I. Introduction
This is a service that ICBC acts as the authorized agent to trade and settle bonds in China interbank market on behalf of customers. Bond settlement is a service that ICBC settles bonds on behalf of customers (financial institutions and non-financial institutions). Bond trading means ICBC, mandated by the customers who have signed up bond settlement service, buys/sells bonds in China interbank market.

ICBC bond trading and settlement services mainly include:
- Open, close bond custody A/C and register the account in government authority;
- Settle bonds (repurchase bonds, buy/sell cash bonds) as directed by the instruction of the customers;
- Ask price in interbank bank on behalf of customers, buy back bonds from customers according to the quoted price or buy/sell cash bonds with the counterparty based on the order placed by the customers;
- Provide latest market news, investment suggestions.

II. Target Clients
Companies/organizations in China (large corporations, listed companies, large government authorities, public institutions, corporate annuity management organizations, housing fund management companies, small-and-medium financial institutions). Organizations outside China who wish to invest in China interbank bond market - central banks, monetary authorities, RMB clearing banks in Hong Kong/Macau, banks participating in cross-border RMB settlements, RQFII.

III. Advantages
(I) Main features
1. One direct channel for customers to buy/sell bonds in China interbank bond market.
2. Diversify asset allocation, information disclosure (listed companies), as required.
3. Highly efficient bond settlement and trading services, customers have the absolute right to allocate the bond assets under their names.
4. Latest market news and investment suggestions to serve clients' business needs.

(II) ICBC in interbank bond market
1.Proven expertise
ICBC was among the first batch of members involved in the opening of interbank market in June, 1997. Over the course of more than a decade, ICBC has accumulated rich experience.

2.Fully certified
ICBC is one of the banks in the first batch certified as a market maker in interbank bond market, Class 1 trader in open market, Class A member for bond syndication, Class A member for policy financial bond syndication and certified agent for bond settlement. ICBC is one of the commercial banks having the highest number of certifications for RMB business in China interbank market.

3. Leading market position
For many years ICBC is the largest investment institution in interbank bond market in terms of asset scale. Around 15-20% of bonds in interbank market are under the custody of ICBC.

ICBC is one of the largest lenders in RMB interbank market topping the league table for consecutive years.

ICBC, as the market maker for RMB bonds and interest rate swaps, is the most active trader in interbank bond market, OTC bond market and interest rate swap market. For many years in succession ICBC sits on the top of league table.

ICBC remains as the market leader in underwriting non-financial corporate debt instruments, securing the highest market shares for five years in a row from 2007 to 2011.

4. Strong market influence
ICBC won numerous awards for many years in succession: Most Influential Member ("CFETS"), Most Active Bond Trader ("CFETS"), Best Derivative Deal ("CFETS"), Excellent Settlement Member of the Year in Bond Service ("CCDC"), Excellent Settlement Member of the Year in Bond Brokerage Service ("CCDC"), Best Market Maker ("NAFMII").

5.Proven track record
ICBC is one of the first commercial banks to open bond trading and settlement services. People's Bank of China announces bond settlement volume starting from 2006. Since then, ICBC heads the bond custody ranking for China with a market share of 28.61%. For many consecutive years ICBC has been named "Excellent Settlement Member in Bond Brokerage Service" by China Central Depository & Clearing Co., Ltd.

(III) Advantages
1. Competitive bond prices and trading services backed by solid financial position in RMB funds, intensive operation, numerous counterparties and a professional well-versed team in bond investment and trading.

2. A professional team and cutting-edge business management system ensures highly efficient, fast bond trading and settlement services.

3. Excellent research team provides comprehensive latest market news, investment suggestions and dynamic portfolio management policies.

IV. Application Conditions
Bond settlement services offer one new channel for customers to invest in bonds or raise fund in inter-bank bond market through ICBC as the agent.

Domestic customers who are well-capitalized and need to invest or trade bonds are welcomed to apply. Overseas customers who wish to enter China interbank bond market must be approved by People's Bank of China first.

V. Service Channel and Hours
For domestic customers, those who are eligible are welcomed to apply at ICBC sub-branches or branches where the services are available, during business hours. ICBC sub-branches or branches will check out the customers and forward the A/C opening documentation to Head Office.

Overseas institutional customers are welcomed to contact ICBC Global Market Department directly. Contact: Liu Zheng, Tel: 010-66104189.

VI. Operation Guidelines
(I) Submit application and necessary documentation
Once consensus is reached with ICBC, submit necessary certification, compliant and valid documentation, documents and forms for opening bond custody A/C, open an account in ICBC sub-branch/branch for clearing, sign with ICBC the Agreement on Bond Trading and Settlement Services.

(II) Open bond custody A/C, bond trading A/C, and register in People's Bank of China
Open bond custody A/C, bond trading A/C (for overseas customers only), register in People's Bank of China.

(III) Bond trading and settlement
Bond trading: ICBC checks out the price in interbank market as required by the customer and finishes the buying or selling with the customer directly, or buys/sells bonds with the counterparties as instructed by customer according to the regulatory rules.

Bond settlement: Customer sends bond settlement instruction to ICBC as agreed in the contract. ICBC checks each order and settles with the customer. If necessary, ICBC can issue deal slip and inform the balance in bond custody account.

VII. Example
In September 2011, a company authorized ICBC as the settlement bank to open Type C bond custody A/C in China Central Depository & Clearing Co., Ltd. The company wished to buy bonds to get more income from the idle cash. In November 2011, the company bought 6-month short-term bonds with a face value of RMB 100 million from the inter-bank bond market, at 5.4% yield which was 190BP higher than the interest rate of bank deposit of the same term. ICBC as the settlement bank completed the settlement and delivered the bonds. In December 2011, the company received a goods payment of RMB 200 million from its downstream company. The amount sat idle. The company bought bonds through ICBC with an agreement to resell them at a rate of 3% and lent to market RMB 200 million. The tenor was one month, reverse repo rate was 151 BP higher than the interest rate of 7-day call deposit. ICBC as the settlement bank completed the settlement and delivered the bonds.

VIII. Risk Warning
(I) Bond price can go up or down in the market. Pay attention to market risk.
(II) Bonds on hand may be difficult to sell in case of insufficient liquidity in the market.
(III) Credit bonds traded in interbank bond market may involve credit risk. Invest carefully.

Note: Information herein is for reference only. Refer to the announcements and regulations of local outlets for further details. Industrial and Commercial Bank of China Limited reserves the final right of interpretation.