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Version status: Entered into force | Document consolidation status: No known changes
Version date: 23 March 2007 - onwards
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Article 10 Transferable securities and money market instruments embedding derivatives

1. The reference in the fourth subparagraph of Article 21(3) of Directive 85/611/EEC to transferable securities embedding a derivative shall be understood as a reference to financial instruments which fulfil the criteria set out in Article 2(1) of this Directive and which contain a component which fulfils the following criteria:

(a) by virtue of that component some or all of the cash flows that otherwise would be required by the transferable security which functions as host contract can be modified according to a specified interest rate, financial instrument price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, and therefore vary in a way similar to a stand-alone derivative;

(b) its economic characteristics and risks are not closely related to the economic characteristics and risks of the host contract;

(c) it has a significant impact on the risk profile and pricing of the transferable security.

2. Money market instruments which fulfi

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