MEASURES FOR THE ADMINISTRATION OF STOCK EXCHANGES

    Article 1  These Measures are formulated with a view to strengthening
the administration of stock exchanges, clearly defining the powers
and responsibilities of stock exchanges and maintaianing normal order
in securities markets.

    Article 2  These Measures shall be applicable to the establishment of stock exchanges within the territory of the People’s Republic
of China.

    Article 3  The stock exchanges referred to in these Measures mean
legal entities of operation practising self-disciplined membership system
established pursuant to the qualifications prescribed by these Measures
not for profit that provide sites and facilities for centralized and
organized trading and perform the powers and responsibilities prescribed
by relevant state laws, regulations, rules and policies.

    Article 4  Stock exchanges shall be subject to the supervision and
control of China Securities Supervisory and Control Commission
(hereinafter referred to as CSSCC).

    The stock registration settlement agencies established by the stock
exchanges should accept the supervision and control of CSSCC.

    Article 6  The establishment of a stock exchange shall be subject
to the examianation and verification of the Securities Commission under the
State Council(hereinafter referred to as the “Securities Commission”) and
submitted to the State Council for approval.

    Article 7  The following documents shall be presented to the Securities
Commission in applying for the establishment of a stock exchange:

    (1)a letter of application;

    (2)drafts of the articles of association and main business rules;

    (3)a list of members that propose to join;

    (4)a list and curricula vitae of candidates of the board of directors;

    (5)explainations on site, equipment and funds;

    (6)explainations on the conditions of managerial staff it proposes to
employ; and

    (7)other documents the presentation of which is required by the
Securities Commission.

    Article 8  The articles of association of a stock exchange shall
contain the following particulars:

    (1)purpose of establishment;

    (2)name;

    (3)location of its main office, trading site and facilities;

    (4)scope of functions;

    (5)membership eligibility and procedures of joining and withdrawal;

    (6)membership rights and obligations;

    (7)discplinary sanctions of members;

    (8)organization and its powers;

    (9)formation, appointments and relief of the posts and the responsibilites
of high-ranking managerial personnel;

    (10)capital and financial matters;

    (11)conditions and procedures of dissolution; and

    (12)other matters that require to be stipulated in the articles of association.

    Article 10  A stock exchange should create open, fair and just market
environment to ensure the normal operations of the securities market.

    Article 11  The functions of a stock exchange include:

    (1)provision of site and facilities for securities trading;

    (2)formulation of business rules for the stock exchange;

    (3)acceptance of listing applications and arrangement of securities
listing;

    (4)organization and supervision of securities trading;

    (5)supervision and control over the members;

    (6)supervision and control over the listed companies;

    (7)establishment of the stock registration settlement agency;

    (8)managment and publication of market information; and

    (9)other functions permitted by the Securities Commission.

    Article 12  No stock exchange shall directly or indirectly engage in:

    (1)businesses for profit;

    (2)information and publication;

    (3)publication of writings and materials on predictions on securities
prices;

    (4)provision of guaranty for others; and

    (5)other businesses not approved by the Securities Commission.

    Article 13  Listing of new varieties for securities trading by a stock
exchange shall be submitted to the Securities Commission for approval.

    Article 14  Provision of securities trading services in varieties for
securities trading not listed in the exchange in networking and other forms
by a stock exchange shall be submitted to the Securities Commission for
approval.

    Article 15  A stock exchange should formulate and revise business
rules within the scope of its functions. The business rules fromulated and
revised by a stock exchange shall be adopted by the board of directors
of the stock exchange and submitted to the Securities Commission for
approval.

    Article 16  A stock exchange shall establish the membership meeting,
the board of directors and specialized committees.

    Article 17  The membership meeting shall be the highest organ of power
of a stock exchange. The membership meeting has the following powers:

    (1)formulation and revision of the articles of association of the
stock exchange;

    (2)election and dismissal of member directors of the board;

    (3)review and adoption of the work reports of the board of directors and
the general manager;

    (4)review and adoption of the financial budget and final settlement
report of the stock exchange; and

    (5)decisions on other major matters of the stock exchange.

    The formulation and revision of the articles of association adopted by
the membership meeting shall be submitted to the Securities Commission for
approval.

