FUTURES AND OPTIONS: REGULATORY AND DERIVATIVE ISSUES
| Date | 01 January 1992 |
| Pages | 72-81 |
| DOI | https://doi.org/10.1108/eb024753 |
| Published date | 01 January 1992 |
| Author | IAIN CULLEN |
| Subject Matter | Accounting & finance |
FUTURES
AND OPTIONS: REGULATORY AND DERIVATIVE
ISSUES
Received (in revised form): 25th August, 1992.
IAIN
CULLEN
IAIN
CULLEN
JOINED SIMMONS & SIMMONS, ONE OF THE
LEADING
FIRMS OF SOLICITORS IN THE CITY
OF
LONDON. IN 1977 AND QUALIFIED AS A
SOLICITOR
IN 1980. FROM 1980 TO
1982.
HE
WORKED
IN THE FIRMS BRUSSELS OFFICE AND
THEN
RETURNED TO LONDON
TO
JOIN
THE
TAX
DEPARTMENT. HE WAS MADE A PARTNER
IN
1986. FOR THE
LAST
FOUR YEARS HE HAS
PRACTISED
PRINCIPALLY IN THE FINANCIAL
SERVICES
FIELD WITH PARTICULAR EMPHASIS
ON
FUTURES AND OPTIONS.
ABSTRACT
This paper
describes
the current status of
the
Securities
&
Investments
Board (SIB)
Regulations relating
to futures and
options
funds (FOFs) and geared futures and
options
funds
(GFOFs)
and
addresses
the
need for amendments to accommodate
guarantees and
performance
fees.
It also
considers
the
position
of
trustees
in
relation
to
futures
brokers'
terms
of
business
and
outlines ways in which
trustees
of
GFOFs
can
protect
themselves
against having to
bear an
excess
of
liabilities
over assets.
INTRODUCTION
The Securities & Investments Board
(SIB) devoted considerable resources
between 1989 and 1991 to drafting
and consulting on regulations
designed to permit the constitution
of authorised unit trust schemes
dedicated to a variety of previously
impermissible investments, including
futures and options. The Financial
Services (Regulated Schemes) Regu-
lations 1991 (the SIB Regulations)1
which were brought into force on
15th July, 1991, were the result of
this process and now permit the con-
stitution of two types of authorised
unit trust scheme dedicated to
investment in futures and options.
These are futures and options funds
(FOFs) and geared futures and
options funds (GFOFs). While both
types of scheme are permitted to
invest in futures and options, FOFs
are protected from the effect of
major market movements by the
requirement that their exposure be
covered from within the trust
property.2 GFOFs, on the other
72
To continue reading
Request your trial