<html> <head> <title>Rule 20:06:20:02 Transactions in financial futures.</title> <META NAME="Keywords" Content="Administrative Rules 20:06:20:02"> <META NAME="Description" Content="Administrative Rules 20:06:20:02 Transactions in financial futures."> <meta name=Generator content="Microsoft Office HTML Filter 2.0"> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Originator content="Microsoft Word 10"> <style> <!-- --> </style> </head> <body lang=EN-US> <div> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>20:06:20:02.&nbsp;&nbsp;Transactions in financial futures.</b> Insurance companies may not enter into financial futures contracts except as part of a hedging transaction. If at any time during the life of a hedge the dollar variation between the hedged item and the hedging transaction is no longer expected to correlate, the transaction cannot be considered a hedging transaction and the financial futures contract must be closed. The amortized cost of the hedged item may not be increased above its fair market value. If the insurer no longer expects to acquire or incur the hedged item, the hedge must be terminated. An insurance company's transactions in financial futures must be evidenced by a trade confirmation or other proof of ownership issued from an authorized entity within the definition of &quot;exchange-traded&quot; in subdivision 20:06:20:01(3).</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; An insurance company may not have outstanding any form of margin and net deferred gains and losses from open, completed, or terminated financial futures contracts in an amount exceeding the limits in SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-27-51">58-27-51.</A> Financial futures contracts must be in investments as described in subdivision 20:06:20:01(5) and, when combined with other current holdings, may not exceed the limits in SDCL 58-27, whether or not they are acquired at the delivery date.</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Source:</b> 13 SDR 75, effective December 21, 1986.</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>General Authority:</b> SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-4-1">58-4-1</A>, <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-27-7">58-27-7.</A></p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Law Implemented:</b> SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-27-7">58-27-7.</A></p> </div> </body> </html>