel oil futures contract adopts depot delivery.
physical delivery against an expired fuel oil futures contract shall be conducted according to the delivery procedures. delivery against a non-expired fuel oil futures contract may be conducted through an exchange of futures for physicals (“efp”).
article 4     anyphysical delivery by a customer shall be conducted via its carrying member through the exchange. any customer who is unable to provide or receive the tax invoices specified by the exchange is not permitted to engage in physical delivery.
a natural person customer shall reduce its open positions in any fuel oil futures contract to zero by the close of the third trading day before the last trading day of the contract. the exchange will force-liquidate such open positions in accordance with its rules starting from the second trading day before the last trading day.
article 5     physical delivery against any expired contract shall take place at a (the list is to be separately announced by the exchange). the settlement location for any non-expired contract due for efp shall be set out in the efp agreement between the parties.
chapter 2    standard delivery procedures
article 6     “delivery procedures,” with respect to an expired futures contract, means the mode of delivery wherein the buyer and the seller completes the delivery of the physicals underlying the contract through an exchange of bonded standard warrants, in accordance with the prescribed procedures.
article 7    
the quality of fuel oil shall be as established at load-in and load-out by assayers certified by the exchange (the list of which is to be separately announced by the exchange), using the sampling method specified in gb/t 4756 and the test methods specified in the shfe fuel oil contract specifications.
the assayer for fuel oil intended for load-in shall be selected from the foregoing list by the seller; the assayer for fuel oil intended for load-out shall be selected from the list by the buyer. designated delivery oil depot does not agree with the buyer’s or seller’s choice, it may negotiate with the relevant party for a replacement. if the negotiation fails, the designated delivery oil depot may request the exchange to select the assayer for them. the buyer, seller, and designated delivery oil depot shall cooperate with certified assayers in the inspection process,. unless otherwise specified by these delivery rules, the load-in inspection fee shall be borne by the seller, the load-out inspection fee shall be borne by the buyer.
article 8    
owner of fuel oil shall coordinate with relevant parties such as dock, port, pipeline companies, customs, and goods inspection agencies before submitting its load-in application. the load-in application shall be submitted to the exchange no later than ten business days prior to the proposed date of load-in. customers shall delegate their futures firm members to handle the load-in application (delivery notice).
article 9    
the exchange will approve or reject the load-in within three business days of receiving a conformant load-in application, taking the owner’s preferences into account if storage capacity permits. following an approval, the owner shall deliver its products to the relevant designated delivery oil depot within the load-in period, which is 15 days as of the approval of load-in by the exchange, subject to such adjustment as the exchange may deem fit according to the circumstances.
article 10  
the documents accompanying the load-in application shall be true and accurate. the owner shall post a load-in application deposit of thirty yuan (¥30) per metric ton, which will be debited by the exchange from the member’s futures settlement account.
the exchange shall return the load-in application deposit to the member’s futures settlement account after the owner has completed the load-in procedures and received the bonded standard warrants. if only a portion of the quantity specified in the load-in application is delivered, the load-in application deposit corresponding to the shortfall shall becredited to the designated delivery oil depot as compensation;if no portion of the specified quantity is delivered, the deposit shall be fully credited to the designated delivery oil depot as compensation. where the actual load-in quantity is within the tolerance for weight differential for the futures contract, the deposit shall be fully refunded.
article 11     before unloading and load-in, the owner shall engage a certified assayer to test the fuel oil for density, kinematic viscosity, sulfur content, moisture, and flash point in accordance to the standards and methods specified in the futures contract, and only unload after passing the test.
article 12  
a designated delivery oil depot shall inspect the fuel oil it receives and verify the accompanying documents.
article 13  
the owner shall engage a certified assayer to inspect its outbound fuel oil at load-in. load-in inspection consists of quality assay and weight inspection.
(i) quality assay
prior to load-in, the certified assayer shall take and seal fuel oil samples from the ship tanks or other transport containers (sample a) and from the depot (sample b). sample a is further divided into a1, comprising several samples taken from each ship tank or each container, and a2, a mixture of all the samples of a1. after load-in, the certified assayer shall assay the mixed fuel oil in the depot (sample c) and issue a testing report. if sample c passes the test, it means the fuel oil delivered by the owner is of satisfactory quality and the testing report for sample c shall serve as the assay report for the fuel oil delivered by the owner.
if sample c is nonconformant, the certified assayer shall test sample a and sample b, with one of the following four outcomes:
(a) sample a conformant and sample b nonconformant. this means the fuel oil delivered by the owner is of satisfactory quality. the designated delivery oil depot shall be held accountable for the nonconformant, mixed fuel oil in the depot, and bear the assay expenses for samples a and b.
