About the Derivative Risk Statement for SMSF

Fully compliant with 1 July 2007 Commonwealth legislation being the "Plan to Simplify and Streamline Superannuation"


What is a derivative?
A derivative is defined as a ‘financial contract whose value depends on, or is derived from assets, liabilities or indices (“the underlying asset’). Derivative Transactions include a broad assortment of instruments such as forwards, futures, options, share ratios, warrants, swaps and other composites.’

Can my Self Managed Superannuation Fund invest in derivatives?
If your Self Managed Superannuation Fund Trust Deed and Investment Strategy allows this type of investment, then yes.

Do I need a Risk Management Statement for Derivatives?
The Risk Management Statement (RMS) for Derivatives is used by Self Managed Superannuation Funds (SMSF) in conjunction with their Investment Strategy. Where SMSF’s trustees want to invest in derivatives, the RMS will assist formalising and formulating control processes. However, if a SMSF wants to undertake a derivative transaction on an Australian or international exchange, and in doing so creates a charge over the assets of the Fund, then it is a Superannuation Industry Supervision (SIS) Regulations requirement that a RMS is prepared.

A RMS proves that a Trustee has properly considered risk and risk management in relation to SMSF investment in derivatives.