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  • Derivative Transactions

    • CIU-1.6.10

      Subject to the conditions below, a Bahrain domiciled retail CIU may enter into permitted financial derivative transactions provided that:

      (a) The underlying positions continue to satisfy Rule CIU-1.6.4 (and the limits specified in Appendix D);
      (b) The transactions are consistent with the stated investment objectives;
      (c) The counterparties are licensed financial institutions or recognised exchanges or clearing houses;
      (d) The instrument constituting the CIU and its prospectus clearly specify the use and rationale of such transactions (i.e. for hedging purposes or for achieving investment goals), as well as a clear description of the associated risks, including that of volatility in net asset values;
      (e) The derivative positions and balances are capable of independent and reliable daily valuations and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the initiative of the CIU;
      (f) The transactions are subject to sound and documented risk management policies and practices; and
      (g) The arrangement is consistent with good market practice.