From: Tazia Smith 4..a , To: jccvacation®gmail.com Cc: Vinit Sahni , Nay Guptiat i l . Paul Morris Vahe Stepanian Subject: Copper - positive momentum from China cap mkts reform Date: Mon, 12 May 2014 13:40:04 +0000 Inbar-Images: unnamed; unnamed(' ) Good Mornay Jeffrey - Your copper option is 5300.000 bid (431,250 pfi). vs. ref of 6883. This is up from 5239,583 as of Friday. Research and desk commentary is below. Bid as of 9:2Oam 912.3m spot ref 6883, 524O/mt. This compares to mid of $252/mt with 0 vol. 3240 represents 0.6% vol (0.75% standard. tightened it) Vega on the option Vega = $2O.27/m1 Source: DB Commodities Trading. 5/12/14 As you know. China announced its New National Nine Rules' (in contrast to the earlier 'National Nine Rules' issued in 2004). which outline meaningful changes to increase open- ness in Capital Markets out of Chita on 5/9. OB research summary below. bottomline takeaway: "Under such endeavor. China capital markets will be much more diverse. structured and transparent in the future. and will a) mobeze massive private savings: b) encourage inward portfolio flows: and c) lift market sentiment and valuation? From Matfs team: Topper is a popular choice for use as collateral in financing trades. Now China is proposing that local governments would be able to issue bonds rather than rely on. among other things. using copper as collateral for financng trades. Indeed it is expected that use of SPVs will be come increasingly difficult. This should be bearish for copper after the regulation is passed. Meanwhile. we think that before the regulation is passed. people are tryng to secure as much copper-backed financing as they can, which has resulted n a saarnbte for copper. and a spike in price. I would further qualify and say that the news announcement has not resulted n a scramble for physical copper yet. but an expectation for the scramble, which itself is sufficient to spike up the price.' 5/12/2014 Live Description Trade Date E