Guangdong Chaohua Technology Co.Ltd(002288)
Financial derivatives transaction feasibility report
1、 Purpose of carrying out financial derivatives trading business
Due to the operation and management needs of the company and avoiding the risk of changes in exchange rate and interest rate, the company plans to carry out financial derivatives trading.
2、 Types of financial derivatives trading business to be carried out
The financial derivatives mentioned in this system include but are not limited to forward, option, swap (SWAP), futures and other products or a combination of the above products, and the corresponding underlying assets include interest rate, exchange rate, currency, etc.
3、 Proposed financial derivatives trading business plan
According to the company's financial derivatives trading management system, in combination with relevant laws and regulations and the actual business needs of the company, the company and its subsidiaries plan to carry out financial derivatives business with a total amount of no more than RMB 300 million or equivalent foreign currency. The service life of the above amount is valid within 12 months from the date of deliberation and approval by the board of directors of the company. Within the validity of the above amount and resolution, it can be recycled and rolled. If the duration of a single transaction exceeds the validity of the resolution, the review procedures and the review amount shall be performed before the expiration of the validity.
4、 Accounting principles for financial derivatives
In accordance with the relevant provisions and guidelines of accounting standards for Business Enterprises No. 22 - recognition and measurement of financial instruments, accounting standards for Business Enterprises No. 24 - hedge accounting and accounting standards for Business Enterprises No. 37 - presentation of financial instruments, the company conducts corresponding accounting treatment for the financial derivatives trading business to be carried out, reflecting the relevant items of the balance sheet and income statement.
5、 Risk analysis of financial derivatives investment
1. Price fluctuation risk: the market risk of loss caused by the price change of financial derivatives due to the fluctuation of the underlying interest rate, exchange rate and market price.
2. Internal control risk: financial derivatives trading business is highly professional and complex, which may cause risks due to imperfect internal control mechanism.
3. Liquidity risk: the risk that the transaction cannot be completed due to insufficient market liquidity.
4. Performance risk: there is a risk of breach of contract due to failure to perform the contract when the contract expires.
5. Legal risk: the change of relevant laws or the violation of relevant legal systems by counterparties may cause the contract to be unable to be executed normally and bring losses to the company.
6、 Risk management measures
1. Clarify the trading principles of financial derivatives: the trading of financial derivatives is based on the principle of hedging, and adjust the operation strategy in time in combination with the market situation to improve the hedging effect.
2. System construction: the company has established the financial derivatives trading management system, which clearly stipulates the authorization scope, approval procedures, risk management and information disclosure of derivatives trading, which can effectively regulate the trading behavior of financial derivatives and control the trading risk of financial derivatives.
3. Product selection: before financial derivatives trading, conduct comparative analysis between multiple counterparties and multiple products, and select the financial derivatives most suitable for the company's business background, strong liquidity and controllable risk to carry out business.
4. Counterparty Management: carefully select the counterparty engaged in financial derivatives business. The company only carries out financial derivatives trading business with financial institutions such as legally qualified large commercial banks to avoid possible legal risks.
5. Specially assigned person: the company's management representative, the company's financial department, the securities department, the audit department and other relevant departments shall establish a special working group to be responsible for the risk assessment before the trading of financial derivatives, analyze the feasibility and necessity of the trading, be responsible for the specific operation of the trading, timely report the risk in case of major changes in the market, evaluate the changes and put forward feasible emergency stop loss measures.
Guangdong Chaohua Technology Co.Ltd(002288) board of directors March 30, 2002
