Chapter 1 General Provisions
Article 1 To strengthen the management of derivatives trading by Shandong Hongqiao Aluminum Industry Holding Co., Ltd. (hereinafter referred to as the "Company") and its holding subsidiaries, standardize derivatives trading activities, prevent and control risks of aluminum price, exchange rate fluctuations, and improve the Company's derivatives trading management system and ensure the safety of the Company's assets, in accordance with the "Company Law of the People's Republic of China," "Securities Law of the People's Republic of China," "Shenzhen Stock Exchange Stock Listing Rules," "Shenzhen Stock Exchange Listed Company Self-Regulatory Supervision Guidelines No. 1 - Normative Operation of Main Board Listed Companies," "Shenzhen Stock Exchange Listed Company Self-Regulatory Supervision Guidelines No. 7 - Transactions and Connected Transactions," and other laws, regulations, rules, normative documents, and the "Articles of Association of Shandong Hongqiao Aluminum Industry Holding Co., Ltd." (hereinafter referred to as the "Articles of Association"), and in combination with the Company's actual situation, this system is hereby formulated.
Article 2 This system applies to the Company and its holding subsidiaries. When the Company and its holding subsidiaries engage in derivatives trading business, they shall obtain approval from the Company's board of directors or shareholders' meeting in advance; without the approval of the Company's board of directors or shareholders' meeting, the Company and its subsidiaries shall not engage in futures and derivatives trading business.
Article 3 For the purpose of this system, futures trading refers to trading activities with futures contracts or standardized options contracts as the underlying assets. For the purpose of this system, derivatives trading refers to trading activities other than futures trading, with swap contracts, forward contracts, and non-standardized options contracts and their combinations as the underlying assets. The underlying assets of futures and derivatives can be securities, indices, interest rates, exchange rates, currencies, commodities, etc., or a combination of the above.
Article 4 For the purpose of this system, the Company's hedging business refers to the Company's futures and derivatives trading activities aimed at managing specific risks such as foreign exchange risk, price risk, interest rate risk, and credit risk, which are basically consistent with the risks to be managed. The types of futures and derivatives products that the Company engages in for hedging purposes shall be limited to products, raw materials, and foreign exchange related to the Company's production and operation, and in principle, the types, scale, and duration of futures and derivatives shall be matched with the risk exposure to be managed. The futures and derivatives used for hedging shall have an economic relationship of mutual risk hedging with the risk exposure to be managed, so that the value of the relevant futures and derivatives and the risk exposure to be managed move in opposite directions due to the same risk factors.
The hedging business referred to in this system mainly includes the following types of trading activities: (1) Selling futures to hedge existing spot inventory; (2) Hedging fixed-price purchase and sale contracts that have been signed, including short hedging for raw material purchase contracts, long hedging for finished product sales contracts, and hedging for priced trade contracts in the opposite direction of the contract; (3) Hedging floating-price purchase and sale contracts that have been signed, including long hedging for raw material purchase contracts, short hedging for finished product sales contracts, and hedging for floating-price trade contracts in the same direction as the contract;