(b) sample a nonconformant and sample b conformant. this means the fuel oil delivered by the owner is of unsatisfactory quality. the owner shall be held accountable for the nonconformant, mixed fuel oil in the depot, and bear the assay expenses for samples a and b.
(c) both sample a and sample b are conformant. this means the fuel oil delivered by the owner is of satisfactory quality. the designated delivery oil depot shall be held accountable for the nonconformant, mixed fuel oil in the depot, and bear the assay expenses for samples a and b.
(d) both sample a and sample b are nonconformant. this means neither the fuel oil delivered by the owner nor that held by the designated delivery oil depot before the load-in are of satisfactory quality. the owner and the designated delivery oil depot shall be held jointly accountable for the nonconformant, mixed fuel oil in the depot, and respectively bear the assay expenses for sample a and sample b.
in all these four scenarios, sample a will be deemed nonconformant if any sample from sample a1 and sample a2 fails the test. in this case, the testing report for sample a shall serve as the assay report for the fuel oil delivered by the owner.
(ii) weight inspection
the weight of fuel oil loaded in shall be as measured by the shore tanks of the designated delivery oil depot.
article 14  
the owner shall ensure the fuel oil it delivers meets the quality standards of the exchange, and assume full responsibilities and liabilities arising from a material quality degradation (i.e., failing to meet the quality standards of the exchange) of the entire tank of fuel oil due to the nonconformant quality of the fuel oil it delivers..
article 15  
the owner shall oversee the load-in of its fuel oil into the designated delivery oil depot, or be deemed to have agreed with the testing results of the certified assayer.
article 16  
the owner shall provide the original or photocopy of such required documentation for delivered products as the testing certificate issued by the certified assayer, bill of lading, goods inspection certificate issued by the loading port, customs load-in approval document, and inspection certificate for bonded pre-mixed marine fuel oil, which will be returned by the exchange after being verified and photocopied.
article 17  
after load-in and acceptance of fuel oil, the member shall bring the required documentation for delivered products to the exchange for review and verification. once it is verified, the exchange will instruct the designated delivery oil depot to issue bonded standard warrants through the standard warrant system.
article 18   bonded standard warrants for fuel oil are valid till the last delivery month of the second year following effectiveness, after which month the underlying fuel oil will be converted to spot product.
a designated delivery oil depot shall transfer fuel oil underlying expired bonded standard warrants to the spot fuel oil tank.
article 19   delivery procedures
physical delivery of fuel oil shall be completed within the five business days following the contract’s last trading day, referred to as the first delivery day, the second delivery day, the third delivery day, the fourth delivery day, and the fifth delivery day. the fifth delivery day is the last delivery day.
(i) the first delivery day
(a) the buyer shall submit to the exchange a letter of intent for the products it intends to take-delivery.
(b) the seller shall, through the standard warrant system, submit to the exchange bonded standard warrants with storage fee fully paid to the fifth delivery day (inclusive), after which date the carrying charges shall be borne by the buyer. fees and fee rates charged by designated delivery oil depot will be confirmed and published elsewhere by the exchange.
(ii) the second delivery day
the exchange will centrally allocate bonded standard warrants to buyers based on time of request, preference for integer quantity, and geographical proximity.
bonded standard warrants that cannot be used for the physical delivery of later-month futures contract shall be prorated among the buyers according to their relative share in the total delivery volume of the current month.
(iii) the third delivery day
(a) the buyer shall make delivery payment at the exchange in exchange for the bonded standard warrants before 14:00.
(b) the exchange shall transfer the delivery payment to the seller before 16:00, which transfer may be postponed under special circumstances.
(iv) the fourth delivery day and fifth delivery day
the seller shall submit to the exchange tax invoices which fully cover the delivered fuel oil and in such format and containing such information as prescribed by the exchange.
article 20  
bonded standard warrants shall circulate as follows in physical delivery through the exchange:
(i) the selling customer endorses the bonded standard warrant to its carrying futures firm member to effectuate the physical delivery;
(ii) the seller’s carrying member submits the bonded standard warrant to the exchange;
(iii) the exchange assigns the bonded standard warrant to the buyer’s carrying member;
(iv) the buyer’s carrying member assigns the bonded standard warrant to the buying customer.
article 21  
within the delivery period, if such delivery procedures as the submission and receipt of bonded standard warrant, delivery payment, and exchange-specified tax invoices are completed by 14:00, the exchange will release the corresponding margin funds on the same day; if such procedures are completed after 14:00, the exchange will do so on the following business day.
article 22   take-delivery
(i) where the lawful bearer of a bonded standard warrant intends to take-delivery, the designated delivery oil depot shall release the product after verifying the bonded standard warrant. the owner may, in its sole discretion, itself take delivery of the product at the designated delivery oil depot or delegate the latter to take-delivery and ship the product.
