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Version status: In force | Document consolidation status: Updated to reflect all known changes
Version date: 1 January 2019 - onwards
  Version 2 of 2    

Article 11 Derivatives: options and swaptions

(1) The requirements listed in this paragraph are that -

(a) the transaction is an option exercisable by a customer ("X") of the ring-fenced body requiring the ring-fenced body to buy or sell foreign currency or commodities, and

(b) the contract in which the option is granted specifies -

(i) the currency or commodity concerned;

(ii) the amount of currency or commodity which may be bought or sold under the option;

(iii) a single date on which the option may be exercised (which must be no later than 3 years from the date on which the contract is entered into); and

(iv) the exchange rate or commodity price which will apply to the transaction.

(2) The requirements listed in this paragraph are that -

(a) the transaction consists of a cap or floor (or both) under which -

(i) in respect of a cap, the ring-fenced body must pay X an amount equal to A minus B (provided that amount is a positive number), where "A" is the interest payable in relation to a specified notional amount at the int