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  Home Page > Corporate Banking >Financial market >Products & Services >Investment products >Account-based Metals
Account-based Metals
 

I. Definition
Account-based metals is an investment product ICBC offers to personal customers for the trading of base metal shares in RMB or USD through bookkeeping without physical delivery of base metals.

II. Target Customers
This product is applicable to personal customers who have the full capacity for civil conduct, possess adequate risk tolerance and pass the product suitability assessment.

III. Varieties of Product
Varieties of account-based metals include paper copper; and quotation on the Paper North America Copper refers to the price of copper futures contract (HG) of the New York Commodity Exchange (“COMEX”). Please refer to actual product rolled out by ICBC for the concrete trading varieties.
Account-based metals are issued in installments, and name of every issue adopts the combination of “trading currency” + “trading variety” + “referential contract code (two digits of the year + two digits of the month)”.

IV. Trading Currency and Unit
Account-based metals transactions are denominated in RMB or USD, with the latter further divided into USD cash and USD spot exchange. Quotation for RMB account-based metals is expressed in “RMB/pound (1 pound = 0.4536kg); and funds are settled in RMB and shall be rounded up to two decimal places. For account-based metals transactions in USD, the measurement unit shall be “USD/pound” for quotations and USD for fund settlement, rounded to two decimal places.

V. Transaction Types
By type of transaction, account-based metals transactions are divided into “buy first, sell later” and “sell first, buy later” transactions. The two trading modes shall be independent of each other.
“Buy first, sell later” means the customer sells existing account-based metals bought previously. The cumulative quantity of account-based metals sold by the customer shall not exceed the accumulative quantity of purchases. In “buy first, sell later” mode, the customer buying account-based metals is called “buy to open”, while the customer selling account-based metals is called “sell to close”.
“Sell first, buy later” means the customer initially conducts a sale and then buys account-based metals in a full or partial quantity of the sale. The cumulative quantity of account-based metals bought by the customer shall not exceed the accumulative quantity of sales. In “sell first, buy later” mode, the customer selling account-based metals is called “sell to open”, while the customer buying account-based metals is called “buy to close”.

VI. Transaction Modes
Account-based metals are divided into real-time trading and pending order by the transaction mode.
i. Real-time trading means the customer buys or sells account-based metals instantly at quoted prices.
ii. Pending order means the customer buys or sells account-based metals at the order price when the quotation meets the pending order. Pending order includes take-profit order, stop-loss order and OCO order. Take-profit order means the order price is better than the real-time quotation, i.e. the customer’s buying order price is lower than ICBC’s current selling price or the customer’s selling order price is higher than ICBC’s current buying price, and the order will be executed when the quoted price reaches the customer's order price.Stop-loss order means the order price is less favorable than the real-time quotation, i.e. the customer’s selling order price is lower than ICBC’s current buying price or the customer’s buying order price is higher than the ICBC’s current selling price, and the order will be executed when the quoted price reaches the customer's order price. OCO order means the combination of a take-profit order and a stop-loss order. When one of the two orders is executed, the other order will be automatically cancelled.
The customer may submit pending orders pursuant to the transaction instructions during trading hours, and effective periods of the pending order include 24 hours, 48 hours, 72 hours, 96 hours and 120 hours. Effective period of the pending order starts from the time that the pending order is handled and doesn’t discriminate trading and non-trading hours. Pending orders that are not settled during the effective period will automatically become invalid. The customer may cancel the unsettled pending orders during the trading or non-trading hours within the effective period of the pending orders. After transaction of the pending order is accepted, the funds or account-based metals needed to complete the pending order transaction will be frozen. Before the pending order is executed, cancelled or automatically invalidated, frozen funds or account-based metals in the relevant account are unavailable for other purposes.

VII. Threshold Quantity of Trading and Minimum Increment
Minimum quantity of the account-based metals transactions is 1 pound; and minimum increment of the transaction quantity is 1 pound. ICBC may adjust threshold quantities and minimum increments according to market conditions.
The customer is not subject to threshold quantity or minimum increment requirements if the customer sells an account-based metals product in full in a trading sub-account for “buy first, sell later” to close the position or buys an account-based metals product in full in a trading sub-account for “sell first, buy later” to close the position.

