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Statement on Irregular Trading

Chancellor's handling of computer system errors, electronic trading system errors and "wrong quote" processing methods :

During trading hours, if the quotation of a product is affected due to the failure of the trading system, and the lag, deviation, or pause causes the quotation to have a difference by more than two US dollars per ounce (US$2.00) from the quotation provided by The Chinese Gold and Silver Exchange in the same time frame, the quotation by the trading system will be treated as “wrong quotations”. Pursuant to Section 2.4 of the Client Agreement regarding the Electronic Trading Services, the Dealer has the final discretion to alter or even cancel all orders in Clients’ trading accounts in the “wrong quotation” period, including long orders, short orders, hedging orders and profit limit / stop loss orders. Clients must fully accept the Dealer's decision and assume responsibility and risk arising out of or in connection with it.

Chancellor has summarized irregular trading activities encountered by peers and also put into consideration the actual needs of regular clients. The following outlines the definition of irregular trading :

1.Whenever clients apply for withdrawal, we will look into all trading activities since the last withdrawal request or, in the case of a new account, since the account's opening, up to the present withdrawal request. Based upon the turnover, if 50% of the transactions involved open positions that were held for less than 5 minutes before liquidation, we will conduct an examination on the account's transaction during this period to determine as to whether irregular trading was involved and the processing of the withdrawal would be postponed for 72 hours.

2.If 30% of the turnover in the client account suspected of conducting irregular trading involved opened positions that were held for less than 2 minutes, the account shall be defined as an "irregular trading account".

3.If 30% of the turnover in the client account suspected of conducting irregular trading involved opened positions that were hedged in less than 2 minutes, the account shall be defined as an "irregular trading account".

Handling of "Irregular Trading Account"

1.If the transactions within the examination period accumulated a trading loss up to 10% or more of the initial deposit, no action would be taken and the request for withdrawal will be processed.

2.If the transactions within the examination period accumulated a trading loss less than 10% of the initial deposit, an administrative cost for investigation of irregular trading activities equivalent to 10% of the initial deposit would be charged. The remaining balance will be processed for withdrawal and returned to the client.

3.If the transactions within the examination period accumulated a trading profit, all such profit shall be forfeited and an administrative cost for investigation of irregular trading activities equivalent to 10% of the initial deposit would be charged. The remaining balance will be processed for withdrawal and returned to the client.

Definition of Irregular Trading and Handling

To ensure fairness in online trading and protect the interest of general clients, Chancellor does not accept any trading activities making use of loopholes in the trading platform, network delay, network failure, quotation error or pricing system fault and is also determined to deter any trading activities conducted through the aid of plugin software (any third party plugin software not promulgated by Chancellor).

Note∶

Given that the mode of irregular trading comes in various forms, we may also suspend the operation of certain accounts suspected of involving in irregular trading even though it may not fall within the definition of an "Irregular Trading Account" as described above for examination to ensure the fairness in online trading. Chancellor reserves the right to suspend such account until the examination is completed. During the suspension, we will not process any request for service or trading transaction. Based upon the findings of the examination, we may consider to reactivate the account or resolve to arrangements as prescribed in the handling of "Irregular Trading Account". In all circumstances, Chancellor reserves the final right of interpretation.

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