42Derivative—covering exposures

42 Derivative—covering exposures

If a passport fund enters into a derivative that gives rise, or may give rise, to a future commitment of the passport fund, the passport fund must hold at all times assets that the operator of the passport fund reasonably believes will be available and able to be converted into sufficient assets: (a) in the case of a derivative that will, or may, be cash‑settled—to enter an offsetting derivative so as to eliminate the exposure or have the counterparty to the derivative agree to terminate it; or (b) in the case of a derivative that requires, or may require, physical delivery of the underlying asset—to be delivered as required to meet the actual or potential delivery obligation.