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

I. Description
This is a service provided for the ICBC’s personal customers to purchase/sell crude oil via account in RMB or USD. The cruel oil is counted by share with no physical cruel oil withdrawn.

II. Target Customers
Personal customer who has full capacity to perform civil conduct and can bear related risks and passes the fitness assessment of the service

III. Types of Cruel Oil
According to quotation references, two types of cruel oil can be transacted via account:  North America Cruel Oil and International Cruel Oil. The North America Cruel Oil is quoted by referring to the price of light sweet crude oil futures of West Texas Intermediate (WTI) at New York Mercantile Exchange (NYMEX, which is subordinate to CME Group). However, the account-based International Cruel Oil is quoted by referring to the price of Brent cruel oil futures at NYMEX or Intercontinental Exchange (ICE).

IV. Transaction Currency and Unit
Transaction currencies can be RMB and USD, and the latter includes USD banknote and USD spot exchange. The quotation unit of cruel oil transaction via RMB account is RMB/barrel and the settlement unit is RMB. The funds shall be accurate to the second decimal place (rounded). The quotation unit of cruel oil transaction via USD account is USD/barrel and the settlement unit is USD. The funds shall be accurate to the second decimal place (rounded).

V. Transaction Type
There are two transaction types, i.e. transactions in which purchases are made before sales and the ones in which sales are made before purchase. These two types of transactions are independent of each other and are handled separately.
In the first type, customer purchases cruel oil and then sells it after it is accredited into the account. The sale amount shall not exceed the purchase amount. The purchase of cruel oil by this type is called “open a position”, and the sale is called “close a position”.
In the second type, customer sells first, and then buys part or all of the account-based cruel oil already sold. The purchase amount shall not exceed the sale amount. The sale of cruel oil by this type is called “open a position”, and the purchase is called “close a position”.

VI. Transaction Method
As for transaction methods, customers can make transaction upon spot delivery or pending orders.
1. Transaction upon spot delivery refers to the spot deals of cruel oil made by customers at the ICBC’s quotation.
2. Pending order refers to that customers place an order and purchase/sell cruel oil at the order prices when the ICBC’s quotation meets their demands. The orders include profit-taking order, stop-loss order and two-way order. Profit-taking order refers to the one whose price is higher than the spot quotation. The customer purchases precious metals at a price lower than spot bid price or sells precious metals at a price higher than spot ask price. The order is closed when quotation reaches profit-taking price. Stop-loss order refers to the one whose price is lower than spot quotation. Customers sell precious metals at a price lower than spot bid price or purchases precious metals at a price higher than the spot ask price. The order is closed when quotation reaches stop-loss price. Two-way order refers to the combination of profit-taking order and stop-loss order. The closure of either one of them causes the annulment of the other.
Customers can place an order during business hours according to the tips. The validity period of the order is the integral multiple of 24 hours and is counted continuously. The shortest period is 24 hours while the longest is 120 hours. There is no distinction between business hours and non-business hours. The orders which are expired or are not completed before adjustment time-point will be annulled automatically. customers can cancel the uncompleted order within business hours or non-business hours during the validity period. Once the order is proceeded, the funds or cruel oil for transaction will be frozen and can’t be used for other purpose until the order is closed, canceled or lose effect automatically.

VII. Transaction Threshold and Minimal Increment
Both the transaction threshold and the minimal increment are 0.1 barrel. The ICBC will make adjustment according to market conditions.
If a customer purchases and then sells all of account-based cruel oil of a certain type from a sub-account to close a position, or if the customer sells and then purchases all of account-based cruel oil of a certain type from a sub-account to open a position, there are no restrictions on the transaction threshold and minimal increment.