    Article 18  The membership meeting shall be convened once a year by the
board of directors. An ad hoc membership meeting shall be convened in the
event of any of the following circumstances:

    (1)the number of directors is less than the minimum number prescribed by
these Measures;

    (2)at the request of over one third of the members out of the total
membership; and

    (3)when the board of directors deems it necessary.

    Article 19  The membership meeting must be attended by over two thirds
of the members and its resolutions shall be valid only after adoption by
more than fifty percent of the members who are present and vote for them.

    A stock exchange shall, within ten days after the conclusion of the membership meeting, submit all the documents
and relevant information
of the meeting to the Securities Commission for the record.

    Article 20  The board of directors shall be the decision-making body
of a stock exchange. Its terms of office shall be three years.

    The responsibilities of the board of directors shall be:

    (1)to implement the resolutions of the membership meeting;

    (2)to formulate and revise the business rules of the stock exchange;

    (3)to examine and finalize the work plan put forth by the general manager;

    (4)to examine and finalize the financial budget and final settlement
proposals put forth by the general manager;

    (5)to examine and decide on the admission of members;

    (6)to examine and decide on the penalty of members;

    (7)to decide on the establishment of specialized committees in the light
of requirements; and

    (8)other responsibilities given by the membership meeting.

    Article 21  The board of directors of a stock exchange shall be
composed of 7 to 13 persons, among them the number of non-member directors
shall not be less than one third of the total number of the members of the
board of directors and not more than fifty percent of the total number of the members of the board of directors.

    Member directors shall be elected by the membership meeting. Non-member
directors shall be appointed by CSSCC.

    A director shall not serve more than two consecutive terms.

    The meeting of the board of directors shall be convened at least once a
quarter. The meeting must be attended by two third of the directors and its
resolution(s) shall be valid only on apparoval through vote by more than two
third of the directors present at the meeting. The resolution(s) of the
board of directors shall be submitted to CSSCC for the record within two
working days upon conclusion of the meeting.

    Article 22  The board of directors shall have one chairman, one to two
vice chairmen. The chairman and vice chairman(chairmen) shall be nominated
by CSSCC and elected by the board of directors. The general manager should
be a member of the board of directors.

    Article 23  The chariman shall be responsible for the convening and
chairing of the meeting of the board of directors. When the chairman is
unable to perform his/her responsibilities temporarily for unforeseen
reasons, the vice chairman designated by the chairman shall perform the
responsibilities  on his/her behalf.

    The  chairman shall serve as the president of the meeting during the
membership meeting.

    The chairman shall not concurrently serve as the general manager of a
stock exchange.

    Article 24  A stock exchange shall have one general manager and
one to three deputy general managers. The general manager shall be appointed
and relieved of the posts by CSSCC. No public servant of the state shall
concurrently serve as the general manager or deputy general manager.

    The term of office for the general manager and deputy general manager
shall be three years. The general manager shall not serve more than two
consecutive terms. The general manager who shall, under the leadership of the
board of directors, be responsible for the routine administration of a
stock exchange shall be the legal representative of the stock exchange.
When the general manager is unable to perform his/her responsibilites
temporarily for unforeseen reasons, the deputy general manager designated by
the general manager shall perform the resposnsibilites on his/her behalf.

    Article 25  The appointments and relief of the posts of middle-rank
cadres of a stock exchange shall be submitted to CSSCC for the record, the
appointiments and relief of the posts of the persons-in-charge of the
accounting and personnel departments shall be submitted to CSSCC for approval.

    Article 26  The board of directors shall establish a supervisory
commission the term of office of which shall be three years. The chairman
shall serve concurrently as the president of the supervisory commission.
The supervisory commission which is responsible to the board of directors
shall exercise the following powers:

    (1)to oversee the high-ranking managerial personnel and other staff
members of the stock exchange in abiding by the relevant state laws,
regulations, rules, policies and the articles of association and business
rules of the stock exchange;

    (2)to oversee the high-ranking managerial personnel in the implementation
of the resolution(s) of the membership meeting and the board of directors;

    (3)to oversee the financial status of the stock exchange; and

    (4)other powers provided for in the articles of association of the
stock exchange.

    Article 27  The board of directors may establish subordinate specialized
committees in accordance with requirements. Specific provisions shall be
made in the articles of association of a stock exchange on matters
concerning the resposnsibilites, term of office and composition of members
of all specialized committtees.

    The expenses of all specialized committees should be integrated into the
budget of the stock exchange.