 (ii) any lawful bearer of a bonded standard warrant who intends to take-delivery shall engage a certified assayer to conduct on-site inspection on the quality and weight of the fuel oil to be delivered. the load-outweight shall be as measured by the shore tanks of the designated delivery oil depot. quality assay shall be based on samples taken from the tank, which are to be divided into sample a, to be used for laboratory testing, and sample b, to be sealed and preserved as a specimen.
any owner who does not engage a certified assayer to conduct the inspection shall be deemed to have approved the quality and weight of the shipment and the certified delivery depository and the exchange will no longer accept any objection regarding the fuel oil thus delivered.
 (iii) anylawful bearer of bonded standard warrant who wishes to dispute the quality of the delivered fuel oil shall submit a written objection, accompanied by the assay results issued by the certified assayer, to the designated delivery oil depot within ten business days following the issuance of the testing report by the certified assayer; failing which, the bearer shall be deemed to have no objection over the delivered fuel oil and the designated delivery oil depot and the exchange will no longer accept any such objections.
 (iv) during load-out, the designated delivery oil depot shall complete a load-out confirmation for bonded standard warrant in duplicate, one for the owner and one for itself, and properly retain the its own copy for future examination.
article 23   loss compensation; tolerance for overfill and underfill
. loss compensation
the owners of fuel oil at load-in and at load-out shall respectively pay to the designated delivery oil depot the load-in loss compensation and the load-out loss compensation according to the formulas below, which shall be settled within three (3) business days of the issuance of the testing report by certified assayer:
load-in loss compensation = quantity of fuel oil on the issued bonded standard warrants × 0.6‰ × (settlement price of the nearest month fuel oil futures contract on the trading day preceding the load-in completion day delivery premiums or discounts);
load-out loss compensation = quantity of fuel oil on the cancelled bonded standard warrants × 0.6‰ × (settlement price of the nearest month fuel oil futures contract on the trading day preceding the load-out completion day delivery premiums or discounts).
(ii) weight differential:
“weight differential” for fuel oil at load-in or load-out refers to the difference between the weight indicated on the weight certificate issued by the certified assayer and the weight specified on the issued or cancelled bonded standard warrants. for fuel oil, such weight differential shall not exceed ±3% and shall be settled by the owner directly with the designated delivery oil depot according to the formula below within three business days following the issuance of the testing report by the certified assayer:
payment for load-in/load-out weight differential = weight differential within the tolerance range × (settlement price of the nearest month fuel oil futures contract on the trading day preceding the load-in / load-out completion day delivery premiums or discounts).
article 24  
the final settlement price for a fuel oil futures contract is the arithmetic mean of the contract’s settlement prices of the last five trading days on which the contract was traded.
article 25   the bonded final settlement price shall be the basis for assessing dutiable values for bearer of a bonded standard warrant for fuel oil.
the bonded final settlement price of an expired contract is:
bonded final settlement price = final settlement price.
the delivery payment corresponding to a bonded standard warrant for fuel oil is:
delivery payment for expired contract = bonded final settlement price × delivery quantity;
delivery payment for efp = efp bonded final settlement price × delivery quantity.
article 26  
the buyer and the seller participating in the physical delivery shall each pay to the exchange a delivery fee of one yuan (¥1) per metric ton.
article 27   the buyer and the seller shall themselves arrange the transportation options if they intend to conduct physical settlement at a designated delivery location.
article 28   a designated delivery oil depot shall assume full responsibilities for the quality, safety, and other relevant aspects of fuel oil in storage from its acceptance and load-in to its load-out.
article 29   load-in and load-out operations at a designated delivery oil depot shall not impair the quality and weight of fuel oil. a designated delivery oil depot shall, both before and after each load-in or load-out., ensure that the pipelines are either fully filled or emptied, that oil inside the pipelines will not affect the quality of the oil to be loaded in or out, and that oil may flow freely inside the pipelines. the temperature of the fuel oil at load-in and load-out shall not be lower than 35 °c.
