Division 2 For the purposes of Article 47(1) of Regulation (EU) No 648/2012, derivative contracts can also be considered highly liquid financial investments, bearing minimal credit and market risk if they are entered into for the purpose of:

1. (a)

   hedging the portfolio of a defaulted clearing member as part of the CCP’s default management procedure; or

2. (b)

   hedging currency risk arising from its liquidity management framework established in accordance with Chapter VIII.

Where derivative contracts are used in such circumstances, their use shall be limited to derivative contracts in respect of which reliable price data is published on a regular basis and to the period of time necessary to reduce the credit and market risk to which the CCP is exposed.

The CCP’s policy for the use of derivative contracts shall be approved by the board after having consulted the risk committee.