Financial derivative instrument: Difference between revisions

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What is an eligible derivative for a UCITS to invest in. This little nugget cleared up a whale of confusion, fear and loathing that had existed in UCITS III about whether a derivative needed to be actually terminable, or whether the UCITS needed only to be able to offset its risk to the derivative position somehow. This makes it clear the trade must be terminable at any time.
What is an eligible derivative for a UCITS to invest in. This little nugget cleared up a whale of confusion, fear and loathing that had existed in UCITS III about whether a derivative needed to be actually terminable, or whether the UCITS needed only to be able to offset its risk to the derivative position somehow. This makes it clear the trade must be terminable at any time.
===What is a [[financial derivative instrument]] exactly===
To our best read, a swap or a forward or a future of some kind, [[OTC]] or [[exchange traded]], but in any case under the [[MiFID]] aegis, and not [[SFTR]]. So, not a  [[stock loan]] or a [[repo]], though don’t expect that to stop mendacious UCITS managers trying to tell you they have to be able to call their term stock loans and repos at par on any day. (it’s like, ''no, you don’t'', and ''if you did, that wouldn't be a term transaction would it, Bozo, so what do you actually think you’re trying to achieve?''
Support for this view?
*The [https://www.handbook.fca.org.uk/handbook/BIPRU/13/3.html definition of financial derivative instrument in BIPRU] (see BIPRU {{bipruprov|13.3.3}}).
*The fact that BIPRU specifies a totally different exposure treatment for [[Financial derivative instrument - UCITS IV Provision|financial derivative instruments]] (BIPRU {{bipruprov|13.3}} than it does for [[Securities financing transaction|securities financing transactions]] (BIPRU {{bipruprov|13.8}})
*The fact that financial derivartives are regulated by [[MiFID]] and not [[SFTR]], and [[Securities financing transaction|securities financing transactions]] are regulated by [[SFTR]] and not [[MiFID]]
*If they’d wanted to include [[securities financing transaction]]s, ''they could have''. They're never short of a verbal diarrhorea, so why go all coy now?

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