VIII. Issuance in Installments and Settlement Mode
ICBC publishes information about product of every issue, including the product name, starting date of transaction, ending date of transaction and settlement date through Internet banking and other channels. Starting date of transaction refers to the first trading day of the account-based metals of a certain issue; ending date of transaction refers to the last trading day of the issue; and settlement date refers to the date that ICBC handles fund settlement for the customer after product of the issue expires. The customer may trade the product from the starting date of transaction to the ending date of transaction. After a product expires (i.e. 24:00 on the ending date of transaction), the customer can’t continue to trade the product, except for automatic execution of the products that have been booked for conversion upon maturity. ICBC will announced the settlement price of a product on the settlement date, and in case that the customer’s trading account still has balance of this issue of product, ICBC will handle fund settlement for the product based on the settlement price at maturity.
Settlement price of USD account-based metals at maturity is the settlement price of relevant base metal futures contract on the New York Mercantile Exchange on the product’s ending date of transaction, and the same type of account-based metals denominated in USD cash and USD spot exchange and the “buy first, sell later” and “sell first, buy later” transactions adopt the same settlement price at maturity.
Settlement price of the same type of RMB account-based metals at maturity is divided into settlement price for “buy first, sell later” transactions and settlement price for “sell first, buy later” transactions, which are calculated respectively based on the settlement price of USD account-based metals at maturity and ICBC’s buying and selling rates for RMB-USD spot purchase and settlement transactions announced by ICBC at 23:30 on the working day prior to the settlement date.
Should relevant exchange doesn’t publish the settlement price of relevant base metal futures contracts in time, ICBC will adopt settlement price of relevant exchanges on the next trading day and correspondingly postpone the settlement date. Should relevant exchange still doesn’t publish the settlement price on the next trading day, ICBC will adopt the final transaction quotation of the account-based metals product on the ending date of transaction to handle fund settlement for the customer.

IX. Product Conversion
Product conversion refers to the transaction function that ICBC provides for its account-based metals customers under which ICBC automatically completes liquidation of the last issue of product and opens position for the next issue of product through system based on the customer’s instruction during the conversion period. The conversion function supports conversion of the same-currency and same-type account-based metals from the last issue to the next issue. It does not support conversion between products of different currencies or different trading types. Conversion is divided into real-time conversion and conversion upon maturity.
i. Real-time Conversion
Real-time conversion refers to the transaction that the customer submits the product conversion instruction during the product’s conversion period and ICBC completes the conversion operation based on the quantity designated by the customer and the real-time conversion price. The period from starting date of the next issue of product to the expiration date of the last issue of product is the conversion period of real-time conversion transactions. The customer may handle real-time conversion during trading hours of the conversion period. ICBC doesn't offer real-time conversion function during non-trading hours. Real-time conversion is a one-off and real-time operation, and the service can’t be booked. ICBC executes a conversion transaction when the customer submits an instruction.
ii. Conversion upon maturity
Conversion upon maturity refers to the transaction that the customer selects to convert the products when the last issue of product expires and ICBC completes the conversion operation on the next day after the last issue of product expires based on the conversion price on the expiration date and the conversion method selected by the customer. ICBC freezes the last issue of products held by the customer at 22:05 on the expiration date of the last product until the conversion period ends (generally 7:05 or later of the next day). The customer may initiate, change or close the conversion-upon-maturity function at any time except the freezing period (including non-trading hours before the last issue of product expires). The conversion-upon-maturity function will remain effective once being initiated, until the customer changes or closes the function.
Conversion upon maturity is divided into conversion by amount and conversion by quantity. Conversion by amount refers to the transaction that ICBC uses all of the proceeds from liquidation of the last issue of products held by the customer to open the maximum position on the next issue of products, and return the remaining fund (or security deposit) that is inadequate to purchase 1 pound of account-based metals to the customer’s fund account (or security account). Conversion by quantity refers to the transaction that ICBC opens the same quantity of position on the next issue of product for the customer based on quantity of the last issue of product held by the customer. If proceeds (or security deposit) from liquidation of last issue of product is adequate to open the same quantity of position on the next issue of product, ICBC will return the remaining fund (or security deposit) to the customer’s fund account (or security deposit account); and if sum of proceeds (or security deposit released) from liquidation of last issue of product and available balance of fund account (or security deposit account) is inadequate to open the same quantity of position on the next issue of product, ICBC will use proceeds (or security deposit released) from liquidation of last issue of product to open the maximum position for the next issue of product, and return the fund (or security deposit) that is inadequate to buy 1 pound of account-based metals to the customer’s fund account (or security deposit account).

