Commonwealth Consolidated Regulations Commonwealth Consolidated Regulations(1) A trustee may give a charge over, or in relation to, an asset of a fund if:
(a) the charge is given in relation to a derivatives contract entered into:
(i) by, or on behalf of, the trustee; or
(ii) by a broker on the instructions, or on account, of the trustee; or
(iii) by a broker for the benefit of the trustee; 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 fund has in place a derivatives risk 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 fund; and
(ii) restrictions and 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 derivatives risk statement.
(2) In this regulation:
"approved body" means a body mentioned in Schedule 4.
"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.