Division 3 INVESTMENT CATEGORIES

The assets referred to in point 2 are to be invested in such a way as to ensure that funds are available as and when needed, while still generating the highest return available, consistent with maintaining a high degree of security and stability over the long-term.

1. (a)

   To obtain these objectives, investment in the following asset categories only shall be permitted:

   1. (i)

      term deposits with authorised banks;

   2. (ii)

      money market instruments, with a final maturity of less than one year, issued by authorised banks or by other categories of authorised issuers;

   3. (iii))

      F1fixed and floating rate bonds with a maturity or, in the case of asset-backed securities, an expected maturity not exceeding a remaining life of 10 years and six months from the payment date, provided that they are issued by any of the categories of authorised issuers;

   4. (iv)

      equity shareholdings in authorised collective investment funds, provided that such investments are limited to funds whose aim is to respond to the performance of a financial index and only for the investments referred to in point 2(c).

2. (b)

   The Commission may also make use of the following operations in respect of the asset categories set out in (a):

   1. i))

      repurchase and reverse repurchase agreements, provided the counterparts are authorised for such transactions, and provided that the Commission remains in a position to repurchase equivalent securities that it may have sold at the contractual deadline. Equivalent securities are securities (i) issued by the same issuer, (ii) which form part of the same issue, and (iii) are of an identical type, nominal value, description and amount as the securities lent out except where subject to a corporate action or redenomination;

   2. (ii)

      bond lending operations, but only under the conditions and procedures laid down by recognised clearing systems such as Clearstream and Euroclear, or by leading financial institutions specialising in this type of operations, subject to prudential rules considered as being equivalent to Community rules.

3. (c)

   ‘Authorised’ counterparts, as the term is used in these guidelines are those selected by the Commission under its rules and procedures referred to in point 7.