Part 3: Specified Products

Subject to any Rules, each of the following is a Specified Product for the purposes of these Regulations.

1. Share

A share or stock in the share capital of:

1.1 any body corporate (wherever incorporated); or
1.2 any unincorporated body constituted under the law of a country or territory outside the QFC,

other than a Unit in a Collective Investment Fund.

2. Debt Instrument

2.1 Subject to paragraph 2.2, an instrument creating or acknowledging indebtedness that is:
(1) a debenture;
(2) debenture stock;
(3) loan stock;
(4) a bond;
(5) a certificate of deposit; or
(6) any other instrument creating or acknowledging a present or future indebtedness that is transferable without the consent of the borrower.
2.2 Paragraph 2.1 does not apply to an instrument:
(1) acknowledging or creating a debt for goods or services;
(2) a bill of exchange (including a cheque), banker's draft or letter of credit but not a bill of exchange accepted by a banker;
(3) a banknote, a statement showing a balance on a bank account;
(4) a lease or other disposition of property; or
(5) a contract of insurance.

3. Credit Facility

3.1 Subject to paragraph 3.2, any advance, loan or other facility in whatever form or by whatever name called whereby the Person to whom such advance, loan or other facility is given has access, indirectly or directly, to the funds of the Person giving it.
3.2 An advance loan or facility made under an instrument that is (or but for paragraphs 2.1-2.6 of the definition of the definition of Debt Instrument, would be) a Debt Instrument is not a Credit Facility for the purposes of this Regulation.

4. Warrants

Warrants or other instruments entitling the holder to subscribe for:

4.1 Shares; or
4.2 Debt Instruments.

5. Securities Receipt

5.1 Subject to paragraph 5.2, a certificate or other instrument which confers contractual or property rights in respect of a Share, a Debt Instrument or a Warrant held by a Person (the security holder) other than the Person on whom the rights are conferred by the certificate or other instrument (the certificate beneficiary), the transfer of which may be effected without requiring the consent of the security holder;
5.2 An Option is not a Securities Receipt for the purposes of this Regulation.

6. Unit in a Collective Investment Fund

6.1 Units in a Collective Investment Fund within the meaning of paragraph 6.2.
6.2 Subject to paragraphs 6.5 and 6.6, a Collective Investment Fund is any arrangement:
(1) the purpose or effect of which is to enable persons taking part in the arrangements (the participants) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of property or sums paid out of such profits or income;
(2) that meets the property condition in paragraph 6.3 and the investment condition in paragraph 6.4.
6.3 An arrangement will meet the property condition referred to in paragraph (2) if:
(1) the arrangement is made with respect to property of any description, including money, whether the participants become owners of the property or any part of it or otherwise; and
(2) any of the participants do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or give directions in respect of the property.
6.4 An arrangement will meet the investment condition referred to in paragraph 6.2 if:
(1) the contributions of the participants and the profits or income out of which payments to be made are pooled; or
(2) the property is managed as a whole by or on behalf of the operator of the scheme.
6.5 Arrangements for such pooling as is mentioned in paragraph 6.4(1) in relation to separate parts of the property are not to be regarded as constituting a single Collective Investment Fund unless the participants are entitled to exchange rights in one part for rights in another.
6.6 The Regulatory Authority may make Rules specifying the circumstances in which particular arrangements do not constitute a Collective Investment Fund for the purposes of paragraph 6.1.

7. Options

7.1 Options to acquire or dispose of:
(1) a Share, Debt Instrument, Warrant, Securities Receipt, Unit in a Collective Investment Fund, Future, or Contract for Differences;
(2) currency of any country or territory;
(3) metals / commodities; or
(4) an option of the kind specified in paragraphs 7.1(1), (2) or (3).
7.2 The Regulatory Authority may issue Rules excluding from the scope of paragraph 7.1 options which are entered into for commercial and not investment purposes and setting out circumstances in which a contract is to be regarded as made for commercial or investment purposes for the purposes of paragraph 7.2.

8. Future

8.1 Subject to paragraphs 8.2 and 8.3 rights under a contract for the sale of a commodity or property of any other description under which delivery is to be made at a future date and at a price agreed on when the contract is made and which is made for investment and not commercial purposes.
8.2 A contract is not a Future for the purposes of paragraph 8.1 if the seller delivers or intends to deliver the property or the purchaser takes or intends to take delivery of the property.
8.3 The Regulatory Authority may issue Rules as to the circumstances in which a contract is to be regarded as made for commercial or investment purposes for the purposes of paragraph 8.1.