    Article 28  Whoever has any of the following circumstances must not be
recruited as an employee of a stock exchange and must not serve as a
high-ranking administrator of a stock exchange:

    (1)has committed crimes of corruption, bribes, occupation of property
and appropriation of property or the crime of disrupting socio-economic
order, or having been deprived of political rights for crime;

    (2)an employee of a securities operations agency or other financial
institutions who has been relieved of the post for acts in violation of law
or discipline for not more than five years starting from the date of relief
of the post;

    (3)a lawyer, certified accountant or a professional of a legal asset
appraisal agency or capital authentication agency who has been revoked
of the qualification for acts in violation of law for not more than five
years starting from the date of revocation of the qualification;

    (4)the legal representative of a company or an enterprise that has been
revoked of the business license for acts in violation of law and is personally
responsible for the revocation of the business license of the said company
or enterprise for not more than five years starting from the date of revocation of the business license;

    (5)one who has served as a director of the board, director of a factory
or manager of a company or an enterprise that has gone bankrupt due to
poor management and is personally responsible for the bankruptcy of the
said company or enterprise for not more than five years starting from the
date of bankruptcy;

    (6)a functionary of a state organ who has been dismissed for not more
than five years starting from the date of dismissal; and

    (7)other circumstances prescribed by the relevant state laws, regulations,
rules and policies.

    Article 30  A stock exchange should formulate specific trading
rules. Their contents shall include:

    (1)types and duration of the securities to be traded;

    (2)modes of securities trading and the operational procedures;

    (3)the acts prohibited in securities trading;

    (4)settlement clearing matters;

    (5)resolution of trading disputes;

    (6)suspension, resumption and cancellation of trading of listed
securities;

    (7)opening, closing, and resting of the stock exchange and handling
of abnormal circumstances;

    (8)mode of collection and rates of service charges and other related
fees in trading;

    (9)provisions on the handling of acts in violation of the trading rules;

    (10)provision and management of the securities trading information of the stock exchange;

    (11)compilation method and mode of publication of stock price indices;
and

    (12)other matters that require to be stipulated in the trading rules.

    Article 31  A stock exchange should publish the current/immediate??
quotations and make daily a securities quotations table recording the
following particulars which shall be announced in appropriate ways:

    (1)names of the listed securities;

    (2)the opening, highest, lowest and closing prices;

    (3)the rise and fall in comparison with the closing price of the
preceding trading day;

    (4)separate calculation and total calculation of the volume and value
of transactions made;

    (5)stock price indices and their rise and fall; and

    (6)other matters CSSCC requires to be made public.

    Article 32  A stock exchange should compile a daily statement, a weekly
statement, a monthly statement and an annual statement on the transactions
effected in its market which shall be released to society in time.

    Article 33  A stock exchange should work out detailed provisions
in the business rules on the terms of coming into force and annulment
of a securities transaction contract and safeguard the validity of the
securities transaction contracts concluded in the stock exchange.

    Article 34  A stock exchange should guarantee that investors have
equal opportunity to obtain the trading quotations and other publicly
disclosed information in the securities market and have equal opportunity
in trading.

    Article 35  A stock exchange has the power to suspend or resume
the trading of the listed securities pursuant to relevant provisions.
When the time of suspension of trading exceeds one trading day, a report
should be submitted to CSSCC for the record; when the time of suspension
of trading exceeds five trading days, a report shall be submitted to
CSSCC in advance for approval.

    CSSCC has the power to ask a stock exchange to suspend or resume the
trading of the listed securities.

    Article 36  A stock exchange should establish the market access
system and restrict or prohibit the securities trading acts of particular
securities investors in accordance with the provisions of securities
regulations or the requirements of CSSCC.

    Except for the above-mentioned circumstances, a stock exchange
must not restrict or prohibit the acts of securities buying or selling by
securities investors.

    Article 37  A stock exchange and its members should put in
safekeeping the materials of entrustment, the trading records
and settlement papers from the securities transactions, and formulate
corresponding search and secrecy control measures.

    A stock exchange should determine the duration of safekeeping
of the above-mentioned documents in accordance with the requirements and
submit it to CSSCC for approval. The duration of safekeeping of important
documents should not be less than 20 years.

    Article 38  A stock exchange should guarantee the conscientious
implementation of its business rules and handle the acts in violation of the business rules in time.

