The Friendly Societies (Insurance Business) (Amendment) Regulations 1996

Interpretation: Part IV

4.—(1) Paragraph (1) of regulation 19 of the 1994 Regulations (interpretation: Part IV) shall be amended as follows.

(2) Before the definition of “approved counterparty” insert—

““amortised value” means the amortised value as determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate to societies;”.

(3) In the definition of “approved counterparty”, at the end of sub-paragraph (b) omit “or” and at the end of sub-paragraph (c) add

“or

(d)in respect of a transaction involving a new issue of securities which are to be listed, the issuer or an approved investment firm acting on behalf of the issuer;”.

(4) After the definition of “building society” insert—

• ““collective investment scheme” has the meaning assigned to it in section 75 of the Financial Services Act 1986(1);”.

(5) After the definition of “contract for differences” insert—

• ““counterparty” has the meaning assigned to it in paragraph 2 of Schedule 5 to these Regulations;”.

(6) Omit the definition of “debenture” and after the definition of “debt” insert—

• ““debt security” includes bonds, notes, debentures and debenture stock;

• “deferred acquisition costs” means those items referred to at G II under the heading “Assets” in Part I of Schedule 2 to the Friendly Societies (Accounts and Related Provisions) Regulations 1994(2);”.

(7) At the end of the definition of “derivative contract” add “and includes a contract under which the amount payable by either party is calculated by reference to the amortised value of any property;”.

(8) After the definition of “enactment” insert—

““equivalent securities” means securities issued by the same issuer being of an identical type and having the same nominal value, description and amount;

“exposure” in relation to assets means an amount determined in accordance with regulation 32 of, and paragraph 5 of Schedule 5 to, these Regulations;

“exposure” in relation to a counterparty means an amount determined in accordance with regulation 32 of, and paragraphs 14 to 16 of Schedule 5 to, these Regulations;”.

(9) Omit the definitions of “equity share” and “equity share capital”.

(10) In the definition of “general business amount” for the words “regulation 32(9) below” substitute “paragraph 2 of Schedule 5 to these Regulations”.

(11) After the definition of “industrial and provident society”, insert—

• ““initial margin” in respect of a derivative contract or a contract or asset having the effect of a derivative contract means assets which, before or at the time the contract is entered into, are transferred by the society subject to a condition that such assets (or, where the assets transferred are securities, equivalent securities) will be returned to the society on completion of that contract;”.

(12) Omit the definition of “insurance liabilities”.

(13) After the definition of “intermediary”, insert—

• ““issuer” in respect of a collective investment scheme means the manager or operator of the scheme and in respect of an interest in a limited partnership means the partnership;”.

(14) In the definition of “listed”, for paragraphs (a) and (b), substitute—

“(a)that there has been granted and not withdrawn a listing in respect of that investment on any stock exchange in an EEA State which is a stock exchange under the law of that State; or

(b)that facilities have been granted for dealing in that investment on a regulated market;”.

(15) In the definition of “long term business amount” for the words “regulation 32(9) below” substitute “paragraph 2 of Schedule 5 to these Regulations”.

(16) Omit the definition of “middle market quotation” and insert—

““market value” means the market value as determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate to societies;”.

(17) After the definition of “option” insert—

• ““permitted asset exposure limit” has the meaning assigned to it in paragraph 3 of Schedule 5 to these Regulations;

• “permitted counterparty exposure limit” has the meaning assigned to it in paragraph 4 of Schedule 5 to these Regulations;”.

(18) Omit the definition of “price earnings ratio”.

(19) In the definition of “regulated institution”, at the beginning of sub-paragraph (a), insert “an insurance company which is either”.

(20) In the definition of “regulated market”, in sub-paragraph (c), for “European Community” substitute “EEA States”.

(21) In the definition of “securities” for the word “debentures” substitute the words “debt securities”.

(22) Omit the definition of “stock lending transaction”.

(23) After the definition of “Treasury Bills” insert—

• ““variation margin” means—

  (a)

  in respect of a derivative contract, or a contract having the effect of a derivative contract, assets (other than assets transferred by way of initial margin) which, at the relevant date, have been transferred by, to, or for the benefit of, the society in pursuance of a condition in that contract or a related contract; and

  (b)

  in respect of an asset having the effect of a derivative contract, assets which, at the relevant date, have been transferred by, to, or for the benefit of, the society in pursuance of a contractual right conferred, or obligation imposed, by the holding of the asset having the effect of a derivative contract;”

(24) After the definition of “warrant” insert—

““working day” means any day other than Saturday, Sunday, Good Friday, Christmas Day and any day which is a bank holiday in any part of the United Kingdom under section 1 of the Banking and Financial Dealings Act 1971(3).”.