Regulation 9 Qualifying interest income: further provisions

(1)

In the circumstances specified in paragraph (2), the underlying subject matter of a derivative contract is treated for the purposes of regulation 8 as consisting wholly of assets representing loan relationships or currency or both (as the case may be).

(2)

The circumstances specified are where the underlying subject matter consists only of—

(a)

assets representing loan relationships or currency or both, and

(b)

other underlying subject matter which is—

(i)

subordinate in relation to those assets, or

(ii)

of small value in comparison with the value of the underlying subject matter.

(3)

In the circumstances specified in paragraph (4), the underlying subject matter of a contract for differences is treated for the purposes of regulation 8 as consisting wholly of one or more of interest rates, creditworthiness and currency (the “principal subject matter”).

(4)

The circumstances specified are where the underlying subject matter consists only of—

(a)

the principal subject matter, and

(b)

other underlying subject matter which is—

(i)

subordinate in relation to the principal subject matter, or

(ii)

of small value in comparison with the value of the underlying subject matter.

(5)

For the purposes of paragraphs (2) and (4), whether part of the underlying subject matter of a contract of a company is subordinate or of small value is to be determined by reference to the time when the company enters into or acquires the contract.