Section 230-RICR-40-10-1.5 - Criteria for Engaging in Derivative TransactionsA. Notice 1. Financial Institutions with no prior Derivative Transaction experience as of December 31, 2012 seeking to engage in Derivative Transactions for the first time after the effective date of this Regulation shall provide the Department written notice of that intention at least thirty (30) calendar days in advance of any binding contractual agreement and provide documentation that said Financial Institution is permitted to engage in Derivative Transactions pursuant to the definition of "Eligible Contract Participant" in 7 U.S.C. § 1(a)(18). 2. Financial Institutions with prior experience in Derivative Transactions shall provide notice of said fact and include the approximate date that the Financial Institution began engaging in Derivative Transactions. Said Financial Institution shall immediately conduct the relevant Credit Exposure impact and analysis for the Department's review during its next examination.3. Should any Financial Institution's lending limit be exceeded by its participation in Derivative Transactions, said Financial Institution shall immediately notify the Department in writing and prepare an analysis and corrective action remedying said issue.B. A Financial Institution seeking to participate in or currently participating in Derivative Transactions must document in its files that it: 1. is Well Capitalized in accordance with its Federal insurer's standards and not subject to any written agreement, order, capital directive, or prompt corrective action, directive to meet and maintain a specific capital level for any capital measure and has an ability to absorb and/or mitigate any Credit Exposure indicated by such participation;2. does not meet the definition of "Troubled condition" in 12 C.F.R. § 371.2(f);3. has a reasonable basis for engaging in the Derivative Transaction;4. has an ability to manage and assess Credit Exposure; and,5. has effective internal controls to manage, monitor, and assess Credit Exposure.C. Any Financial Institution that does not meet the conditions in § 1.5(B)(1)(5) of this Part may request written permission from the Department to engage in Derivative Transactions.230 R.I. Code R. 230-RICR-40-10-1.5