Prudential Regulation Authority Rulebook

1.

The following financial products shall be considered synthetic holdings of capital instruments pursuant to points (f), (h) and (i) of Article 36(1) of the CRR:

1. (a) derivative instruments that have capital instruments of a financial sector entity as their underlying or have the financial sector entity as their reference entity;
2. (b) guarantees or credit protection provided to a third party in respect of the third party's investments in a capital instrument of a financial sector entity.

2.

The financial products provided for in paragraph 1 shall include the following:

1. (a) investments in total return swaps on a capital instrument of a financial sector entity;
2. (b) call options purchased by the institution on a capital instrument of a financial sector entity;
3. (c) put options sold by the institution on a capital instrument of a financial sector entity or any other actual or contingent contractual obligation of the institution to purchase its own own funds instruments;
4. (d) investments in forward purchase agreements on a capital instrument of a financial sector entity.

[Note: This rule corresponds to Article 15b of Part 2 of Regulation (EU) No 241/2014 as it applied immediately before revocation by the Treasury.]