I. Description
ICBC commodity transaction refers to such derivatives as forward, swap, and option that take precious metals, base metals and minerals, energy, agricultural products and soft commodities as underlying assets, offered by ICBC to meet actual transaction demands of corporate customers.

II. Target Customers
The product applies to corporate customers with corresponding risk tolerance, having real trading demands and meeting product fitness assessment.

III. Varieties of Product
ICBC’s commodity transaction product includes five categories, such as precious metals, base metals and minerals, energy, agricultural products and soft commodities. The specific varieties are subject to products actually launched by ICBC.

List of ICBC Commodity Transaction Products

The pegging indicators for the five-type commodity transactions are as follows. It is subject to products actually launched by ICBC.
i. Precious metals
Gold and silver are pegged to gold and silver futures contracts traded on the New York Commodity Exchange (COMEX), while platinum and palladium are pegged to platinum and palladium futures contracts traded on the New York Mercantile Exchange (NYMEX).
ii. Base metals and minerals
Copper, aluminum, zinc, lead, nickel and tin are pegged to copper, aluminum, zinc, lead, nickel and tin futures contracts traded on the London Metal Exchange (LME). The iron ore is pegged to the TSI62% index.
iii. Energies
Crude oil is pegged to Dated Brent price indexes issued by NYMEX WTI, ICE BRENT and PLATTS, and Dubai crude oil indexes. Natural gas is pegged to natural gas futures contracts traded on NYMEX. Fuel oil, jet fuel, diesel and naphtha are pegged to product prices publicized by PLATTS. Coal is pegged to API2 (CIF, West and North Europe), API4 (FOB, Port of Richard’s Bay, South Africa) and API8 (CIF, South China Port, China) released by ARGUS Media as well as NEWC (CIF, Port of Newcastle, Australia) publicized by GLOBALCOAL, etc. Paraxylene is pegged to PX price indexes issued by PLATTS.
iv. Agricultural products
Soybean, soybean meal, soybean oil, wheat, and corn are pegged to soybean, soybean meal, soybean oil, wheat, and corn futures contracts traded on the Chicago Board of Trade (CBOT). Beef cattle, live cattle, lean meat and skim milk powder are pegged to beef cattle, live cattle, lean meat and skim milk powder futures contracts traded on CME.
v. Soft commodities
Sugar, cotton, coffee and orange juice are pegged to sugar, cotton, coffee and orange juice futures contracts traded on the Intercontinental Exchange (ICE). Coco is pegged to coco futures contracts traded on ICE and LIFFE. Rubber is pegged to rubber futures contracts traded on the Tokyo Commodity Exchange (TOCOM) and Singapore Exchange (SGX). Palm oil is pegged to palm oil futures contract traded on the Bursa Malaysia Derivatives Exchange (MDX). Paper pulp is pegged to BNSK and BHKP indexes of FOEX.

IV. Trading Currencies
Trading currencies of the commodity transaction include USD and RMB. Settlement currency for commodity transaction products quoted and settled in USD is USD, keeping two digits after the decimal point (on rounding-off basis). Customers can handle foreign exchange settlement and sale for gains or losses incurred therefrom. Security deposits can be offered in RMB or USD. Settlement currency for commodity transaction products quoted and settled in RMB is RMB, keeping two digits after the decimal point (on rounding-off basis). The RMB spread funds can be delivered without delivery of physical products. Security deposits can be offered in RMB or USD.

V. Transaction Types
By transaction types, the commodity transactions can be divided into commodity forward transaction, commodity swap transaction and commodity option transaction.
i. Commodity forward transaction refers to a trading contract in which the customer and ICBC agree to trade the commodity at a specified future time according to the agreed underlying asset, price, and quantity and make cash spread delivery (instead of physical delivery).
ii. Commodity swap transaction refers to a trading contract in which the customer and ICBC agrees to exchange commodity prices at a specified future time according to agreed date, underlying asset, and reference standards and make cash spread delivery (instead of physical delivery).
iii. Commodity option transaction refers to a trading contract in which the customer and ICBC agree that the option buyer pays some option premium to obtain the right of buying an agreed quantity of underlying commodity (call option) or selling an agreed quantity of underlying commodity (put option) at a specified future time. The option buyer has the right of deciding whether to exercise the option. According to different methods of fixing delivery price, the option transaction can be divided into European option and Asian option.

