Common use of Recommendation and Approval of Hedge Effectiveness Tests Clause in Contracts

Recommendation and Approval of Hedge Effectiveness Tests. In consultation with IIM Risk Management and the BU ALCs, the US Risk Committee, shall recommend to the Board hedge effectiveness tests (including compliance parameters) such as effective duration, DV01 (the dollar value change of an asset or liability resulting from a 1 basis point change in a reference metric), equity beta or delta, performance attributions or other tests, which are commonly based on historical and statistical data. Based on the recommendations of the US Risk Committee, the Board of Directors shall adopt by resolution hedge effectiveness tests (“Hedge Effectiveness Tests”) and related compliance parameters (“Hedge Effectiveness Parameters.”). The resolutions of the Board, or the Hedge Effectiveness Tests and Hedge Effectiveness Parameters set forth therein, shall be provided, in writing, to the Derivatives Group Head as well as the Investment Groups and the Reporting Groups.