9. Contract for Differences

9.1 Subject to paragraph 9.2–9.3 rights under a contract the purpose or purported purpose of which is to secure a profit or avoid a loss by reference to fluctuations in:
(1) the value or price of property of any description; or
(2) an index or other factor designated for that purpose in the contract.
9.2 A contract will not be a Contract for Differences for the purposes of paragraph 9.1 if:
(1) the parties intend that the profit is to be secured or the loss avoided by one or more of the parties taking delivery of any property to which the contract relates;
(2) money is received on terms that the entire principal amount will be repaid (after deduction of reasonable fees, if relevant) but any interest or other return to be paid on the sum received will be calculated by reference to fluctuations in an index or other factor; or
(3) the contract is a Contract of Insurance.
9.3 The Regulatory Authority may issue Rules excluding from the scope of paragraph 9.1 contracts for differences which are entered into for commercial and not investment purposes and setting out the circumstances in which a contract is to be regarded as made for commercial or investment purposes for the purposes of paragraph 9.1.

10. Contract of insurance

10.1 Rights under a qualifying contract of insurance or reinsurance that is either a General Insurance Contract within the scope of paragraph 10.3 or a Long Term Insurance Contract within the scope of paragraph 10.4.
10.2 The Regulatory Authority shall make Rules prescribing the circumstances in which a contract is a qualifying contract of insurance for the purposes of paragraph 10.1.
10.3 A qualifying contract of insurance will be a General Insurance Contract if it falls within one or more of the following categories:

General Insurance Category 1: Accident

Contracts of insurance providing fixed pecuniary benefits or benefits in the nature of indemnity (or a combination of both) against risks of the Person insured:
(1) sustaining injury as the result of an accident or of an accident of a specified class;
(2) dying as a result of an accident or of an accident of a specified class; or
(3) becoming incapacitated in consequence of disease or of disease of a specified class,

including contracts relating to industrial injury and occupational disease but excluding contracts falling within Long Term Insurance Category 4: Permanent Health described in paragraph 10.4 of this Schedule.

General Insurance Category 2: Sickness

Contracts of insurance providing fixed pecuniary benefits or benefits in the nature of indemnity (or a combination of both) against risks of loss to the Persons insured attributable to sickness or infirmity but excluding contracts falling within Long Term Insurance Category 4: Permanent Health described in paragraph 10.4 of this Schedule.

General Insurance Category 3: Land vehicles

Contracts of insurance against loss of or damage to vehicles used on land, including motor vehicles but excluding railway rolling stock.

General Insurance Category 4: Railway rolling stock

Contract of insurance against loss of or damage to railway rolling stock.

General Insurance Category 5: Aircraft

Contracts of insurance upon aircraft or upon the machinery, tackle, furniture or equipment of aircraft.

General Insurance Category 6: Ships

Contracts of insurance upon vessels used on the sea or on inland water, or upon the machinery, tackle, furniture or equipment of such vessels.

General Insurance Category 7: Goods in transit

Contracts of insurance against loss of or damage to merchandise, baggage and all other goods in transit, irrespective of the form of transport.

General Insurance Category 8: Fire and natural forces

Contracts of insurance against loss of or damage to property (other than property to which paragraphs 3 to 7 relate) due to fire, explosion, storm, natural forces other than storm, nuclear energy or land subsidence.

General Insurance Category 9: Damage to property

Contracts of insurance against loss of or damage to property (other than property to which paragraphs 3 to 7 relate) due to hail or frost or any other event (such as theft) other than those mentioned in paragraph 8.

General Insurance Category 10: Motor vehicle liability

Contracts of insurance against damage arising out of or in connection with the use of motor vehicles on land, including third-party risks and carrier's liability.

General Insurance Category 11: Aircraft liability

Contracts of insurance against damage arising out of or in connection with the use of aircraft, including third-party risks and carrier's liability.

General Insurance Category 12: Liability of ships

Contracts of insurance against damage arising out of or in connection with the use of vessels on the sea or on inland water, including third party risks and carrier's liability.

General Insurance Category 13: General liability

Contracts of insurance against risks of the persons insured incurring liabilities to third parties, the risks in question not being risks to which General Insurance Categories 10, 11 or 12 relates.

General Insurance Category 14: Credit

Contracts of insurance against risks of loss to the Persons insured arising from the insolvency of debtors of theirs or from the failure (otherwise than through insolvency) of debtors of theirs to pay their debts when due.

General Insurance Category 15: Suretyship

(1) Contracts of insurance against the risks of loss to the Persons insured arising from their having to perform contracts of guarantee entered into by them.
(2) Fidelity bonds, performance bonds, administration bonds, bail bonds or customs bonds or similar contracts of guarantee, where these are:
(A) effected or carried out by a Person not carrying on the business of Deposit Taking;
(B) not effected merely incidentally to some other business carried on by the Person effecting them; and
(C) effected in return for the payment of one or more premiums.

