(7) Designated trading

Local Chinese investors involved in the trading of B Shares at the stock exchanges must commission orders via designated member in advance and this member is obliged to complete clearing and delivery.

Registration and amendment of designated trading for B Shares must be submitted through an application to clearing and registration institutions through respective clearing members, rather than designated trading instructions being directly reported to the stock exchanges' trading mainframe computer.

Applications for registration and amendment of designated transactions are generally effective after T+1.

(8) Cross Trading

Cross trading is a transaction generated when a designated buyer and designated seller negotiate a price for the same securities at the same prices and quantities through a securities company. Cross trading is generally used for block trade orders of B Shares. Presently, the SSE has following operating provisions for the handling of cross trading.

• The quantity of cross trading is generally controlled at more than 50,000 shares;
• Pricing of cross trading is generally controlled between the highest and lowest price of the day. If there is just one price on a day, the cross price interval is between this price and the previous closing price. If there is no concluded transaction that day, the previous closing price is used as the cross price;
• Cross trading orders must be placed by floor traders and can only be concluded after confirmation made by SSE floor supervisors according to the above principles. The time for the handling of orders is 15 minutes after the opening and before the closing of trading.

(9) Turnaround Trading

Turnaround trading is a trading method designed for B Shares since B-share trading uses a T+3 settlement system. In turnaround transactions, B shares that investors have placed orders to buy and that have been confirmed by the trading system but not settled and delivered can be fully or partially sold during the period from T+1 to T+3 prior to delivery. But whether buying or selling a share, investors can only handle settlement of these transactions on the third trading day after conclusion. Attention should be given to the following conditions when carrying out turnaround transactions:

If an investor has no stock shares balance, he can only sell shares after buying.

• If an investor has a share balance of unconcluded delivery and settlement, he can sell this part of shares instead of selling after completion of delivery and settlement.
• The total amount of stocks are an investor may sell at one time is equal to the balance of stocks already delivered and settled plus the balance of stocks not yet delivered and settled;
• Stocks that investors have bought or sold on different trading days can only be cleared separately and cannot offset each other.
• Transactions concluded on different trading days carry out settlement and delivery on the third trading day respectively after conclusion.
• Turnaround trading can also be applied to Cross trading

(10) Ex-rights and Ex-dividends Ex-dividend trading

As B Shares implement a T+3 settlement system, its operating method of ex-dividend trading is different from the operating method of A Shares under the T+1 system. Firstly, three dates and their significance should be clarified. They are the "last trading day'", "ex-dividend trading day" and "rights registration day".

The last trading day is the last day of trading of shares with cum-dividend. Ex-dividend trading day is trading day following the last trading day and the stock exchanges will carry out ex-dividend procedures for the securities. Buying or holding shares before that day are cum-dividend shares. The third trading day of the last trading day is rights registration day and registration of investor share rights can be completed only on that day.

Ex-dividend quotation = closing price of last trading day- cash dividend per share

Ex-right trading

This is the same as ex-dividend trading, thre dates have to be clarified for ex-right trading, i.e. last trading day, ex-right trading day and rights registration day. The calculation methods and principles for these 3 dates is the same as for ex-dividend trading. The calculation method of ex-right quotation is as follows:

• Ex-right quotation for bonus shares = closing price of the last trading day/(1 + bonus share ratio)
• Ex-right quotation for rights issue = (closing price of the last trading day + pricing of rights issue shares X rights issue ratio)/(1 + rights issue ratio)
• Ex-right quotation for bonus shares and rights issue handled meantime = (closing price of the last trading day + pricing of rights issue X rights issue ratio)/(1+ rights issue ratio + bonus share ratio)
• Ex-right and ex-dividend quotation for ex-dividends, rights issue and bonus share handled meantime = (closing price of the last trading day - cash dividend per share + pricing of rights issue X rights issue ratio)/(1 + bonus share ratio + rights issue ratio)