Zheng Jian Fa [2006] No. 20

The branch offices of the China Securities Regulatory Commission in all provinces, autonomous regions, municipalities directly under
the Central Government, the cities specifically designated in the state plan, and the Commissioner’s Offices in Shanghai and Shenzhen,

In order to regulate the applications for the use of securities investor protection funds, guarantee the lawful use and the security
of the securities investor protection funds, the Measures for Application for the Use of Securities Investor Protection Funds (for
Trial Implementation) are hereby printed and distributed to you for implementation.

The China Securities Regulatory Commission

March 7, 2006

Measures for Application for the Use of Securities Investor Protection Funds (for Trial Implementation)
Chapter I General Provisions

Article 1

These Measures have been set down in accordance with the Measures for the Management of Securities Investor Protection Funds, the
Advice on the Purchase of the Personal Credits and the Settlement Funds of Clients’ Securities, the Measures for the Operating of
the Purchase of the Personal Credits and the Settlement Funds of Clients’ Securities, and the Circular on Relevant Issues Concerning
the Purchase of the Personal Credits and the Settlement Funds of Clients’ Securities, etc. in order to regulate the applications
extending, and use of the securities investor protection funds (hereafter referred to as “protection funds” for short).

Article 2

The securities companies which have been commanded by the China Securities Regulatory Commission (hereafter referred to as the CSRC)
to stop their business operations for rectification or have been appointed to any other organization for custody or which have been
taken over or abrogated (hereafter referred to as “securities companies under disposition” for short) shall be subject to these Measures
when they apply for utilizing their protection funds to purchase the personal credits or the settlement funds of their clients’ securities
in accordance with the relevant state policies.

Article 3

The institution that takes charge of operating the legal person duties and functions of a securities company under disposition in
accordance with the relevant provisions (hereafter referred to as “custodian settlement institutions”) shall take charge of filing
applications for utilizing the protection funds, and shall borrow and utilize the protection funds in accordance with the legal provisions.

The China Securities Investor Protection Funds, Co., Ltd. (hereafter “CSIPF”) shall exercise the duties and functions of releasing
and managing the protection funds.

CSRC and the institutions empowered thereby shall take charge of checking and monitoring the applications and use of protection funds.

Article 4

The principles of “use for certain purposes, management under certain accounts, and closed operations” shall be followed in the applications
for, grant and use of protection funds, and it is forbidden severely to use any of the protection funds for any other purpose.

Chapter II Application for Protection Funds

Article 5

CSIPF shall sign a “Loan Agreement on Securities Investor Protection Fund” with the custodian settlement institutions and the institutions
authorized by the CSRC in accordance with the sanctified risk disposition schemes of the securities companies and the protection
fund use schemes in order to elucidate the quotas, purposes of use, processes, etc. for the use of the protection funds as well as
the obligations and functions of the parties involved.

Article 6

The custodian settlement institutions or the groups of the relevant local government for discerning the personal credits shall make
differentiations and recognitions of the settlement funds of the clients’ securities and the personal credits in accordance with
the standards and procedures as provided for in the relevant policies of the state, and shall take the responsibility for the authenticity,
precision, and lawfulness of their differentiations and recognitions.

Custodian settlement institutions shall apply for utilizing protection funds once and for all or many times in accordance with the
certain situation and the real demand of differentiation and recognition.

Article 7

To apply for purchasing the personal credit with protection funds, the custodian settlement institution shall put forward an application
to the institution authorized by the CSRC. The application materials shall be prepared in duplicate, which shall include the following
contents:

(1)

an application report and a form of application (see Appendix I);

(2)

detailed ledgers of the personal credit which is requested to be purchased by the head office of the securities company under disposition
as well the branches thereof, which have been collected together, discerned and recognized by the custodian settlement institution
(see Appendix II);

(3)

a particular audit report on the personal credits;

(4)

a verification report made by the differentiation group of the local government and the accompanying detailed ledgers as well as the
detailed materials, or a verification report made by the custodian settlement institution and the relevant detailed materials (the
part of personal credits constituted as a result of appropriating the securities of the personal clients of a normal broker);

(5)

an operating scheme for purchasing the personal credits; and

(6)

other materials as requested by the CSRC for submission.

