33Application of certain restrictions to index funds and benchmark funds

33 Application of certain restrictions to index funds and benchmark funds

(1) This section applies to a passport fund that is an index fund or a benchmark fund. (2) If the assets of the passport fund or the underlying assets of the derivatives of the passport fund are constituents of the index then the limitation on the exposure of the fund to the entity, or group of entities, to which the asset or assets relate relative to the value of the assets of the passport fund is instead the lower of: (a) the percentage of the index that the asset or assets represent as constituents plus 2%; and (b) 25%, or, only for an index fund, 40% if the eligible index relates to an established market or market sector that is widely used by investors including in economies other than the economy to which the market or market sector relates and no other exposure of the passport fund to another entity or group of entities exceeds 25%. (3) Paragraph (2)(b) applies only if the home regulator for the passport fund has given written notice to the operator that in the home regulator’s opinion there are exceptional market circumstances relevant to the fund and that the eligible index relates to an established market or market sector that is widely used by investors including in economies other than the economy to which the market or market sector relates and has not revoked that notice by written notice to the operator.