(Yicai Global) Nov. 1 -- Recently, people's court of Licheng District of Jinan city, capital of East China's Shendong province, made its first-instance judgment in a dispute over an investment on spot platform, ruling that Tianjin Precious Metals Exchange (TPME) organized illegal futures trading, and declared all transactions involved invalid. TPME shall compensate the plaintiff investors with CNY900,000 (USD136,000). However, Yicai Global learned that TPME is not satisfied with the adjudication and will appeal against the ruling.

The case materials show that the plaintiff Li traded silver spot with TPME from November 2011 to May 2012, with a successive total investment of about CNY1.3 million with 192 transactions concluded, suffering a total loss of about CNY910,000.

TPME was founded in 2008, and in accordance with its official website, the rules for silver spot trading are as follows: first, TPME will offer the quotation of the guide price of silver spot based on the price in London silver spot market and by integrating the price in domestic silver market and the yuan-dollar exchange rate. Then, its member company will offer the bid and ask price based on the information and some point difference. Investors can make margin trading, which accounts for 8 percent to 40 percent of the trading amount.

People's court of Licheng District believed that the so-called trading mode of deferred spot delivery in this case is an illegal futures trading in essence, and there is no physical delivery of silver spot or delayed physical delivery in the involved 192 transactions which were directly liquidated to eliminate the obligation of physical delivery. Each transaction in this case is up to 15 lots (15 kg/lot), and investors of ordinary natural person are incapable of delivery.

In September 2015, China Securities Regulatory Commission Shenzhen Bureau submitted its response to Shenzhen Economic Crime Investigation Bureau, ruling that Tianjing Guoteng Precious Metals Management Co., No. 139 member of TPME, was "engaged in futures trading without relevant authorization," Yicai Global learned.

Furthermore, in June this year, the Supreme People's Court once made a final adjudication in a civil case that Shanxi-based Northwest Gold & Jewelry Exchange Center conducted illegal futures trading in the name of "spot goods" and shall compensate the investors in full.