• GENE Chapter 11 GENE Chapter 11 Inclusion, exclusion and restriction of activities and products

    • GENE Part 11.1 Activities

      • GENE 11.1.1 Definitions for Chapter 11

        In this Part:

        commercial captive finance, as an activity of an entity (the captive financier), means providing finance to a commercial customer to enable the customer to lease or purchase (through finance lease, operating lease, hire-purchase or a similar form) an asset (usually immoveable properties, machinery, vehicles and equipment) from the captive financier’s parent entity or from a member of the parent entity’s group.

        commercial customer means a business customer or eligible counterparty within the meaning of each of those terms in the Customer and Investor Protection Rules 2019.

        Amended by QFCRA RM/2020-06 (as from 15th October 2020)

      • GENE 11.1.2 Declaration of providing captive finance as regulated activity

        Subject to rule 11.1.3, for FSR, article 23, the regulated activity of providing credit facilities is taken to include the activity of providing captive finance by way of business. The activity of providing captive finance by way of business is therefore a regulated activity.

        Amended by QFCRA RM/2020-6 (as from 15th October 2020)

      • GENE 11.1.3 Exclusion of certain captive finance to commercial customers

        For FSR, article 25 (2), providing captive finance is not regarded as carried on by way of business (and is therefore not a regulated activity) if it is carried on by way of commercial captive finance.

        Note An entity that provides captive finance to commercial customers (and carries on no other regulated activity) in or from the QFC in the circumstances described in rule 11.1.3 need only be licensed and does not need to apply for an authorisation from the Regulatory Authority.

        Amended by QFCRA RM/2020-6 (as from 15th October 2020)

    • GENE 11.2 GENE Part 11.2 Products

      • GENE 11.2.1 Declaration of captive finance as specified product

        For FSR, Schedule 3, Part 3, the specified product credit facility is taken to include captive finance (through finance lease, operating lease, hire-purchase or a similar form).

        Amended by QFCRA RM/2020-6 (as from 15th October 2020)

      • GENE 11.2.2 Options and futures that are and are not specified products

        The circumstances in which either an option or a futures contract is regarded as being made for commercial purposes and therefore excluded from the respective definition of a specified product; and conversely, the circumstances in which it is considered to be made for investment purposes and therefore included within the respective definition, are set out below:

        (a) a contract is regarded as made for investment purposes if:
        (i) it is made, or traded, on a regulated exchange; or
        (ii) it is made otherwise than on a regulated exchange, but is expressed to be traded on:
        (A) a regulated exchange; or
        (B) the same terms on which an equivalent contract would be traded on a regulated exchange;
        (b) a contract not falling within paragraph (a) is regarded as made for commercial purposes if under the terms of the contract delivery is to be made within 7 days, unless it can be shown that there existed an understanding that (notwithstanding the express terms of the contract) delivery would not be made within 7 days;
        (c) the following are indications that a contract not falling within paragraph (a) or (b) is made for commercial purposes (the absence of them is an indication that it is made for investment purposes):
        (i) 1 or more of the parties produces, or uses in its business, the commodity or other property;
        (ii) the seller delivers or intends to deliver the property or the purchaser takes or intends to take delivery of it; or
        (iii) the price, the lot size, the delivery date and other terms are determined by the parties for the purposes of the particular contract and not by reference (or not solely by reference) to regularly published prices, to standard lots or delivery dates or to standard terms;
        (d) the following are indications that a contract is made for investment purposes:
        (i) it is expressed to be as traded on a regulated exchange;
        (ii) performance of the contract is ensured by a regulated exchange or a clearing house; or
        (iii) there are arrangements for the payment or provision of margin; and
        (e) for the purposes of paragraph (a), a price is to be taken to be agreed on when a contract is made:
        (i) notwithstanding that it is left to be determined by reference to the price at which a contract could be entered into on a market or exchange or could be entered into at a time and place specified in the contract; or
        (ii) in a case where the contract is expressed to be by reference to a standard lot and quality, notwithstanding that provision is made for a variation in the price to take account of any variation in quantity or quality on delivery.
        Amended by QFCRA RM/2020-6 (as from 15th October 2020)

      • GENE 11.2.3 GENE 11.2.3 Contracts of insurance that are qualifying contracts of insurance

        A contract of insurance is a qualifying contract of insurance if it falls into 1 or more of the categories of general insurance contract or long term insurance contract mentioned in FSR, Schedule 3, Part 3, paragraphs 10.3 and 10.4.

        Amended by QFCRA RM/2020-6 (as from 15th October 2020)

        • GENE 11.2.3 Guidance

          Contracts of insurance are further sub-defined in INAP into those constituting non-investment insurance contracts, pure protection contracts and long term care insurance contracts and the restrictions surrounding activities conducted in relation to them are detailed in PINS.

          Amended by QFCRA RM/2020-6 (as from 15th October 2020)