Article 7 Additional exposure constituted by the structure of a transaction

The structure of a transaction shall not constitute an additional exposure if the transaction meets both of the following conditions:

1. (a)

   the legal and operational structure of the transaction is designed to prevent the manager of the transaction or a third party from redirecting any cash flows which result from the transaction to persons who are not otherwise entitled under the terms of the transaction to receive these cash flows;

2. (b)

   neither the issuer nor any other person can be required, under the transaction, to make a payment to the institution in addition to, or as an advance payment of, the cash flows from the underlying assets.

The condition in point (a) of paragraph 1 shall be considered to be met where the transaction is one of the following:

1. (a)

   a UK UCITS as defined in under section 237 of the Financial Services and Markets Act 2000;

2. (b)

   an undertaking established in a third country, that carries out activities similar to those carried out by a UK UCITS and which is subject to supervision pursuant legislation of a third country which applies supervisory and regulatory requirements which are at least equivalent to those applied in the UK to UK UCITS.