Commonwealth Consolidated Regulations Commonwealth Consolidated Regulations(1) A life company may give a charge over, or in relation to, an asset of a statutory fund if:
(a) the charge is given in relation to a derivatives contract entered into:
(i) by, or on behalf of, the life company; or
(ii) by a broker on the instructions, or on account, of the company; or
(iii) by a broker for the benefit of the company; and
(b) the charge is given in order to comply with the rules of an approved body (as defined in subregulation (2)) that requires the performance of obligations in relation to the derivatives contract to be secured; and
(c) the life company has in place a risk management statement that sets out:
(i) policies for the use of derivatives that include an analysis of the risks associated with the use of derivatives within the investment strategy of the company; and
(ii) controls on the use of derivatives that take into consideration the expertise of staff; and
(iii) compliance processes to ensure that the controls are effective (for example, reporting procedures, internal and external audits and staff management procedures); and
(d) the investment to which the charge relates is made in accordance with the risk management statement.
(2) In this regulation:
"approved body" means a body mentioned in Schedule 7.
"derivative" means a financial asset or liability the value of which depends on, or is derived from, other assets, liabilities or indices.
"derivatives contract" means an options contract or a futures contract relating to any right, liability or thing.