Article 8

The purchasing funds that shall be paid by the local government shall have been actually paid in full amount, when a custodian settlement
institution applies for purchasing the personal credits with protection funds. The custodian settlement institution shall submit
it to the CSRC without postponing so that the CSRC could coordinate, if the purchasing funds of the local government cannot be actually
paid timely or in full amount. The custodian settlement institution may first purchase personal small-sum credits of less than 100,000
Yuan within the quota of funds to be implemented by the Central Government, and when the purchasing funds of the local government
are actually paid in full amount, it may then purchase the parts below 100,000 Yuan that has not been purchased as well as the large-sum
personal credits of over 100,000 Yuan.

Article 9

To apply for purchasing the settlement funds of the clients’ securities with protection funds, a custodian settlement institution
shall put forward an application to the institution authorized by the CSRC. The application materials shall be prepared in duplicate,
which shall include the contents as follows:

(1)

an application report and a form of application (see Appendix III);

(2)

the details of the settlement funds of the clients’ securities of the head office of the securities company under disposition as well
the branches thereof, which have been discerned and recognized by the custodian settlement institution (including a CD involving
the detailed relative information of the accounts);

(3)

a particular audit report on the settlement funds of the clients’ securities;

(4)

a verification report on packing up the accounts;

(5)

an operating scheme for offsetting the gap in the settlement funds of the clients’ securities; and

(6)

other materials as requested by the CSRC for submission.

Article 10

In case a custodian settlement institution put forward applications by several times for utilizing the protection funds and when
it put forward application for a second time, it is not requested to present again the materials which are the same as those that
have been already presented , provided that it has to give an account of the use of the protection funds for which it has put forward
an application.

Article 11

The institution authorized by the CSRC shall examine the application materials put forward for utilizing the protection funds to
purchase the personal credits and the settlement funds of the clients’ securities, and shall release clear examination opinions.
The examination materials in which the institution authorized by the CSRC approves to give protection funds shall cover the following
contents:

(1)

opinions of examination;

(2)

a Form of examination of Applications for Utilizing Protection Funds (Form of Examination of Applications for Purchasing the Personal
credits with Protection Funds (see Appendix IV) or Form of Examination of Applications for Purchasing the Settlement Funds of Client’s
Securities with Protection Funds (see Appendix V)); and

(3)

the Detailed Ledgers of the Personal Credits (see Appendix II) or Detailed Ledgers of the Gaps in the Settlement Funds of Clients’
Securities (see Appendix VI) as recognized upon examination.

Article 12

After the institution authorized by the CSRC has inspected and sanctified an application for utilizing protection funds of the custodian
settlement institution, it shall release to the custodian settlement institution a document of approval on giving the protection
fund, which shall be offered to the CSIPF together with the examination materials and the application materials put forward by the
custodian settlement institution.

Article 13

Where a securities company under disposition fails to safeguard the on-the-counter payment of its clients for its normal brokering
businesses because of its lack of adequate funds so that panic bank withdrawal may occur, the custodian settlement institution may
put forward an application to the institution authorized by the CSRC for utilizing the emergency aid fund within the sanctified quota
for utilizing protection funds, and shall simultaneously present a scheme for utilizing the emergency aid fund in order to make clear
the procedures for checking the allocation of emergency aid funds and the clients’ withdrawal of money.

Article 14

The institution authorized by the CSRC shall direct an examination to the scheme of utilizing the emergency aid fund, fill in an
Examination Form of Utilizing Emergency Aid Fund (see Appendix VII), and specify its examination opinions. Where it approves to grant
the emergency aid fund, it shall offer in duplicate to the CSRC its examination opinions, Form of Examination together with the scheme
of utilizing the emergency aid fund as proposed by the custodian settlement institution.

Article 15

If the CSRC agrees to grant the emergency aid fund, it shall release a document of approval to the custodian settlement institution,
and shall send it to the CSIPF together with the examination opinions of its authorized institution, the Form of Examination, as
well as the scheme of utilizing the emergency aid fund which has been proposed by the custodian settlement institution.

Article 16

After receiving the document of approval as released by the CSRC or its authorized institution to offer the protection fund as well
as the relevant materials forwarded thereby, the CSIPF shall grant the protection fund in accordance with these Measures and other
related provisions.

Chapter III Extending of the Protection Fund

Article 17

In accordance with the operational rules of the People’s Bank of China with regard to the reloaning of securities investor protection
funds, the CSIPF shall open a particular account for “deposit of securities investor protection funds” with the Business Department
of the People’s Bank of China in order to check and calculate the reloans extended by the People’s Bank of China for the risk disposition
of the securities company.

