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4.1.12 Exchange of Underlying for Futures Contracts

An exchange of Underlying for Futures Contracts shall be permitted upon the satisfaction of the following conditions:

(a) the transaction is between two parties where one party is the buyer of the Underlying and the Seller of the Futures Contract and the other party is the seller of the Underlying and the Buyer of the Futures Contract;
(b) the seller of the Underlying has in its possession the Underlying to be delivered;
(c) the purchase and sale of the Futures Contract shall be simultaneous with the sale and purchase of an equal quantity of the Underlying;
(d) the transaction is at a price mutually agreed by the transacting parties; and
(e) the transaction is reported to the Exchange, and the Members maintain a complete record of such transactions together with the relevant memoranda.