(7)The Policy Manual applies to non-centrally cleared derivatives, with the exception of physically settled foreign exchange (‘FX’) forwards and swaps, FX transactions embedded in cross-currency swaps associated with the exchange of principal, physically settled commodity forwards and, until further notice, non-centrally cleared single-stock options, equity basket options and equity index options. For the purposes of the Policy Manual, ‘non-centrally cleared derivative’ refers to an OTC derivative product (as defined in section 1B, Part 1 of Schedule 1 of the Securities and Futures Ordinance (‘SFO’)) that is not cleared through a central counterparty (as defined in section 2(1) of the Banking (Capital) Rules). That definition of ‘non-centrally cleared derivative’ should be considered equivalent to that of OTC derivatives in Regulation (EU) No 648/2012. This decision should therefore be taken with respect to arrangements applying to OTC derivatives that are subject to margins under the Policy Manual.