Article 1
The use of financial derivative instruments solely for hedging purposes
The use of financial derivative instruments shall solely serve the purpose of hedging the risks inherent to other investments of the ELTIF where all of the following conditions are fulfilled:
the use of the financial derivative instruments is:
economically appropriate for the ELTIF at the ELTIF level;
consistent with the risk-profile of the ELTIF;
the use of the financial derivative instruments aims at a verifiable reduction of the risks at the ELTIF level;
the underlyings of the financial derivative instruments are assets to which an ELTIF is exposed, or, where the financial derivative instruments to hedge the risks arising from the exposure to such assets are not available, the underlyings of financial derivative instruments are of the same or economically similar asset class.
For the purposes of point (b), the manager of the ELTIF shall take all reasonable steps to ensure that the financial derivative instruments used to hedge the risks inherent to other investments of the ELTIF reduce the risks at the ELTIF level, including in stressed market conditions.