Necessity and Overview of Conducting Futures and Derivatives Hedging Business
Given the overseas investments and continuously growing international business of Junwei Electronics Technology Co., Ltd. and its subsidiaries (hereinafter referred to as "the Company"), it is necessary to conduct futures and derivatives trading to avoid and mitigate adverse impacts from fluctuations in exchange rates and interest rates on the Company's assets, liabilities, and profitability. The planned futures and derivatives trading will involve foreign exchange currencies that are the same as the primary settlement currencies used in the Company's operations. The counterparties for transactions conducted by the Company and its domestic subsidiaries will be financial institutions approved by the State Administration of Foreign Exchange and the People's Bank of China, which possess qualifications for foreign exchange derivatives trading. The Company will prudently assess the necessity of conducting derivative transactions abroad and the political, economic, and legal risks associated with trading in relevant countries and regions, fully considering factors such as settlement convenience, trading liquidity, and fluctuations in exchange rates and interest rates. The types and instruments of trading include, but are not limited to, commodity futures, commodity options, forward foreign exchange contracts, foreign exchange swaps, foreign exchange options, currency swaps, interest rate swaps, interest rate options, or combinations of the aforementioned products. The Company prohibits engaging in any speculative arbitrage activities related to derivatives.