X. Transaction Quotation
ICBC offers transaction quotation to customers based on comprehensive consideration of the movements of base metals contract prices at New York Mercantile Exchange, exchanges rate of RMB and domestic market liquidity, and may adjust the transaction quotation in light of the market conditions.
Transaction quotation for account-based metals includes bank’s buying rate and selling rate. Bank’s selling rate refers to the quotation at which the customer buys account-based metals from ICBC (i.e. ICBC sells account-based metals to the customer). Bank’s buying rate refers to the quotation at which the customer sells account-based metals to ICBC (i.e. ICBC buys account-based metals from the customer).

XI. Trading Hours
Trading hours for account-based metals shall be as follows:
i. Outlets:
Monday-Friday: trading hours published by the outlets that have launched this service.
ii. E-banking channels
Monday: 09:00-24:00.
Tuesday-Friday: 00:00~02:00, 09:00~24:00.
Saturday: 00:00~02:00.
ICBC may suspend all or part of account-based metals transactions on holidays in major international markets, China’s statutory holidays and actual rest days arising from holiday adjustments made pursuant to relevant regulations of the State or in the case of natural disasters, wars or other unpredictable, unavoidable and unconquerable events, or in the case of international political or economic incidents or emergencies or in the case of communication failure, system failure, power interruption, suspended market trading or other unexpected incidents or financial crisis or national policy changes or when the total net balance of Account Base Metal reaches it upper/lower limit, and shall, where possible, make a prior or timely announcement to customers on its official website (http://www.icbc.com.cn) or through other channels. During suspension, real-time trading and pending orders cannot be processed, pending orders that have become effective cannot be executed but the validity period of pending orders is not affected.

XII. Account Management
For account-based metals transactions, the customer shall designate his or her personal multi-currency debit card or settlement account current passbook opened with ICBC as the fund account for account-based metals transactions. After the customer’s application is accepted, ICBC will automatically open the customer’s trading account for account-based metals transactions. ICBC will automatically open the customer’s security deposit account when the customer conducts the first “sell first, buy later” transaction of account-based metals and transfers security deposit.
i. Fund account
Fund account is used for accounting the paying and receiving of funds in the customer’s account-based metals transactions. USD cash and spot exchange in the cash account shall not be converted to each other through account-based metals trading. Proceeds from sale of account-based metals bought in USD cash shall still be USD cash, and proceeds from sale of account-based metals bought in USD spot exchange shall still be USD spot exchange. ICBC rules for account management are applicable to the fund account.
ii. Trading account
Trading account is used for accounting the paying and receiving of account-based metals in the customer’s account-based metals transactions. Of the trading account, independent trading sub-accounts are established to record the account-based metals that are traded in USD cash, USD spot exchange and RMB, respectively. account-based metals on these sub-accounts can’t accumulate or offset. The “buy first, sell later” transactions and the “sell first, buy later” transactions shall have independent trading sub-accounts, and account-based metals on these sub-accounts can’t accumulate or offset.
iii. Security deposit account
Security deposit account is used for calculating receipt and disbursement of the security deposit for “sell first, buy later” as well as its profit and loss. Security deposit account is divided into RMB security deposit sub-account, USD cash security deposit sub-account and USD exchange security deposit sub-account. These three types of sub-accounts are mutually independent; and security deposits on these sub-accounts don’t accumulate or offset. Security deposits on same-currency security deposit sub-accounts can be consolidated. Security deposits on security deposit accounts can’t be directly withdrawn or used to apply for certificates of deposits or provide guarantee to other debts.
In a business area (a branch in a municipality directly under the Central Government, the banking department of a provincial branch, a branch in a city divided into districts, autonomous prefecture or league or a branch in one of selected cities that are not divided into districts) of ICBC, the customer shall designate one fund account only and open only one trading account and one security deposit account. But the customer may adjust the local personal multi-currency debit card corresponding to the fund account.