Article 18

In case the CSIPF grants to the custodian settlement institution any protection fund so as to purchase the personal credits and the
settlement funds of clients’ securities, it shall sign a loan agreement with the custodian settlement institution and the institution
authorized by the CSRC and shall appoint a commercial bank (hereafter referred to as an “entrusted bank”) to extend the loan on its
behalf.

Article 19

The CSIPF shall open a particular account of protection fund deposit with the entrusted bank so as to check and calculate the protection
funds as granted to the custodian settlement institution, and shall conclude with the head office of the entrusted bank an “Agreement
on the Management of the Particular Settlement Account of Securities Investor Protection Funds”.

Article 20

The CSIPF shall, when handling the formalities of transferring the reloan funds it borrows, send to the Business Department of the
People’s Bank of China an instruction for allocation attached with the seal of its own of which it has left a specimen therewith,
and shall fill in a “Letter for Consulting Allocated Securities Investor Protection Funds”.

Article 21

If the custodian settlement institution utilizes the protection fund to purchase the personal credits and the settlement funds of
clients’ securities, it shall open a deposit account for the protection fund with the entrusted bank upon the strength of the document
of the CSRC or any other department in charge on agreeing the establishment of the custodian settlement institution in order to check
and calculate the protection funds, and shall report its opening of bank accounts to the institution authorized by the CSRC, the
branch organization of the People’s Bank of China in the locality, and the CSIPF for archival purpose.

Article 22

The CSIPF shall, in accordance with the provisions of the loan agreement, allocate the loans once and for all or by installments
to the protection fund deposit account of the custodian settlement institution at the entrusted bank.

When extending protection funds for purchasing the personal credits and the settlement funds of clients’ securities, the CSIPF shall
present the entrusted bank its allocation instruction which has been attached with the seal of which it has left a specimen therewith,
and shall present the entrusted bank the detailed ledgers of the personal credits which have been checked and verified by the institution
authorized by the CSRC.

Article 23

The principle of “purchasing a batch after verifying a batch” shall be followed in the purchase of the personal credits. The custodian
settlement institution shall open a protection fund deposit account with each of the branches of the entrusted bank in all the places
where the purchase of the personal credits is implemented for the sole purpose of purchasing the personal credits, and shall report
its opening of accounts to the institution authorized by the CSRC, the branch organization of the People’s Bank of China, and the
CSIPF for archival filing.

Article 24

When implementing the allocation of protection funds for purchasing the personal credits, the custodian settlement institution shall
release a circular of allocating funds for purchasing the personal credits upon the strength of the checklist of the personal credits
of all places that need to be purchased, and shall present all of them to the branch or sub-branch of the entrusted bank.

Article 25

The branch or sub-branch of the entrusted bank shall extend the purchase funds to the certain creditors in accordance with the relevant
provisions after examining the purchase checklist of the personal credits against the detailed ledgers of the personal credits as
offered by the CSIPF.

Article 26

A creditor or the agent thereof shall gain its purchase money at the appointed business place of the entrusted bank in accordance
with the relevant provisions upon the strength of its valid identity certificate and the Letter of Verification of _____ Securities
Company for Purchasing the Personal credit as released by the differentiation and verification group of the local government.

The branch or sub-branch of the entrusted bank shall recede the Letter of Verification of _____ Securities Company for Purchasing
the personal credit which the personal creditor holds after paying the purchase money.

Article 27

To purchase the credit of a personal formed because of the misappropriation of the securities of the normal broker-clients, the custodian
settlement institution may pay the purchase money directly to the China Securities Registration & Settlement Company if it considers
it appropriate. The purchase money giving circular released by the custodian settlement institution shall have gone through the examination
of the institution authorized by the CSRC.

Article 28

In case the custodian settlement institution utilizes the protection fund to purchase the settlement funds of clients’ securities,
it shall do so simultaneously when it deposits the settlement funds of the clients’ securities in a third party.

When conducting the formalities for giving money for the gap in the settlement funds of clients’ securities, the custodian settlement
institution shall release a circular on giving money for offsetting the gap in the settlement funds of clients’ securities, and shall
offer it to the entrusted bank after succeeding in the examination and getting the approval of the institution authorized by the
CSRC.