VIII. Product Release and Settlement
According to whether or not the transaction of cruel oil can be made continuously, two types of cruel oil products are available for transaction via account: term-specific products and continuing products.
i. Term-specific products
The term-specific account-based cruel oil products are released by installment and products of each installment are named by “transaction currency” + “type of cruel oil” + “reference agreement No.” (two-digit year + two-digit month). the ICBC releases the product’s name as well as starting date, ending date and settlement date of the transaction through the Internet banking. The starting day of transaction is the first business day of a certain product, while the closing day is its last business day. The settlement day is the day when the ICBC handle settlement for customers after the product becomes expiration.
Customers can purchase and sell the product during business days from the starting day to the ending day. After the product expires (i.e. 24 hours after closing date), customers can’t make transactions any more, except on the products which have been set to renew automatically.upon expiration. The ICBC will release the settlement price of the product before the settlement date. If the customer has a balance of the product in the account, the ICBC will make settlement at the settlement price in the ending day.
The settlement price of account-based cruel oil transacted in USD is the settlement price of cruel oil futures in the international market at the ending day. The settlement prices are the same for cruel oil transacted in USD banknote and USD spot exchange, and for buy-before-sell and sell-before-buy transactions. The settlement price of North American Cruel Oil transacted via account is the settlement price of light sweet cruel oil futures (WTI) at NYMEX on the futures contract of the recent trading month at the ending day of North American Cruel Oil; while that of International Cruel Oil transacted via account is the settlement price of Brent cruel oil futures at NYMEX or ICE on the futures contract of the recent trading month at the ending day of International Cruel Oil.
The settlement prices of the same account-based cruel oil transacted in RMB are different due to different transaction types. The settlement price of cruel oil transaction in which purchase is made before sale is calculated according to the settlement price of account-based cruel oil transacted in USD; while that of cruel oil transaction in sale is made before purchase is calculated according to the bid price and ask price of spot exchange at RMB-USD exchange rate released by the ICBC at 11:30 p.m. the day before the settlement day.
If related exchanges fail to release the settlement price of cruel oil futures, the ICBC will use the settlement price at related exchanges on the next business day. The settlement day will be postponed accordingly. If the related exchanges fail to release the settlement price on the next business day, the ICBC will adopt the quotation of the cruel oil at the ending day to make settlement for customers.
ii. Continuing products
There is no expiration date for continuing account-based cruel oil products. The products are named by “transaction currency” + “type of cruel oil”.
When the product is valid, the cruel oil contract term at exchanges referred by the continuing product will be adjusted on a regular basis and the shares of continuing account-based cruel oil product will also be adjusted accordingly. However, the customer’s total assets will remain unchanged after the adjustment. The ICBC will publish the adjustment date in advance through the Internet banking and mobile banking. After the transaction is closed at the adjustment day, the ICBC will calculate the shares of product that shall be held by customers after the adjustment and update the positions according to the shares held by customers before the adjustment and prices of shares before and after the adjustment. Meanwhile, the ICBC will return the capital that is insufficient for the minimal transaction unit, or release related security deposit. The customer’s assets remain unchanged after the adjustment and the ICBC will not charge for it. Position before adjustment * price of shares before adjustment = Position after adjustment * price of shares after adjustment + capital returned (security deposit). The prices of shares before and after adjustment shall refer to the settlement price of contracts at exchanges at the adjustment day and the bank’s exchange rate at the given day. Customers can inquire relevant information through Internet banking and mobile banking.
In general, the ICBC begins to freeze the positions of continuing account-based cruel oil product and adjust shares at 24:00 on the adjustment day. Transactions will be resumed from 9:00 the next day.

IX. Product Term Conversion
It is a service provided by the ICBC for customers who hold term-specific account-based cruel oil products in account. The system can automatically square the positions of the previous installment and build positions of the next installment according to customer’s orders with the total assets remaining unchanged. Products of the same currency and transaction type can be converted from the previous installment to the next installment. The conversion can’t be made between products of different transaction currencies and types. The conversion types include real-time conversion, on-demand conversion and conversion upon maturity.
i. Real-time conversion
After a customer gives orders during the conversion period, the ICBC will start conversion according to the quantity designated by the customer and real-time conversion prices. The conversion period is from the day when the transaction of next installment starts to the day when the transaction of the previous installment ends. Customers can make real-time conversion within business hours during conversion period. Real-time conversion can’t be made during non-business hours. Real-time conversion is a one-time and real-time operation. Customers can make conversion upon one order and can’t make appointment.
ii. On-demand conversion
A customer shall make an appointment and select the conversion time-point from fixed time-points provided by the ICBC. The ICBC will handle the conversion according to the conversion price and means selected by the customer at the conversion time-point. The ICBC will freeze the quantity of products of the previous installment held by the customer 25 minutes prior to the fixed time-point appointed by the customer. The products will generally be frozen for over 30 minutes until the end of conversion. The customer can open or close on-demand conversion at anytime (including the non-transaction period before the expiration of the products of the previous installment) except for the freezing period. Once the customer opens it, the on-demand conversion will be in effect until the customer closes it.
On-demand conversion is divided two types: conversion with fixed amount and conversion with fixed quantity. In the first type, all of the funds earned by selling products of the previous installment (or security deposit released) will be used to purchase products of the next installment as many as possible (the customer shall first supplement the security deposit required for transaction in which sales are made before purchase). The funds (or security deposit) which are insufficient for 0.1 barrel will be returned to the customer’s fund account (or margin account). In the second type, the customer will purchase products of the next installment with the quantity equal to that of products of the previous installment. If the funds earned by selling all products of the previous installment (or security deposit released) is sufficient to purchase the same quantity of products of the next installment (the customer shall supplement the security deposit required for transaction in which sales are made before purchase), the surplus funds (or security deposit) will be returned to the customer’s fund account (or margin account). If the funds earned by selling all products of the previous installment (or security deposit released) and the available balance of the customer’s fund account (or margin account) are insufficient to purchase the same quantity of products of the next installment, the funds earned by selling all products of the previous installment (or security deposit released) will be used to purchase products of the next installment as many as possible (the customer shall supplement the security deposit required for transaction in which sales are made before purchase). The funds (or security deposit) insufficient for 0.1 barrel shall be returned to the customer’s fund account (or margin account).
iii. Conversion upon maturity
Conversion upon maturity means that customer choose to make conversion upon the maturity of products of the previous installment. The ICBC will conduct the conversion, according to the settlement price of the products of the previous installment and that of products of the next installment, by means selected by the customer on the next day after the products expire. The ICBC will freeze the quantity of products of the previous installment held by the customer at 10:05 p.m. at the ending day. The products will generally be frozen until or after 7:05 a.m. the next day when the conversion is finished. The customer can open or close conversion upon maturity at anytime (including the non-transaction period before the maturity of products of the previous installment) except for the freezing period. Once the customer opens it, the service will be in effect until the customer closes it.
Conversion upon maturity includes conversion with fixed amount and conversion with fixed quantity. Specific details are identical to those of on-demand conversion.

