Document ID: chunk:federal_register_of_legislation:C2025C00135:section:38a:p1
Version: federal_register_of_legislation:C2025C00135
Segment Type: section
Provision Reference: s 38A (pt 1/4)
Character Range: 125184–127780

38A  Charges relating to derivatives
 (1) For the purposes of paragraph 38(3)(aa), a life company may charge an asset of a statutory fund if:
 (a) the charge complies with subsection (2), (3) or (4) of this section in relation to:
 (i) a derivative to which the life company is a party; or
 (ii) a derivative to which a person (other than the life company) is a party on behalf of, on the instructions of, on account of, or for the benefit of, the life company; or
 (iii) in the case of subsection (3)—a derivative that relates to a derivative to which subparagraph (i) or (ii) of this paragraph applies; and
 (b) the charge relates to an investment; and
 (c) the life company has 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 life company's risk management statement.

Charges given to comply with rules and laws
 (2) The charge complies with this subsection in relation to a derivative if the charge is given for the purposes of complying with a requirement that is:
 (a) a requirement to secure the performance of an obligation in relation to the derivative; and
 (b) a requirement under:
 (i) rules governing the operation of an approved body; or
 (ii) a law of the Commonwealth, a State, a Territory or a foreign country (including a part of a foreign country) that applies to dealings in the derivative.

Charges given to agents etc.
 (3) The charge complies with this subsection in relation to a derivative if:
 (a) the charge is given in favour of a person (the agent) who:
 (i) is a party to the derivative on behalf of, on the instructions of, on account of, or for the benefit of, the life company; or
 (ii) enters into the derivative on behalf of, on the instructions of, on account of, or for the benefit of, the life company; and
 (b) the agent is obliged under either of the following to keep the property of the life company separate from the property of the agent:
 (i) rules governing the operation of an approved body;
 (ii) a law of the Commonwealth, a State, a Territory or a foreign country (including a part of a foreign country) that applies to dealings in