Explanatory note

This Order amends the Building Societies (Prescribed Contracts) Order 1993 (the 1993 Order) which prescribes certain contracts as types of contract which a building society may effect under section 23 of the Building Societies Act 1986 for the purpose of reducing the risk of loss arising from changes in interest rates, currency rates or other factors of a prescribed description which affect its business.

The Order substitutes a new Part IV of the Schedule to the 1993 Order. The new Part IV clarifies the nature of the forward and futures contracts which societies are permitted to effect and widens the scope of the permitted contracts which may be entered into by societies which do not have a qualifying asset holding. A building society has a qualifying asset holding where the aggregate value of its total commercial assets is not less than £100 million.

The Order also brings the list of government securities which may be delivered for the purpose of settling a permitted futures contract into line with the list of governments whose securities are prescribed as liquid assets which may be held by building societies by the Building Societies (Liquid Asset) Regulations 1991 (S.I. 1991/2580) (as amended by the Building Societies (Liquid Asset) (Amendment) Regulations 1992 (S.I. 1992/2930)).

A compliance cost assessment of the effect that this instrument would have on the cost of business is available from the Secretary, Building Societies Commission, 15 Great Marlborough Street, London W1V 2LL.