The entrusted bank shall allocate funds to the deposit account of a third party upon the strength of the “Circular on Giving Money
for Offsetting the Gap in the Settlement Funds of Clients’ Securities”.

Article 29

To offset the overdrafts of the securities company under disposition in the normal brokering business settlements of the China Securities
Registration & Settlement Company with protection funds, the custodian settlement institution shall release a “Circular on Allocating
Money for Offsetting the Gap in the Settlement Funds of Clients’ Securities”, and then after getting the approval of the institution
authorized by the CSRC, offer to the CSIPF, who shall allocate the fund directly to the bank account appointed by the custodian settlement
institution in China Securities Registration & Settlement Company.

Article 30

The emergency aid fund which the custodian settlement institution put forward an application for shall only be utilized for paying
for the client’s on-the-counter drawing of money in the normal brokering business and other purposes as specified by the relevant
state policies.

When distributing any emergency aid fund out of its protection fund deposit account, the custodian settlement institution shall release
a circular on distributing emergency aid funds, and then present it to the entrusted bank after getting the approval of the institution
authorized by the CSRC. The entrusted bank shall allocate the funds upon the strength of the “Circular on Allocating Emergency Aid
Funds” which has succeeded in the examination and acquired the consent of the institution authorized by the CSRC.

Article 31

A custodian settlement institution shall borrow protection funds from the CSIPF, the interest rate of which shall be 165 basic points
more favorable than the one-year fluid reloan interest rate as provided for by the People’s Bank of China.

If a custodian settlement institution borrows any protection fund, the deposit interests of the deposits in the protection fund deposit
account which it opens shall be utilized to repay the due loan interests of CSIPF.

Article 32

After purchasing the personal credits and the settlement funds of clients’ securities with the protection funds, the custodian settlement
institution shall transfer the interests thereof as well as the remaining funds back to the protection fund deposit account which
the CSIPF has set up in the entrusted bank, and shall adjust the corresponding amount of loan.

The custodian settlement institution shall write off its protection fund deposit account in time, and shall present its written-off
account to the institution authorized by the CSRC, the branch or sub-branch of the People’s Bank of China in the locality, and the
CSIPF for archival purpose.

Chapter IV Supervision and Management

Article 33

The CSRC and the institutions authorized thereby shall take charge of checking and consenting the application materials put forward
by the custodian settlement institutions for utilizing protection funds, monitoring over the lawfulness of the custodian settlement
institutions’ use of protection funds, and for monitoring, regulating, coordinating, and directing the differentiation, verification,
and purchase of the personal credits and the settlement funds of clients’ securities.

Article 34

The CSIPF shall set up and improve its inner management, supervision and control mechanisms, implement supervision, management and
examination to the applications, grant, and utilization of the protection funds in accordance with the related provisions, and shall
report to the related departments on the grant and use of the protection funds in accordance with the related provisions.

Article 35

The CSIPF may entrust intermediary institutions with appropriate qualifications to implement particular audits to the custodian settlement
institutions’ use of protection funds, and the related entities and personal under audit shall assist and cooperate.

Article 36

After purchasing the personal credits and the settlement funds of clients’ securities with protection funds, a custodian settlement
institution shall help the CSIPF to pass the credit transfer and registration formalities.

The CSIPF, which has acquired the corresponding right to repayment in accordance with law, has the right to join the liquidation or
restructuring of the securities company under disposition.

Article 37

If the CSIPF finds any of the following situations that may influence the safety of the protection fund, it shall report it to the
CSRC, and the CSRC or the institution authorized thereby shall command the custodian settlement institution to make corrections within
a time limit. In case the custodian settlement institution cannot make corrections in good time, the CSIPF shall have the right to
stop the allocation of fund or require the entrusted bank to stop the allocation of fund:

(1)

In case the differentiation or verification of the personal credits or the settlement funds of clients’ securities cannot satisfy
the related policies of the state;

(2)

In case there is anything untrue in the protection fund application materials;

(3)

In case the use of the protection fund cannot satisfy the related policies of the state;

(4)

Any other circumstances under which the safety of the protection fund may be influenced.

Article 38

A custodian settlement institution shall employ an accounting firm as recognized by the CSIPF to implement particular audits to the
personal credits and the settlement funds of clients’ securities, and shall do well in registering and purchasing the personal credits
as well as the differentiation, verification, and purchase of the settlement funds of clients’ securities in accordance with the
dictated standards and procedures in order to guarantee that the applications and use of the protection fund satisfy the related
state policies.

