Section 806.30  Definitions

            Business Entity includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or other similar form of business organization, whether organized for profit or not for profit.  [215 ILCS 5/126.2(H] (see P.A. 90-418, effective August 15, 1997).

            Counterparty Exposure Amount means:

            The amount of credit risk attributable to a derivative instrument entered into with a business entity other than through a qualified exchange or qualified foreign exchange, or cleared through a qualified clearinghouse ("over-the-counter derivative instrument").  The amount of credit risk equals:

            The market value of the over-the-counter derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurer; or

            Zero if the liquidation of the derivative instrument would not result in a final cash payment to the insurer.

            If over-the-counter derivative instruments are entered into under a written master agreement which provides for netting of payments owed by the respective parties, and the domicile of the counterparty is either within the United States or, if not within the United States, within a foreign jurisdiction listed in the Purposes and Procedures of the Securities Valuation Office as eligible for netting, the net amount of credit risk shall be the greater of zero or the net sum of:

            The market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment to the insurer; and

            The market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment by the insurer to the business entity.

            For open transactions, market value shall be determined at the end of the most recent quarter of the insurer's fiscal year and shall be reduced by the market value of acceptable collateral held by the insurer or placed in escrow by one or both parties. [215 ILCS 5/126.2(S)] (see P.A. 90-418, effective August 15, 1997).

            Derivative Instrument means:

            An agreement, option, instrument or a series or combination thereof:

            To make or take delivery of, or assume or relinquish, a specified amount of one or more  underlying interests, or to make a cash settlement in lieu thereof; or

            That has a price, performance, value or cash flow based primarily upon the actual or expected price, level, performance, value or cash flow of one or more underlying interests.

            Derivative instruments include options, warrants used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, forwards, futures and any other agreements, options or instruments substantially similar thereto or any series or combination thereof and any agreements, options or instruments permitted pursuant to this Part. Derivative instruments shall not include an investment authorized by Sections 126.11 through 126.17, 126.19 and 126.24 through 126.30 of the Illinois Insurance Code.  [215 ILCS 5/126.2(V)] (see P.A. 90-418, effective August 15, 1997).

            Derivative Transaction means a transaction involving the use of one or more derivative instruments.  [215 ILCS 5/126.2(W)] (see P.A. 90-418, effective August 15, 1997).

            Qualified Clearinghouse means a clearinghouse for, and subject to the rules of, a qualified exchange or a qualified foreign exchange, which provides clearing services, including acting as a counterparty to each of the parties to a transaction such that the parties no longer have credit risk as to each other.  [215 ILCS 5/126.2(OOO)] (see P.A. 90-418, effective August 15, 1997).

            Qualified Exchange means:

            A securities exchange registered as a national securities exchange, or a securities market regulated under the Securities Exchange Act of 1934 (15 USC 78 et seq.), as amended;

            A board of trade or commodities exchange designated as a contract market by the Commodity Futures Trading Commission or any successor thereof;

            Private Offerings, Resales and Trading through Automated Linkages (PORTAL);

            A designated offshore securities market as defined in Securities Exchange Commission Regulation S, 17 C.F.R. Part 230, as amended; or

            A qualified foreign exchange.  [215 ILCS 5/126.2(PPP)] (see P.A. 90-418, effective August 15, 1997).

            Qualified Foreign Exchange means a foreign exchange, board of trade or contract market located outside the United States, its territories or possessions:

            That has received regulatory comparability relief under Commodity Futures Trading Commission (CFTC) Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC's Regulations, 17 C.F.R. Part 30);

            That is, or its members are, subject to the jurisdiction of a foreign futures authority that has received regulatory comparability relief under CFTC Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC's Regulations, 17 C.F.R. Part 30) as to futures transactions in the jurisdiction where the exchange, board of trade or contract market is located; or

            Upon which foreign stock index futures contracts are listed that are the subject of no-action relief issued by the CFTC's Office of General Counsel, provided that an exchange, board of trade or contract market that qualifies as a "qualified foreign exchange" only under this definition shall only be a "qualified foreign exchange" as to foreign stock index futures contracts that are the subject of no-action relief.  [215 ILCS 5/126.2(QQQ)] (see P.A. 90-418, effective August 15, 1997).