1.1 In normal circumstances, the Exchange would consider that a cross trade was not prearranged if there is a time lag of ten (10) seconds between the entry of the first and second legs of the orders. However, if the time lag is less than ten (10) seconds, or the Exchange nevertheless suspects a cross trade was pre-arranged, the Member or the Approved Trader would have to satisfy the Exchange otherwise.

1.2 The following are examples on the application of Rule 4.1.10:

The Contract is NKH'06 with a tick size of 5 points.

Example	Existing Bid	Existing Offer	Last traded price
(a)	11710	11740	11740
(b)	11710	11740	11740
(c)	None	None	11740

Example (a)

The Approved Trader receives buy and sell orders at the same time and at price of 11715. The Approved Trader can expose either the buy or the sell order first.

Reason: Both the price of buy and sell orders are better than the prevailing 11710 bid and 11740 offer respectively.

Example (b)

The Approved Trader receives buy and sell orders at the same time and price at 11740. The Approved Trader shall expose the buy order first.

Reason: The buy order is a more attractive order than the sell order because there was an existing 11740 offer waiting to be "lifted".

Example (c)

The Approved Trader receives buy and sell orders at the same time and price at 11715. The Approved Trader shall expose the sell order first.

Reason: The sell order has a more attractive price because the opposite trader who "lifts" the offer will be buying at a price lower than the last traded price of 11740. On the contrary, the buy order has a less attractive price because the opposite trader who "hits" the bid will be selling at a price lower than the last traded price of 11740.