Why did the CPP Investment Board request greater access to derivatives?
Section 14 of the Canada Pension Plan Investment Board Act limited the CPP Investment Board’s use of derivative instruments to hedging transactions or as a substitute to investing in the underlying security. The repeal of section 14 on February 1, 2007 enables the CPP Investment Board to more cost-effectively manage the portfolio and generate similar or higher returns with a similar risk profile. It also means that we now compete on a level playing field with other large pension funds. • Will the use of derivatives increase risk in the CPP Fund? No. All risk/return decisions are made within risk management policies and parameters approved by the Board of Directors of the CPP Investment Board.
