Derivative Financial Instruments
Derivative financial instruments are used by ESB to hedge exposures and reduce risk. In order for ESB to be able to lawfully enter into derivative financial instruments, counterparts must meet certain credit and other criteria. The 1992 Financial Transactions of Certain Companies and Other Bodies Act 1992 (“the 1992 Act”) governs the use by ESB of derivative financial instruments.
Guidance in relation to the operation of the 1992 Act by ESB is issued by the Irish Minister for Finance from time to time, most recently in December 2017, in the form of the Specification of the Minister for Finance and the Requirements of the Minister for Finance. Compliance with the 1992 Act, and with the Specification and Requirements of the Minister for Finance, forms a central part of ESB’s control and governance framework for entering into these instruments.