The rule requires a fund to define and implement a derivatives risk management program. The written program has to include policies and procedures to identify and manage derivatives risks such as leverage, market, couterparty, liquidity, operational and legal risk in addition to any other risks.
The program will institute a standardized risk management framework for funds, while also permitting principles-based tailoring of each fund to the fund’s particular risks. The program must include risk guidelines as well as stress testing, backtesting, internal reporting and escalation, and program review elements.
A derivatives risk manager approved by the fund’s board of directors will administer the program and report to the fund's board on the program's effect.