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On the issue of covered bonds and covered bond public supervision
Article 11

Article 11 — Derivative contracts in the cover pool

  1. Member States shall ensure investor protection by allowing derivative contracts to be included in the cover pool only where at least the following requirements are met:
    1. the derivative contracts are included in the cover pool exclusively for risk hedging purposes, their volume is adjusted in the case of a reduction in the hedged risk and they are removed when the hedged risk ceases to exist;
    2. the derivative contracts are sufficiently documented;
    3. the derivative contracts are segregated in accordance with Article 12;
    4. the derivative contracts cannot be terminated upon the insolvency or resolution of the credit institution that issued the covered bonds;
    5. the derivative contracts comply with the rules laid down in accordance with paragraph 2.
  2. For the purposes of ensuring compliance with the requirements listed in paragraph 1, Member States shall lay down rules for derivative contracts in the cover pool. Those rules shall specify:
    1. the eligibility criteria for the hedging counterparties;
    2. the necessary documentation to be provided in relation to derivative contracts.