article 30   the delivery unit of fuel oil futures contract is ten metric tons and delivery shall made in multiples thereof.
article 31   deliverable grade for fuel oil  is as specified in the shfe fuel oil contract specifications.
article 32   the minimum load-in or load-out weight for fuel oil is 1,000 metric tons, unless, in the case of load-out weight, the owner and the designated delivery oil depot have agreed on another quantity.
article 33   exchange of futures for physicals refers to the transaction wherein upon mutual consultation and approval by the exchange, a buyer and a seller who take opposite positions in a same-month futures contract close out such positions through the exchange at the price prescribed by the exchange, and exchange, at the price mutually agreed upon, the warrantsof a commodity which is of the same quantity as, and identical or similar to, the underlying commodity of the futures contract.
fuel oil futures contracts may be physically settled by efp before expiration.
article 34  
the efp application period for a fuel oil futures contract is from the listing day of the contract to the second trading day (inclusive) before the last trading day of the contract.
article 35  
members and customers may publish their efp intents through the standard warrant system. each intent shall specify, among other information, the customer code, , product, contract month, trading direction, efp settlement methodand contact information. buyers and sellers may reach efp agreement on their own initiative based on the efp intents published by the exchange.
article 36   after a buyer and a seller holding opposite positions in a same-month contract agree to enter into an efp, either of them shall submit the efp application to the exchange through the standard warrant system, by 14:00 on any trading day within the efp application period (“efp application day”).. the efp may be carried out once it is approved by the exchange.
efp is only available to positions in fuel oil futures opened before the efp application day.
article 37   if the parties to an efp intend to use bonded standard warrants and settle via the exchange, their carrying members shall submit a corresponding application to the exchange in advance.
article 38   the final settlement price for efp is the price as agreed by the buyer and the seller. for an efp that is conducted using bonded standard warrants and settled through the exchange, the bonded final settlement price shall be as follows:
bonded final settlement price for the efp = settlement price of the delivery month contract on the trading day preceding the efp application day.
article 39   positions held by the buyer and the seller in the delivery month contract that correspond to their efp application shall be closed out by the exchange prior to 15:00 on the efp application day at the bonded final settlement price for the efp.
article 40   for any efp that is conducted using bonded standard warrants and settled through the exchange, the trade margin shall be based on the settlement price of the corresponding delivery month contract on the trading day preceding the efp application day; the exchange of delivery payment and bonded standard warrants shall be completed by the buyer and the seller through the exchange within the agreed timeframe.
article 41   for any efp that is conducted using bonded standard warrants and cleared and settled directly between the buyer and the seller, the off-the-exchange transfer of standard warrants shall be governed in reference to the standard warrant rules of the shanghai futures exchange; alternatively, such transfer may be conducted directly between the buyer and the seller following delivery.
article 42   for any efp that is conducted using bonded standard warrants and settled through the exchange, the seller shall submit the tax invoice to the exchange within five business days following the settlement of delivery payment and bonded standard warrants. if the exchange receives the tax invoice before 14:00, it shall, after verifying the accuracy thereof, release the corresponding margin funds to the seller at clearing on the same day; otherwise, the exchange shall, after such verification, release the corresponding margin funds at clearing on the following business day. the exchange shall issue a tax invoice to the buyer on the business day after the day on which it received the seller’s tax invoice.
if the seller fails to submit the tax invoice within the prescribed time limit, it shall pay a late fee of 0.5‰ of the delivery payment for each day of delay between three and ten days, and of 1‰ of the delivery payment for each day of delay between eleven and thirty days. failing to provide the tax invoice within thirty days shall be deemed as a refusal and for which the seller shall pay 20% of the delivery payment as penalty.
article 43   delivery payment for efp settled through the exchange shall be settled by such means as internal transfer or bank transfer.
article 44   for any efp that is conducted using bonded standard warrants, settled through the exchange, and the delivery for which is not completed within the prescribed time limit, the rules governing delivery default shall apply. in the event of a dispute over the quality of the delivered physicals, the buyer shall submit an objection, accompanied by the testing report from a certified assayer, within ten business days following the issuance of the report.
article 45   where the efp is conducted using non-standard warrants, the final settlement price shall be as agreed between the buyer and the seller the buyer and the seller shall abide by applicable laws and regulations and furnish the sales agreement, non-standard warrants, and other relevant materials. delivery payment, non-standard warrants, and tax invoice shall be settled by the buyer and the seller themselves. the exchange does not provide any guarantee with respect to the quality of physicals in a delivery involving non-standard warrants should a dispute over quality arise.
