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This excerpt taken from the IRE 20-F filed May 29, 2009. Policy
The Group’s participation in derivatives markets is subject
to policy approved by the Court and, at a more detailed level,
by the GRPC. The Group makes a clear distinction between
derivatives which must be transacted on a perfectly hedged
basis, and those whose risks can be managed within broader
interest rate or foreign exchange books. Since these broader
books can be structured to assume some degree of discretionary
risk, derivative positions held within them will not necessarily
be exactly hedged. Market risk can only be assumed in clearly
defined categories of derivatives which are traded in well
established, liquid markets, supported by industry standard
conventions and documentation and valued in accordance with
generally accepted methods.
BoIGM is permitted to take discretionary risk in derivatives
such as interest rate futures, bond futures, forward rate
agreements, interest rate swaps, credit derivatives, forward
foreign exchange and currency swaps. In addition, it is
permitted to take exposure in the most widely traded option
markets, principally options on futures, caps, floors, swap
options (swaptions) and conventional currency options.
Transactions in more complex derivatives are typically on a
perfectly matched back to back basis.
This excerpt taken from the IRE 20-F filed Jul 8, 2008. • Policy
The Group’s participation in derivatives markets is subject
to policy approved by the Court of Directors and, at a more
detailed level, by the GRPC. The Group makes a clear distinction
between derivatives which must be transacted on a perfectly
hedged basis, and those whose risks can be managed within
broader interest rate or foreign exchange books. Since these
broader books can be structured to assume some degree of
discretionary risk,
BANK OF
IRELAND GROUP
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
55 RISK
MANAGEMENT (continued)
derivative positions held within them will not necessarily be
exactly hedged. Market risk can only be assumed in clearly
defined categories of derivative which are traded in well
established, liquid markets, supported by industry standard
conventions and documentation and valued in accordance with
generally accepted methods. Positions can only be taken in
instruments which the business can settle, administer and value,
and where the risks can be accurately measured and reflected
within exposure against limits.
BoIGM is permitted to take discretionary risk in derivatives,
such as interest rate futures, bond futures, forward rate
agreements, interest rate swaps, credit derivatives, forward
foreign exchange and currency swaps. In addition, it is
permitted to take exposure in the most widely traded option
markets, principally options on futures, caps, floors, swap
options (swaptions) and conventional currency options.
Transactions in more complex derivatives are typically on a
perfectly matched back to back basis. This category consists
predominantly of equity index derivatives, used for the purposes
of constructing retail savings products whose performance is
linked to equity markets.
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