    A stock exchange shall bear the responsibility of uncovering, curbing
and reporting the acts in violation of laws and regulations relating
to securities trading prescribed in relevant state laws, regulations,
rules and policies, and has the power to investigate and deal with them
within the scope of responsibilities.

    Article 39  A stock exchange should establish a computer system
conforming to the requirements of securities market supervision and control
and realtime monitoring, and establish a specialized agency for securities
market supervision and control.

    Article 40  A stock exchange should formulate specific rules for
membership administration. Their contents shall include:

    (1)terms and procedures for the acquisition of membership;

    (2)measures for the administration of seats;

    (3)requirements for membership internal supervision, risk control,
standards for the computer systems and their maintenance relating to
securities trading and the settlement business;

    (4)business reporting system of members;

    (5)code of conduct of listing representatives sent by members on the
trading floor;

    (6)penalty of acts in violation of laws and regulations by members and
their listing representatives; and

    (7)other matters that require to be stipulated in the membership
administration rules.

    Article 41  Members admitted by stock exchanges should be the
in-country securities operations agencies with the status of a legal person
the establishment of which is approved by the empowered departments.

    Article 42  The decision of a stock exchange on the admission or
expulsion of a member should be submitted to CSSCC for the record within
five working days after the decision is made; the decision on the admission
or expulsion of members other than the official members should be submitted
to CSSCC five working days ahead of the completion of the relevant formalities
for the record.

    Article 43  A stock exchange must restrict the number of trading seats.
The establishment of seats other than the general seats by a stock
exchange shall be subject to the approval of CSSCC. Adjustment in the number
of general seats and seats other than the general seats by a stock exchange
shall be subject to the approval of CSSCC in advance.

    Article 44  A stock exchange shall exercise stringent administration
over the trading seat obtained by a member. Transfer of a seat by a member
shall be subject to the examination and approval of the exchange pursuant to
the relevant provisions on the administration of the stock exchange.
A member is strictly prohibited to hand over the seat in full or in part
to another agency or individual for use in the form of lease or contracting.

    Article 45  A stock exchange should, in accordance with the provisions
concerning the administration of self-managed securities business of
securities operations agencies and business rules of the stock exchange,
exercise the following supervision and administration over the self-managed
securities business of the members:

    (1)to ask the members to use special stock accounts and fund accounts in
self-managed buying and selling business, and adopt technical means to enforce
stringent administration;

    (2)to inspect whether the members opening self-managed accounts have the
prescribed self-operations qualification;

    (3)to ask the members to compile monthly securities inventory statement
and submit the same to the stock exchange before the 5th of the following
month;

    (4)to work out specific risk control measures for self-operations and
submit the same to CSSCC for the record;

    (5)to submit reports on the status of self-managed securities business
of all members ending on the said dates to CSSCC within 30 days after June 30
and December 31 every year; and

    (6)other matters relating to supervision and administration.

    Article 46  A stock exchange should work out detailed provisions
on securities buying and selling business by members for clients in the
business rules and exercise the following supervision and administration:

    (1)to determine the format of the agency agreement to be signed by
a member and a client and examine the legitimacy of its contents;

    (2)to work out the procedures and responsibilities in accepting the
entrustment of a client and make sample survey of the status on the
implementation of the entrustment of the clients; and

    (3)to ask the members to submit a report on their trading business
and clients’ complaints within 5 days after every month. The format of the
report and the contents shall be promulgated by the stock exchange upon
approval of CSSCC.

    Article 47  A stock exchange should make sample or comprehensive
inspection over the members’ financial status, internal risk control system
and compliance with the relevant state regulations and business rules of the stock exchange, and report the results of inspection
to CSSCC.

    Article 48  A stock exchange has the power to ask the members to provide
business-related statements, account books, trading records as well as other
documents and materials.

    Article 49  Members of a stock exchange should accept the supervision and
administration of the stock exchange and report relevant questions on their
own initiative.

    Article 51  A stock exchange should formulate specific listing rules
pursuant to the provisions of relevant laws and administrative regulations.
Their contents shall include:

    (1)terms and procedures of application and approval of securities listing
as well as the contents and format of the listing agreement;

    (2)the contents and format of the listing announcement;

    (3)the qualification, responsibilities and obligations of the person who
recommends the listing;

    (4)the mode of collection and rates of the listing fees and other related
charges;

    (5)provisions on the handling of acts in violation of the listing rules;
and

    (6)other matters