article 46   any non-bona fide efp shall be handled in accordance with the enforcement rules of the shanghai futures exchange.
article 47   the exchange will promptly disclose all pertinent efp-related information.
chapter 4    delivery default
article 48   any of the following acts shall constitute a delivery default:
(i) the seller fails to deliver all the bonded standard warrants within the prescribed delivery period;
(ii) the buyer fails to deliver all the delivery payments within the prescribed delivery period; and
(iii) any other act recognized by the exchange as a delivery default.
article 49   in connection with calculating the number of contracts on which a buyer has committed delivery default, twenty percent (20%) of the value of such contracts shall be provisioned as liquidated damages and compensation.
the following formulas apply when calculating the number of contracts on which a buyer or a seller has committed delivery default:
seller-default quantity (in lots) = quantity (in lots) of bonded standard warrants to be delivered – quantity (in lots) of bonded standard warrants actually delivered;
buyer-default quantity (in lots) = (delivery payment due – delivery payment made) ÷ (1 – 20%) ÷ final settlement price ÷ contract size
article 50   in the event of a delivery default, the exchange shall notify the defaulting party and the non-defaulting party of the default by 16:30 on the day of the default.
the non-defaulting party shall, by 11:00 on the next trading business day, indicate to the exchange in writing of whether it chooses to terminate delivery or to proceed with the delivery. the non-defaulting party will be deemed to have chosen to terminate the delivery if it does not submit such a written intent within the prescribed period.
article 51   in the event of a delivery default, the defaulting party shall pay the non-defaulting party liquidated damages equaling 5% of the contract value in default, additionally,
(i) where the seller is in default, the buyer may choose to:
(a) terminate the delivery, in which case the exchange will return the delivery payment to the buyer; or
(b) continue with the delivery, in which case the exchange will announce a solicitation of bonded standard warrants on the business day following the determination of default, which shall be held within seven business days. if the solicitation succeeds, the exchange will transfer the bonded standard warrants to the buyer; otherwise, the seller shall pay the buyer 15% of the contract value in default as compensation, and the exchange will return the delivery payment to the buyer and terminate the delivery. the seller shall solely bear all financial losses and costs incurred by the solicitation.
(ii) where the buyer is in default, the seller may choose to:
(a) terminate the delivery, in which case the exchange will return the bonded standard warrants to the seller; or
(b) continue with the delivery, in which case the exchange will announce an auction of the bonded standard warrants on the business day following the determination of default, which shall be held within seven (7) business days. if the auction succeeds, the exchange will transfer the delivery payment to the seller; otherwise, the buyer shall pay the seller 15% of the contract value in default as compensation, and the exchange will return the bonded standard warrants to the seller and terminate the delivery. the buyer shall solely bear all financial losses and costs incurred by the auction.
the termination of delivery shall relieve the exchange of any delivery guarantees.
article 52   the solicitation price shall not be higher than 125% of the final settlement price; the auction price shall not be lower than 75% of the final settlement price.
article 53   where both the buyer and the seller are in default, the exchange will terminate the delivery and impose a fine on each equaling five percent (5%) of the contract value in default.
article 54   where a member commits delivery default on some of its transactions, any bonded standard warrants or delivery payment it receives can be used as remedy.
article 55   any member who willfully defaults on physical delivery shall be handled in accordance with the enforcement rules of the shanghai futures exchange.
article 56   any member or designated delivery oil depot involved in a default are obligated to provide evidence related to the default. a member’s refusal to provide such evidence shall have no bearing on the characterization of the default.
article 57   any delivery-related dispute between any buyer or seller and a designated delivery oil depot shall be resolved through negotiation. if negotiation fails, the dispute shall be submitted to the exchange in writing within ten (10) days of its occurrence for mediation. if mediation fails, they may, in accordance with their arbitration agreement, apply to an arbitral body for arbitration. if such an agreement was not made or is invalid, they may initiate a lawsuit before a people’s court.
article 58   if either or both the buyer and the seller cannot perform or fully perform its/their obligations due to force majeure, it/they may be partially or fully exempt from the resulting liabilities to the extent to which it was / they were adversely affected by the force majeure.
article 59   the exchange reserves the right to interpret these delivery rules.
article 60   matters not covered herein shall be governed, mutatis mutandis, by the articles of association, general exchange rules, and other implementing rules of the exchange.
article 61   these delivery rules shall come into effect as of june 26,2018.
 
 
 

 

 
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