Commonwealth Numbered Regulations

LIFE INSURANCE REGULATIONS (AMENDMENT) 1998 No. 191 - REG 4

4.1 After regulation 4.00, insert: Charges over the assets of statutory funds:
derivative contracts (Act, s 38 (3) (c))

"4.00A. (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)  Australian Stock Exchange Ltd;

   (b)  Options Clearing House Pty Ltd;

   (c)  Sydney Futures Exchange Ltd;

   (d)  Sydney Futures Exchange Clearing House Pty Ltd;

   (e)  a body that is an approved foreign exchange within the meaning of
        regulation 1.2A.02 of the Corporations Regulations;

   (f)  a body specified in Schedule 11 to those Regulations;

   (g)  a body that performs clearing house functions in relation to a body
        mentioned in paragraph (e) or (f) (the second body) in accordance with
        the rules of the second body or a law of the country where the second
        body is incorporated. 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 option contract
        or futures contract relating to any right, liability or thing,
        including in particular:

   (a)  an option contract as defined in section 9 of the Corporations Law;
        and

   (b)  a futures contract within the meaning of section 72 of that Law; and

   (c)  an agreement to which section 72A or 92A of the Law applies.".