X. Quotation
The ICBC will quote customers by referring to the prices of cruel oil in the international market, RMB exchange rate in China and market liquidity. Necessary adjustments will also be made depending on market conditions.
The quotation includes ICBC’s bid price and ask price. ICBC’s bid price is the quoted price at which the ICBC purchases crude oil from customers (or customers sell crude oil to the ICBC). ICBC’s ask price is the quoted price at which the ICBC sells crude oil to customers (or customers purchase crude oil from the ICBC).

XI. business hours
Business hours of cruel oil are as follows:
i. At outlets:
From Monday to Friday: Cruel oil can be transacted within business hours released by the ICBC outlets which provide this service.
ii. Through e-banking
Monday: from 9:00 a.m. to 0:00 p.m.
From Tuesday to Friday: from 0:00 a.m. to 4:00 a.m.; from 9:00 a.m. to 0:00 p.m.
Saturday: from 0:00 a.m. to 4:00 a.m.
The ICBC may suspend all or part of account-based cruel oil transactions due to vocations, public holidays and rest days adjusted according to national regulations in major international markets; or unforeseeable, unavoidable and insurmountable force majeure including natural disasters and wars; or international political and economic events; or accidents such as communication failure, system failure, power off and transaction suspension in markets; or financial crisis and the change of national policies; or the fact that the net amount of account-based cruel oil has reached the upper limit or lower limit. The ICBC will inform customers through its official website (http://www.icbc.com.cn) or other means in advance or in real time. During transaction suspension, customers can’t make real-time transaction or place orders. The orders which have been handled can’t be carried out. However, the calculation of validity period of orders will not be affected.

XII. Account Management
To apply for the service, customers shall take their ICBC personal multi-currency debit card as the fund account. After a customer finished application, the ICBC will automatically open the account for cruel oil transaction for the customer. When a customer makes cruel oil transaction in which sale is made before purchase for the first time and pays for security deposit, the ICBC will automatically open the margin account for the customer.
i. Fund account
The fund account is used to check receipt and payment of the transaction funds for account-based cruel oil. The USD banknote and USD spot exchange in the fund account can’t be converted to each other by transaction. The cruel oil which is purchased in USD banknote can only be sold in USD banknote, while that purchased in USD spot exchange can only be sold in USD spot exchange. The ICBC’s related account management regulations apply to the fund account.
ii. Transaction account
Transaction account is used to check the sale and purchase quantity of cruel oil. Customers shall establish independent sub-accounts for account-based International Cruel Oil and North America Cruel Oil. Quantities of cruel oil in the two sub-accounts can’t accumulate or counteract. Customers shall establish independent sub-accounts for cruel oil transaction in USD banknote, USD spot exchange and RMB.Quantities of cruel oil in the three sub-accounts can’t accumulate or counteract. Customers shall establish independent sub-accounts for cruel oil transaction in which purchase is made before sale and for transaction in which sale is made before purchase. Quantities of cruel oil in the two sub-accounts can’t accumulate or counteract.
iii. Margin account
Margin account is used to calculate receipt/payment and profit/loss of security deposit of the transaction in which sale is made before purchase. Margin account includes sub-account of RMB margin account, sub-account of USD banknote margin account and sub-account of USD spot exchange margin account. Such three sub-accounts are independent of each other and security deposit in them can’t accumulate or counteract. The security deposits for North America Cruel Oil and International Cruel Oil in sub-accounts, whose security deposits are of the same currency, can be merged.
In one region, customers can only designate one fund account and establish one transaction account and one margin account at the ICBC branches (including the ICBC branches in municipality directly under the central government, outlets of the ICBC provincial branch, the ICBC municipal branches in cities with districts, ICBC autonomous prefecture branches, ICBC league branches and some ICBC municipal branches in cities without districts). However, customers can change their local personal multi-currency debit cards bound with fund accounts.

