Document ID: chunk:federal_register_of_legislation:F2023L00306:body:0:p7
Version: federal_register_of_legislation:F2023L00306
Segment Type: other
Provision Reference: 
Character Range: 17770–20725

position owns the asset or instrument. With regard to options, this refers to the purchase of the option contract itself. A short position relates to assets, or instruments, that have been contracted to be sold at a future date without the reporting insurer actually owning them at the time of entering into the contract. With regard to options, this refers to the sale of the option contract itself.

Section 2: Total contracts

     1. Total over the counter derivative financial instruments classified into:

The derivative instruments to be reported in this section are those that are not traded on recognised exchanges.

    1.1.      Forwards

A forward contract is an agreement to exchange a predetermined amount of currency, commodity, or other financial instrument at a specified future date and at a predetermined price.

    1.2.      Swaps

A swap is a financial instrument representing a transaction in which two parties agree to swap or exchange some obligation, generally a series of cash flows, on differing terms.

    1.3.      Bought option positions

These are option positions where the reporting insurer has purchased an option position and has the right, but not the obligation, to exercise the option against the writer and request delivery or sale of the underlying security or cash settlement.

           1.3.1.                  Call options

    A bought call option gives the holder of the option the right, but not the obligation, to require the writer of the option to sell the underlying security / asset to the holder.

           1.3.2.                  Put options

    A bought put option gives the holder of the option the right, but not the obligation, to require the writer of the option to buy the underlying security / asset from the holder.

    1.4.      Written (sold) option positions:

These are option positions where the reporting insurer has written / sold an option position, and as a result has the obligation to deliver or purchase the underlying product of the option or settle in cash, if exercised by the holder of the option position.

           1.4.1.                  Call options

    A written call option gives the writer of the option the obligation to sell the underlying security / asset when the option is exercised by the holder of the option.

           1.4.2.                  Put options

    A written put option gives the writer of the option the obligation to buy the underlying security / asset when the option is exercised by the holder of the option.

    1.5.      Credit derivatives

A credit derivative enables the user to transfer the credit risk of an underlying asset from one party, the protection buyer, to another, the protection seller, in isolation from other risks.

         1.5.1.         Credit derivatives in which the reporting insurer is providing credit protection

    This refers to credit derivatives that have been sold, or written,