General Insurance Category 16: Miscellaneous financial loss

Contracts of insurance against any of the following risks, namely:
(1) risks of loss to the Persons insured attributable to interruptions of the carrying on of business carried on by them or to reduction of the scope of business so carried on;
(2) risks of loss to the Persons insured attributable to their incurring unforeseen expense (other than loss such as is covered by contracts falling within General Insurance Category 18); or
(3) risks which do not fall within sub-paragraph (1) or (2) and which are not of a kind such that contracts of insurance against them fall within any other General Insurance Category.

General Insurance Category 17: Legal expenses

Contracts of insurance against risks of loss to the Persons insured attributable to their incurring legal expenses (including costs of litigation).

General Insurance Category 18: Assistance

Contracts of insurance providing either or both of the following benefits, namely:
(1) assistance (whether in cash or in kind) for Persons who get into difficulties while travelling, while away from home or while away from their permanent residence; or
(2) assistance (whether in cash or in kind) for Persons who get into difficulties otherwise than as mentioned in sub-paragraph (1).
10.4 A qualifying contract of insurance will be a Long Term Insurance Contract if it falls within one or more of the following categories:

Long Term Insurance Category 1: Life and annuity

Contracts of insurance on human life or contracts to pay annuities on human life, but excluding (in each case) contracts within Long Term Insurance Category 3.

Long Term Insurance Category 2: Marriage and birth

Contract of insurance to provide a sum on marriage or on the birth of a child, being contracts expressed to be in effect for a period of more than one year.

Long Term Insurance Category 3: Linked long term

Contracts of insurance on human life or contracts to pay annuities on human life where the benefits are wholly or party to be determined by references to the value of, or the income from, property of any description (whether or not specified in the contracts) or by reference to fluctuations in, or in an index of, the value of property of any description (whether or not so specified).

Long Term Insurance Category 4: Permanent health

Contracts of insurance providing specified benefits against risks of Persons becoming incapacitated in consequence of sustaining injury as a result of an accident or of an accident of a specified class or of sickness or infirmity, being contracts that:
(1) are expressed to be in effect for a period of not less than five years, or until the normal retirement age for the Persons concerned, or without limit of time; and
(2) either are not expressed to be terminable by the Insurer, or are expressed to be so terminable only in special circumstances mentioned in the contract.

Long Term Insurance Category 5: Tontines

Tontines.

Long Term Insurance Category 6: Capital redemption contracts

Capital redemption contracts, where effected or carried out by a Person who does not carry on a banking business, and otherwise carries on the Specified Activity of Effecting Contracts of Insurance or Carrying Out Contracts of Insurance.

Long Term Insurance Category 7: Pension fund management
(1) Pension fund management contracts, and
(2) pension fund management contracts which are combined with contracts of insurance covering either conservation of capital or payment of a minimum interest,
where effected or carried out by a person who does not carry on a banking business, and otherwise carries on the Specified Activity of Effecting Contracts of Insurance or Carrying Out Contracts of Insurance.

11. Deposits

11.1 Subject to paragraphs 11.2, 11.3 and 11.4, rights under any contract under which a sum of money is paid on terms under which it will be repaid, with or without interest or a premium, and either on demand or at a time or in circumstances agreed by or on behalf of the Person making the payment and the Person receiving it.
11.2 Rights under a contract will not be a Deposit for the purposes of paragraph 11.1 if money is paid:
(1) by way of advance or part payment under a contract for the sale, hire or other provision of property or services, and is repayable only in the event that the property or services is or are not in fact sold, hired, or otherwise provided;
(2) by way of security for the performance of a contract or by way of security in respect of loss which may result from the non-performance of a contract; or
(3) by way of security for the delivery up or return of property, whether in a particular state of repair or otherwise.
11.3 Rights under a contract will not be a Deposit for the purposes of paragraph 11.1 if the Person who pays the money is:
(1) carrying on a business consisting wholly or significantly of lending money;
(2) an Authorised Firm which has permission to carry on Deposit Taking or to effect or carry out Contracts of Insurance;
(3) a member of the same Group as the payee; or
(4) a Close relative, director, manager or Controller of the payee.
11.4 Rights under a contract will not be a Deposit for the purposes of paragraph 11.1 if the payee of the money is:
(1) a lawyer acting in the course of his profession duly licensed by the QFC Authority
(2) the issuer of a Debt Instrument;
(3) the recipient of a Credit Facility; or
(4) an Authorised Firm (other than one whose Authorisation permits it to carry on Deposit Taking) in the course of carrying one or more of the following activities:
(A) Dealing in Investments;
(B) Arranging Deals in Investments;
(C) Managing Investments;
(D) Operating a Collective Investment Fund; or
(E) Provision of Custody Services.

13. Rights in investments

Any right or interest in any Investment under this Part.

Amended by QFC Reg 2010-2 (as from 9th December 2010)