PART 2EXCLUDED ACTIVITIES AND EXCEPTIONS

Derivatives: forward contracts and swaps10.

(1)

The requirements listed in this article are that the transaction is—

(a)

a currency swap,

(b)

an interest rate swap, or

(c)

a forward contract relating to currencies or commodities, where the relevant contract specifies—

(i)

the description and amount of the currency or commodity concerned;

(ii)

the date when delivery will be made or when settlement will be made in cash; and

(iii)

the exchange rate or commodity price which will apply.

(2)

For the purposes of this article—

(a)

“currency swap” means a transaction under which—

(i)

one person (“A”) agrees with another person (“B”) that A will at a specified date pay to B a specified amount in one specified currency, and B will pay A that amount in another specified currency, calculated by reference to a specified exchange rate, and

(ii)

the amount concerned may consist of a specified principal amount and interest calculated at a specified fixed or floating rate;

(b)

“forward contract” means a contract for the sale of a commodity, currency or property of any description (including futures, whether or not traded on an exchange or trading venue) under which delivery is to be made at a future date and at a price agreed on when the contract is made;

(c)

“interest rate swap” means a transaction under which—

(i)

one person (“A”) agrees with another person (“B”) that A is liable to pay to B an amount equal to interest calculated by reference to an interest rate on a specified notional sum over a specified period, and that B is liable to pay to A an amount equal to interest calculated by reference to a different interest rate on that notional sum, and

(ii)

the interest rates in question are either specified (in the case of a fixed interest rate), or determined in relation to a specified reference rate (in the case of a floating interest rate);

(d)

“reference rate” means a foreign exchange or interest rate which is offered on an inter-bank market, or which is set out in an index published by any person who is not one of the parties to the contract;

(e)

“specified” means specified in the transaction agreement.