VI. Transaction Modes
Trading modes of the commodity transaction include real-time transaction, pending order transaction, inquiry real-time transaction and inquiry pending order transaction.
i. Real-time transaction refers to the operation that the customer carries out commodity transactions in real time according to transaction offers of ICBC with the maximum limit of single contract in 10-100 lots. ICBC can, based on degree of market activeness, launch or stop real-time trading mode of some commodity in due time. The real-time trading mode does not apply to commodity swap and option transactions temporarily.
ii. Pending order transaction refers to the operation that the customer submits a pending order. When transaction offers of ICBC meet standards of the pending order, transaction based on price of pending order can be concluded, with the maximum limit of single contract in 10-100 lots. ICBC can, based on degree of market activeness, launch or stop pending order trading mode of some commodity in due time. The pending order trading mode does not apply to commodity swap and option transactions temporarily.
Validity periods of a pending order includes 24 hours, 48 hours, 72 hours, 96 hours, 120 hours and a week. The period of validity of a product having a fixed date cannot be later than its expiration time. Pending order exceeding its expiration time with transaction unsettled will be invalid automatically. The customer can cancel the unsettled pending order within its period of validity. Before the pending order was settled, canceled or invalid automatically, frozen funds of corresponding account cannot be used for other purposes.
iii. Inquiry real-time transaction refers to the operation that the customer sends inquiries about the trading price to ICBC. ICBC offers quotes according to the customer’s demand. Then the customer concludes the transaction within the required time after conforming the Bank’s offers. If the customer does not confirm the Bank’s offers within the required time, it will be deemed that the customer gives up the transaction and the customer can send inquiries again to the Bank.
As for base metals forward transaction product, the inquiry real-time transaction is divided into price inquiry real-time transaction and spread inquiry real-time transaction. Specifically, the price inquiry real-time transaction refers to the operation that the Bank offers quotes according to the customer’s demand. After the customer confirms the transaction price, the system will create a forward transaction for conclusion. The spread inquiry real-time transaction refers to the operation that the Bank offers quotes according to the customer’s demand. After the customer confirms the spread and concludes the transaction, the Bank will fix the forward and front transaction prices based on the spread, and the system will create two forward transactions for conclusion.
iv. Inquiry pending order transaction refers to the operation that the customer submits a commodity transaction pending order to ICBC by means of inquiries. The Bank, according to factors of the customer’s inquiry pending order such as price, trading volume and duration, and market situation, determines whether to conclude the transaction and trading volume with the customer. Period of the validity of the inquiry pending order transaction is set based on the Bank’s system preparatory conditions. The period of validity of the inquiry pending order having a fixed date cannot be later than its expiration time.
As for base metals forward transaction product, the inquiry pending order transaction is divided into price inquiry pending order transaction and spread inquiry pending order transaction. Specifically, the price inquiry pending order transaction refers to the operation that the Bank, according to factors of the customer inquiry pending order such as price, trading volume and duration, determines whether to conclude the transaction and trading volume with the customer, and the system will create a forward transaction for conclusion. The spread inquiry pending order transaction refers to the operation that the Bank, according to factors of the customer inquiry pending order such as price, trading volume and duration, determines whether to conclude the transaction and trading volume with the customer, and fix the forward and front transaction prices based on the spread, and the system will create two forward transactions for conclusion.

VII. Transaction Threshold and Minimum Increment
Trading threshold of the ICBC commodity transaction products is generally one lot and the minimal increment unit is also one lot. Corresponding relations between trading unit and lot of trading varieties are as follows:

Trading threshold and the minimal increment unit of other products will be fixed by ICBC and customers based on market situations.

VIII. Transaction Quotation
In consideration of factors such as the price trend on the global commodity market, market liquidity, etc., ICBC offers transaction quotations to customers and adjust the quotations based on market conditions. The quotation of commodity transaction product includes bank’s buying price (customer’s selling price), and bank’s selling price (customer’s buying price).
i. Bank’s buying price in commodity forward transaction refers to the price at which a bank buys commodity from the customer at a future time, namely, the forward fixed price at which the bank pays to the customer. Bank’s selling price refers to the price at which a bank sells commodity to the customer at a future time, namely, the forward fixed price at which the bank charges the customer.
ii. Bank’s buying price in commodity swap transaction refers to the price at which a bank buys commodity from the customer within every given period of the swap contract, namely, the fixed price at which the bank pays to the customer for every delivery. Bank’s selling price refers to the price at which a bank sells commodity to the customer within every given period of the swap contract, namely, the fixed price at which the bank charges the customer for every delivery.
iii. Bank’s buying price in commodity option transaction refers to the option premium paid by a bank to buy option from the customer. Bank’s selling price refers to the option premium paid by a customer to buy option from the bank.

