Securities Custody and Depository of Securities Depository and Clearing Rules

Article 34 Unless otherwise provided by applicable laws, regulations and requirements of the CSRC, the CSDCC shall provide centralized depository of securities registered in the name of either the securities company or its clients, and the investor's securities shall be held in the custody of the securities company.

Article 35 the CSDCC shall establish respective general legers for the securities company's proprietary tradingand brokerage tradingfor recording the deposit and withdrawal of securities registered in the name of the securities company and its clients.

Unless otherwise provided by applicable laws, regulations and requirements of the CSRC, the CSDCC shall be commissioned to maintain the securities company's proprietary account and its clients' securities accounts.

Article 36 To participate in securities investment, the investor shall enter into the securities brokerage, custody and clearing agreement with the securities company.

The CSDCC shall prescribe and disseminate the mandatory provisions in relation to the securities depositary and clearing service in the securities brokerage, custody and clearing agreement, which shall include, but not limited to:

1. The Securities Company shall place the trading instructions upon client's entrustment, execute settle- ment of each valid transaction and take corresponding settlement responsibility in line with the securities trading rules; the securities transfer between the securities company's securities settlement account and its client's account shall be executed by the CSDCC commissioned by the securities company after the market close.
2. The investor and the securities company that involved in a collateralized repurchase agreement shall provide the required pledged securities to the CSDCC in accordance with the operating rules; the liabilities between the investor and the securities company will not prejudice the CSDCC's pledge rights on the pledged securities.
3. In case of a client's default in meeting his payment obligations, the CSDCC may, on behalf of the securities company, transfer the client's net-buy securities into the securities company's Securities Disposition Account, and require the client to make the payment within a specified time limit. In case of a client's default in meeting his securities delivery obligation, the securities company is entitled to detain equivalent amount of cash from the client.

Article 37 The securities company shall file with the CSDCC the establishment, change and termination of securities custody services for clients for the purpose of record retention.

Article 38 Unless otherwise provided by applicable laws, regulations and requirements of the CSRC, the securities company shall process the transfer of securities custody to another securities company upon the client's request, in line with relevant operating rules of the stock exchange and the CSDCC.

Article 39 The securities company shall take effective measures to protect the securities under its custody from misappropriation and unauthorized sale.

The CSDCC shall take effective measures to protect the securities under its depository from misappropriation and unauthorized sale.

Article 40 The pledge, lock-up, freeze and fortfeit of securities shall be executed by the securities company and the CSDCC in accordance with applicable regulations.