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OTC Book-entry Bond Trading

☆ Introduction
OTC book-entry bond trading service ("OTC bond trading") is an ICBC service for customers to trade RMB bonds at ICBC domestic outlets or via Electronic Banking, as well as custody and settlement of bonds.
OTC Bonds are book-entry bonds tradable with the approval of the People's Bank of China at commercial banks and under tier-1 custody of China Central Depository & Clearing Co.,Ltd. Customers are not required to hold the certificate, but only open a custody ccount at the bond custody institution to record the holding.
Further information on the bond category, issuance size and offering period will be announced by the People's Bank of China and Ministry of Finance through related media.

☆ Target Clients
(I) Customers who wish to buy/sell bonds, well-experienced, able to bear the risk, hold certain knowledge about bond market and wish to gain from price spread.
(II) Customers who wish to allocate asset, well-experienced in bond investment, hold bond till maturity to earn stable coupon interest.

☆ Features
(I) Benefits of buying and trading book-entry T-bond over the counters of commercial banks:
1. Low credit risk, simple structure, strong liquidity, trading anytime, no interest loss.
2. Gain from the price spread as bid/ask prices of bonds change according to the interbank bond market.
3. Multi-channel trading. Book-entry T-bond can be bought/sold online via Internet Banking besides trading over the counters of commercial banks nationwide.
(II) Benefits of buying/selling OTC book-entry T-bond at ICBC:
1. ICBC is China's largest state-owned commercial bank with excellent credibility, strong capital base and has the largest turnover in bond. ICBC's well-developed service network is the greatest assurance to fulfill the needs of all investors.
2. No need to open a special bank account: ICBC OTC book-entry bond trading system allows customers to buy/sell bonds using their existing deposit accounts. No need to open a special bank account.
3. Settlement in real-time: The amount for buying/selling bonds is settled in real-time for maximizing the use of your investment amount and wealth management.
4. Various trading options: ICBC's large network of outlets allows customers to buy/sell bonds at different outlets, online or by phone without going to the trading market or bank outlet.

☆ Application Condition
Individuals or non-financial corporate clients in China holding valid identity document are all welcomed to open T-bond custody account at any counter of commercial banks for buying/selling T-bond.

☆ Sign up
You as an investor must hold a valid identity document and assign one A/C opened in ICBC under the same name as the bank A/C for trading bonds (bank A/C for trading OTC book-entry bond). Go to any ICBC outlet where the service is available, fill in the Bond Account Service Application Form. ICBC opens a bond custody A/C for you and gives you a "Bond Custody Account Card". You can also open the bond custody account directly via Internet Banking.
For individual customers, valid identity documents include: ID card or unexpired temporary ID card, permanent residence booklet, military ID card, passport. The bank account designated by customers should be the matching RMB current deposit account of the Peony Money Link Card. If someone opens the account on behalf, he/she must submit his/her valid identity document.
Institutional customers should provide the corporate business license, organization code certificate (public institution/social organization), valid identity document of the person-in-charge. If the account is opened by a company's subsidiary, a written authorization by legal representative should be provided. The bank account designated by institutional investors should be the RMB settlement account in self-service cards.

☆ Service Channel and Hours
The OTC bond trading service is available in all ICBC tier-1 branches and direct branches in China, as well as outlets in the main cities of each province.
Monday to Friday: 10:00--15:30. Announcement will be made at the ICBC web portal in the beginning of each year on the national/public holidays or subject to the observed dates specified by the People's Bank of China.

☆ Operation Guide
(I) Sign up OTC book-entry T-bond services at ICBC counter:
To buy/sell bonds, transfer custody of bonds or sign up other related services, open a bond custody account at the ICBC counter first. Then bring along own valid identity document and bond trading card (personal customers use Peony Money Link Card, dealers of institutional investors use self-service card) to the designated ICBC outlet and fill in the Bond Trading Certificate.
(II) Sign up OTC book-entry T-bond services via Telephone Banking:
Follow the voice prompts to enter your card number and password. Sign up Telephone Banking self-services, choose "Securities" -> "Bond". Under the self-service menu for OTC book-entry T-bond, you can buy/sell bonds or check details.
(III) Sign up OTC book-entry T-bond services via Internet Banking:
In Internet Banking, click "Online T-bond" to open a bond custody account. Choose the necessary options from the menu to trade OTC book-entry T-bond or check details.

☆ Tips
The prices of OTC book-entry T-Bond are closely related to market changes. Sharp judgment will bring additional gain. Bond price is inversely proportional to market interest rate. Interest rate going down will cause bond price going up. Interest rate going up will cause bond price going down. Interest rate is expected to rise when inflation comes as a result of fast economic growth. Customers can sell the bonds on hand to avoid loss caused by the decline of the bond prices. As interest rate really rises and bond prices falls, investors then buy bonds to wait for another opportunity. Investors may buy bonds if interest rate is expected to decline amid signs of economic recession, and sell the bonds later when interest rate really rises to cause bond price down. Real gain at this time will be higher than interest.

☆ Market Information
There are many ways for investors to find the market information of a bond: designated ICBC outlets, Telephone Banking (95588), ICBC website (www.icbc.com.cn), China Bond Information Network (www.chinabond.com.cn).
Customers can also look up the bond balance or trading details through 2 service channels: ICBC outlet or Telephone enquiry system of the China Central Depository & Clearing Co.,Ltd. When making enquiry at the ICBC counter, customers should use T-bond trading card and enter password. When checking through Telephone Enquiry System of China Government Securities Depository Trust & Clearing Company (400-666-5000 or 400-862-4365), customers should enter bond custody A/C No. and enquiry password. Initial enquiry password is the last 6 digits of ID No. (individual customer) or organizational code certificate (institutional customer). Zero will be inserted in front if less than 6 digits.

☆ Risks
The prices of OTC book-entry T-bonds depend on the market fluctuation. A loss in the price spread may be incurred if the market yield rises but bond net price declines. Customers should fully understand the market risk.
Customers after buying bonds may suffer loss arising from the bond price lower than its face value when interest rate goes up (loss due to price change). For customers who hold the bonds till maturity will not incur loss on top of receiving fixed coupon interest.

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