Chapter 1 General Principles
Article 1
To standardize the financial derivative trading business and related information disclosure of Xiamen Hongxin Electronic Technology Group Co., Ltd. (hereinafter referred to as "the Company") and its subsidiaries, strengthen management of financial derivative trading, prevent and control business risks, improve the management mechanism for financial derivative trading, and protect the rights and interests of investors and the Company, this system is formulated based on relevant laws, regulations, and the Company's Articles of Association.
Article 2
The term "financial derivatives" in this system refers to products such as foreign exchange, futures, options, forwards, swaps, etc., traded on-exchange, off-exchange, or in non-trading forms, or combinations thereof. The underlying assets include securities, indices, interest rates, exchange rates, currencies, commodities, etc. Settlement can be through physical delivery or cash difference, and leverage trading methods such as margin, guarantees, and pledges can be used, as well as unsecured credit trading methods.
Article 3
This system applies to the Company and its subsidiaries included in the consolidated financial statements. Subsidiaries may not engage in financial derivative trading without the approval of the Company's shareholders' meeting or board of directors. The Company and its subsidiaries must follow the decision-making procedures and information disclosure obligations as stipulated in this system when conducting related business.
Chapter 2 Basic Management Principles
Article 4
The Company and its subsidiaries must strictly comply with relevant national laws, regulations, normative documents, and the provisions of this system when conducting financial derivative trading.
Article 5
The Company must adopt a risk-neutral approach in financial derivative trading, adhering to the principles of legality, prudence, safety, and effectiveness. It should maintain scientific decision-making, cautious operations, and strict risk control, avoiding blind investments and illegal operations.
Article 6
The Company shall not engage in financial derivative trading solely for profit. All trading activities must be based on normal production and operations, relying on specific business activities, with hedging as the core purpose, focusing on avoiding and mitigating exchange rate risks, interest rate risks, and major raw material price fluctuation risks to achieve cost locking and risk avoidance. The futures varieties for hedging must be limited to products or raw materials related to the Company's production and operations; the quantity of futures hedging shall not exceed the corresponding scale of spot transactions, and the holding period of futures must match the spot hedging pricing cycle.
Article 7
The varieties, scale, and direction of financial derivative contracts must match the business background and cash flow, and the contract duration shall not exceed the term specified in the business contract.
Article 8
The Company and its subsidiaries may only conduct financial derivative trading with financial institutions that have legal qualifications and good credit for such business, and may not trade with other organizations or individuals outside of these institutions. When conducting derivative trading with related parties that meet the above conditions, in addition to complying with this system, they must also adhere to the "Related Party Transaction Decision-Making System" and relevant service agreements signed with related parties.
Article 9
The Company and its subsidiaries must establish financial derivative trading accounts in their own names and may not use others' accounts for trading.
Article 10
The Company must have its own funds that match the financial derivative trading and may not use raised funds directly or indirectly for derivative trading. It must strictly control the scale of funds according to the trading limits approved by the board of directors or shareholders' meeting, ensuring it does not affect the Company's normal operations.