Explanatory note

This order prescribes swap contracts, option contracts, swap option contracts and forward and future contracts in relation to interest rate and currency risks as types of contract which a building society may enter into under section 23 of the Building Societies Act 1986 for the purpose of reducing the risk of loss.

The power to enter into prescribed contracts is only available to a building society which has adopted the power in section 23. Societies which do not have a qualifying asset holding may only enter into interest rate swap contracts providing such contracts do not include an interest rate determined by reference to the fluctuations in value or price of property of any description or in an index or other factor derived from such value or price. A building society has a qualifying asset holding where the aggregate value of its total commercial assets is not less than £100 million.

Article 4 of this Order revokes the Building Societies (Prescribed Contracts) Order 1988 as amended by the Building Societies (Prescribed Contracts) (Amendment) Order 1991. Under those Orders swap contracts, interest rate option contracts, swap option contracts and interest rate forward and futures contracts were prescribed and remain so under this Order. The validity of prescribed contracts entered into under those Orders is preserved by article 6.