Article 39

After utilizing any emergency aid fund, a custodian settlement institution shall offer the related materials to the institution authorized
by the CSRC in a timely manner, and then report it to the CSIPF after acquiring the recognition of the institution authorized by
the CSRC. The materials it shall offer shall include but are not limited to:

(1)

a report on utilizing the emergency aid fund; and

(2)

a detailed account of the settlement funds of clients’ securities involved in the emergency aid fund (including a CD containing the
concrete information of the accounts).

Article 40

In case a custodian settlement institution applies for utilizing any protection fund, it shall present regular reports to the CSIPF
about the assets and liabilities of the securities company under disposition as of the day when the disposition begins, the progress
of the custodian settlement, the differentiation and verification of the personal credits and the settlement funds of clients’ securities,
as well as any other materials as requested by the CSIPF for submission.

Article 41

After receiving the protection funds, a custodian settlement institution shall make regular reports as requested to the institution
authorized by the CSRC and the CSIPF about the progress in the grant and use the protection funds, and shall report, on the quarterly
basis, to the branch organization of the People’s Bank of China at the locality where the legal person securities company under disposition
about the use of the protection funds and the disposition of risks.

In case any grave problem happens in the grant or use of protection funds, the custodian settlement institution shall report it to
the institution authorized by the CSRC and the CSIPF in time.

Article 42

After purchasing the personal credits and the settlement funds of clients’ securities with protection funds, a custodian settlement
institution shall collect in a timely manner the related information about the use of protection funds and the disposition of risks,
and shall report to the CSRC and the institution authorized thereby and the CSIPF.

Article 43

The custodian settlement institutions and the entrusted banks shall set up accounting ledgers for protection funds, registering in
detail the allocation and use of protection funds, and maintain appropriately the vouchers for the receipt and designation of protection
funds, the bills of honor, and other related original vouchers, in order to guarantee the completeness of the original archival files.

Article 44

When executing its duties in allocating protection funds, a custodian settlement institution shall strictly comply with these Measures
and the relevant state policies concerning purchase, and carefully check the relevant materials, in order to guarantee that the no
error persists in the relevant materials and the basis in the course of granting protection funds.

The entrusted bank shall compose regular reports to the CSIPF about the extending and use of protection funds, and shall bear legal
liabilities for the entrusted matters.

Article 45

The parties involved shall strictly carry out the related policies and rules of the state in order to guarantee the lawful use and
safety of the protection funds. The violations of law or rule, if any, such as misappropriating, seizing or acquiring protection
funds by fraudulent means, etc., shall be cracked down, and the relevant personnel who are guilty of dereliction of duty shall be
subjected to legal liabilities in accordance with law. If any crime is formed, the offenders shall be transferred to the judicial
organ for punishment.

Chapter V Supplementary Provisions

Article 46

If any of the protection funds is utilized for any other purpose upon consent, the methods for the application thereof shall be separately
set down.

Article 47

If any securities company under disposition in which the local government or any other department plays a leading role needs to apply
for utilizing any protection fund, these Measures shall be applied by analogy in terms of the duties and responsibilities of the
parties involved and the processes of work.

Article 48

The term “institution authorized by the CSRC” as mentioned in these Measures means a department or entity which is authorized by
the CSRC to monitor and examine the custodian settlement institutions’ application for and use of protection funds.

Article 49

The CSRC is responsible for interpreting these Measures.

Article 50

These Measures shall be implemented as of the date of promulgation.

Appendixes:

1.

Form of Application for Purchasing the Personal Credits with Protection Funds; (Omitted)

2.

Detailed Ledgers of the Personal credits (Omitted)

3.

Application Form for Purchasing the Settlement Funds of Clients’ Securities with Protection Funds (Omitted)

4.

Form of Examination of Applications for Purchasing the Personal credits with Protection Funds (Omitted)

5.

Form of Examination of Applications for Purchasing the Settlement Funds of Client’s Securities with Protection Funds (Omitted)

6.

Detailed Ledgers of the Gaps in the Settlement Funds of Clients’ Securities (Omitted)

7.

Form of Examination of Applications for Utilizing Emergency Aid Funds (Omitted)