XIII. Interest Accrual and Charges
Funds on the customer’s fund account accrue interests based on requirements of the government regulatory departments and the demand deposit rate and interest accrual method published by ICBC; balance of account-based metals on the customer’s trading accounts does not accrue interests. Funds on the customer’s security deposit account do not accrue interests, and the customer may not directly withdraw cash from, apply for issuance of certificate of deposits or provide guarantee to other debts with funds on the security deposit account.
ICBC does not charge customers any fee for buying or selling account-based metals at quoted prices.

XIV: Transaction Limits
Pursuant to the national regulatory requirements, ICBC sets upper and lower limits on net total balance of account-based metals transactions on RMB accounts. Net total balance refers to the balance of account-based metals, netting the positive and negative positions, on all of the accounts held by the customer handling RMB account-based metals transactions.
When net total balance reaches the upper limit, the customer will be prohibited from handling real-time buying or submitting new pending buying order in the “buy first, sell later” transactions, but the customer may continue to handle real-time liquidation of long positions or submit the pending orders for liquidation of long positions in the “sell first, buy later” transactions. When the net total balance falls below the upper limit, the customer may continue to handle real-time buying or submit new pending buying order in the “buy first, sell later” transactions.
When net total balance reaches the lower limit, the customer will be prohibited from handling real-time sell trading or submitting new pending selling orders in the “sell first, buy later” transactions, but the customer may handle real-time liquidation of short positions or submit pending orders for liquidation of short positions in the “buy first, sell later” transactions. When the net total balance rises above the lower limit, the customer may continue to handle real-time selling or submit new pending selling order in the “sell first, buy later” transactions.

XV. Risk Disclosure
The customer shall fully know and understand possible risks before applying for account-based metals transactions. Below are a list of main risks and objective analysis of risk factors made by ICBC according to current market conditions and characteristics of account-based metals products. It is not an exhaustive list of risks in account-based metals transactions and none of the information below represents any market forecasts of ICBC.
i. Policy risk: account-based metals are products designed according to relevant laws and regulations currently in force. Any changes in the state’s macro policies, laws or regulations may affect normal account-based metals trading activities of customers and discontinue the business, which will cause losses to customers.
ii. Market risk: Any unfavorable movements of account-based metals prices on the world’s relevant account-based metals markets may cause losses to customers. In the circumstance that the customer first sells and then buys metals, wild fluctuation of the market prices may result in shortage of the customer’s security deposits and further trigger forced liquidation of the balance that the customer holds from the “sell first, buy later” transactions.
iii. Liquidity risk: Customers who hold account-based metals may face the risk of illiquid account-based metals when they have any demand for funding during non-trading hours; the expansion of bid-ask spread of ICBC due to market liquidity factors may put customers at a disadvantaged liquidity position.
iv. Operational risk: Customers may suffer unnecessary losses due to leakage of identity information, improper use of identity tools or operational errors.
v. Force majeure and emergency risk: Customers may suffer losses due to natural disasters, wars or any other unforeseeable, unavoidable or unconquerable events or international political, economic or other emergencies or communication interruption, system faults, power failure, market suspension or other unexpected events or financial crisis or national policy changes, which may affect normal account-based metals trading activities of customers.
vi. Other contingent risks: Due to reasons of government regulatory policies, ICBC sets upper and lower limits on the net total balance of account-based metals transactions on the RMB accounts, which may impact the normal RMB account-based metals transactions of customers.

XVI. Supplementary Rules
Unless otherwise specifically stated, times and dates referred to in this Product Brochure are Beijing Time.

This Product Brochure is formulated and revised by ICBC. ICBC will give a prior notice of any revision of this Product Brochure on its official website. Any customers who disagree with such revision during the notice period may raise their queries or comments through telephone banking 95588 or deregister themselves from account-based metals transactions before the new Product Brochure becomes effective. Customers failing to deregister upon expiration of the notice period or continue relevant operations after the notice period shall be deemed as acceptance of the revised Product Brochure.

Note: The information provided on this page is for reference only. Concrete business shall be subject to the announcement and provisions of the local outlet.


(2016-05-04)
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