Use of derivatives

This section only applies to funds which are permitted to use and are currently using derivative instruments. 

 

A - Minimum compliance

Members should disclose:

  1. Funds should ensure that their use of derivativesis appropriate, having regard to the investor objectives and policies and the risk profile of the fund. 
  2. Risks in respect of the use of derivatives (including, where appropriate, in respect of the exchange of collateral and ensuring the availability of margin and other amounts which may become payable by the fund) should be appropriately monitored and managed. 
  3. The fund should be compliant with applicable national and international rules relating to the use of derivatives.
  4. To the extent relevant, funds should disclose on request:
    • Whether they had a derivatives exposure at the date of their last property valuation.
    • The maximum permissible derivative exposure.
    • Nature and status of counterparts.
    • whether collateral is exchanged.
    • The rationale for use of derivatives.
    • How and in what circumstances they would use derivatives.
    • The type of derivatives used.
    • The accounting policy adopted, for example, IFRS or other applicable accounting standards prevailing at the time. 
    • Contract size
    • Contract duration
    • Index
    • Potential cash flow impact arising from the derivative and a valuation of the derivatives in accordance with IFRS or other applicable acounting standards prevailing at the time, including any fair valuation requirements.