XIII. Interest Accrual and Charges
Interest of the fund account shall be calculated and paid according to the interest accrual methods on demand deposit stipulated by related national supervision department and the ICBC. The balance of cruel oil in the customer’s transaction account can’t bear interest and can’t offer security to other debts. The funds in the customer’s margin account can’t bear interest, can’t be cashed directly, can’t be used as deposit certification and can’t offer security to other debts.
Customers shall trade account-based cruel oil at the quotation with no fees charged by the ICBC.

XIV. Transaction Limit
According to national supervision regulations, the ICBC sets the upper and lower limits for the net amount of account-based cruel oil transacted in RMB. Net amount of transaction refers to the net amount of account-based cruel oil held by customers after offsetting positive positions with negative positions.
When the net amount of transaction reaches the upper limit, customers can’t build positions in real-time or place new purchase orders for transaction in which purchase is made before sale. However, the transaction in which sale is made before purchase will not be affected. After the net amount of transaction restores to the level within the limit, customers can resume the operations of building positions in real-time or placing new purchase orders for transaction in which purchase is made before sale.
When the net amount of transaction reaches the lower limit, customers can’t close positions in real-time or place new sale orders for transaction in which sale is made before purchase. However, the transaction in which purchase is made before sale will not be affected. After the net amount of transaction restores to the level within the limit, customers can resume the operations of closing positions in real-time or placing new sale orders for transaction in which sale is made before purchase.

XV. Risk Warning
Customers shall be fully realize and understand all kinds of risks before trading account-based cruel oil. The following is a list of major risks and objective analysis provided by the ICBC based on current market conditions and features of cruel oil transactions. However, it doesn’t cover all risks during the transaction and doesn’t show the ICBC’s forecast about the market.
i. Policy risks: The account-based cruel oil is a product which is designed according to existing laws, regulations and supervision rules concerned. The change of national macro policy, laws, regulations or supervision rules may influence customers’ normal transaction, or even cause the closure or suspension of the service, as a result of which, customers may suffer loss.
ii. Market risks: Customers may suffer loss due to the headwinds in international cruel oil market. As for transactions in which sale is made before purchase, dramatic turbulence in the market may lead to the insufficient security deposit. As a result, the quantity of sale-before-purchase trade held by customers is forced to be squared.
iii. Liquidity risks: Customers may have difficulties in cashing in the products they hold if they meet fund demand during non-business hours. Customers may find themselves in a disadvantageous situation if the spread of the ICBC expands due to the market liquidity.
iv. Operation risks: Customers may suffer losses due to the disclosure of ID information, misuse of identity authentication method or misoperations.
v. Force majeure and emergencies risks: Normal transaction of account-based cruel oil may subject to unforeseeable, unavoidable and insurmountable force majeure including natural disasters and wars; or international political and economic events and emergencies; or accidents such as communication failure, system failure, power off and transaction halt in markets; or financial crisis or the change of national policies. Customers may suffer losses because of that.
vi. Other contingent risks: The ICBC sets the upper and lower limits for net amount of account-based cruel oil transaction in RMB according to national supervision policies. This may affect normal transactions of account-based cruel oil.

XVI. Supplementary Provisions
If not specified, the date and time mentioned in the description refer to Beijing Time.
The product introduction is formulated and modified by the ICBC that will inform customers of any modifications of the introduction in advance on its official website. During the period of informing, customers who have objections to the modifications can make consultant, bring forward an opinion, or cancel account-based cruel oil by calling 98855 before release of the new products. Customers who don’t make cancellation or continue to implement related operations after being informed shall be deemed to have accepted the modified product introduction.

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. The ICBC reserves the right of final explanation.


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