IX. Trading Hours
Trading hours for commodity transaction products are as follows:
i. Counter-based
Monday-Friday: actual business hours of outlets.
ii. E-banking channels
1. Trading hours of precious metals products (including COMEX gold and silver):
Monday: 09:00 – 24:00;
Tuesday to Friday: 00:00 – 02:00; 09:00 – 24:00;
Saturday: 00:00 – 02:00.
2. Trading hours of energy products (including Brent crude oil, WTI crude oil, NYMEX natural gas):
Monday: 09:00 – 24:00;
Tuesday to Friday: 00:00 – 02:00; 09:00 – 24:00;
Saturday: 00:00 – 02:00.
3. Trading hours of base metals (including LME copper, aluminum, zinc, lead, nickel and tin):
Monday: 09:00 – 24:00;
Tuesday to Friday: 00:00 – 02:00; 09:00 – 24:00;
Saturday: 00:00 – 02:00.
4. Trading hours of agricultural products (including CBOT soybean, corn, wheat, soybean oil, and soybean meal):
Monday: 09:30 – 20:30; 22:30 – 24:00;
Tuesday to Friday: 00:00 – 02:00; 09:30 – 20:30; 22:30 – 24:00;
Saturday: 00:00 – 02:00.
5. Trading hours of soft commodities (including ICE cotton, coffee, sugar, MDX palm oil, and SICOM rubber):
Monday: 10:00 – 24:00;
Tuesday to Friday: 00:00 – 02:00; 10:00 – 24:00;
Saturday: 00:00 – 02:00.
Roll-out and trading hours of other commodity transaction products are subject to notifications of ICBC. Trading hours of commodity transactions quoted and settled in RMB by internet banking inquiry are from 9:30 to 16:30 of Monday to Friday (Beijing time).
In case of any holidays in major international markets, national public holidays, and actual non-working days after adjustment according to national regulations, or unforeseeable, unavoidable and insurmountable force majeure events such as natural disasters and war, impacts of factors such as international political, economic events and emergencies, or emergencies such as communication breakdown, system failure, power blackout, market trading suspension, or impacts of factors such as financial crisis and changes to national policies, ICBC can temporarily suspend all or some commodity transactions and inform customers in advance as soon as possible or timely through its official website (http://big5.icbc.com.cn) or in any other forms that are feasible. During the suspension period, transactions cannot be handled. The executed pending order instructions cannot be carried out, either. But, calculation of the validity period of pending order instructions will not be affected.

When opening a commoditX. Account Management y transaction quoted in USD, the customer has to designate its USD account with ICBC as the fund settlement account for the commodity transaction. When opening a commodity transaction quoted in RMB, the customer has to designate its RMB account with ICBC as the fund settlement account of the commodity transaction. When handling a commodity transaction, the customer can, based on demands, designate security deposit accounts for every deal if necessary.
i. Fund settlement account
The fund settlement account is used for checking collection and payment of the customer’s commodity transaction funds. The Bank’s regulations related to account management apply to the fund settlement account.
ii. Security deposit account
The security deposit account is used for deducting and transferring security deposit when the customer carries out the commodity transaction. When the transaction expires, the security deposit after normal clearing will be returned via the account. Security deposit account and funds settlement account must be the same one.

XI. Interest Accrual and Charges
Interest of funds in the customer’s fund settlement account and security deposit account will be calculated and paid according to demand deposit interest rate and interest accrual methods of national relevant regulators and ICBC.
ICBC will not charge the customer handling fees when it carries out transactions according to the Bank’s commodity transaction offers.

XII. Risk Prompt
Before handling commodity transaction, customers shall fully know and understand possible risks. The following is major risk types listed by ICBC and its objective analyses on risk factors based on current market situations and characteristics of the commodity transaction. The Bank cannot guarantee that the following covers all risk types of the commodity transaction. Meanwhile, the following list does not represent the Bank’s predictions on market situations.
i. Policy risk: Commodity transaction is a product designed according to relevant laws and regulations, and supervision regulations at present. For example, if changes in a country’s macro-economic policies, and laws and regulations, and supervision regulations occur, customers’ normal transactions will likely be affected. Relevant business is likely to be shut down, further leading to losses for the customer.
ii. Market risk: Affected by global relevant commodity markets, like adverse fluctuations in commodity transaction prices, customer will likely suffer a loss.
iii. Operational risk: Customers may suffer unnecessary losses for ID information leakage, misuses of ID authentication, or mistakes in operations.
iv. Force majeure and emergency risks: Due to unforeseeable, unavoidable and insurmountable force majeure events such as natural disasters and war, impacts of factors such as international political, economic events and emergencies, or accidents such as communication breakdown, system failure, power blackouts, market trading suspension, or impacts of factors such as financial crisis, the customer’s normal handling of commodity transaction will be affected, likely leading to losses for customers.

XIII. Others
Unless otherwise specified, date and time in the product description are both on the basis of Beijing time.
This Product introduction is formulated and revised by ICBC.

Note: the information provided on the page is for reference only. Specific businesses are subject to announcements and rules of local outlets.