COLL 7.4.1 General Investment Requirements for Non-Approved Transferable Securities—QFC Retail Schemes

(1) A QFC retail scheme may invest in a transferable security that is not an approved security if the security meets all the following requirements:
(a) the potential loss that the scheme may incur in relation to holding the transferable security is limited to the amount paid for it;
(b) its liquidity does not compromise the ability of the operator to comply with its obligation under these rules to redeem units on the instructions of any unitholder;

Note See r 8.1.17 (3) (Issue and redemption generally—QFC retail schemes).
(c) a reliable valuation is available for it (see subrule (2));
(d) appropriate information is available for it (see subrule (3));
(e) it is negotiable;
(f) its risks are adequately captured by the operator's risk management process.

Note Transferable security is defined in r 7.1.6. Approved security is defined in r 7.1.9.
(2) For subrule (1) (c), reliable valuation is available for the transferable security if—
(a) for a transferable security that is an approved security—there are accurate, reliable and regular prices that are either market prices or prices made available by valuation systems independent from issuers; and
(b) for a transferable security that is not an approved security— there is a valuation on a periodic basis that is derived from information from the issuer of the security or competent independent research.
(3) For subrule (1) (d), appropriate information is available for the transferable security if—
(a) for a transferable security that is an approved security—there is regular, accurate and comprehensive information available to the market on the security or, if relevant, on the security's portfolio; and
(b) for a transferable security that is not an approved security— there is regular and accurate information available to the scheme's operator on the security or, if relevant, on the security's portfolio.
(4) Unless there is information available to the scheme's operator that would lead to a different decision, a transferable security that is an approved security is presumed—
(a) not to compromise the operator's ability to comply with its obligation under these rules to redeem units at the request of any unitholder; and
(b) to be negotiable.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)