United States: Do What I Say, Not What I Do: The US Internal Revenue Service Finalizes Changes To The Mixed Straddle Rules

Keywords: US Internal Revenue Service, mixed straddle rules

A common parenting conundrum is presented by the larger sibling who continually uses force to get his or her way with their smaller counterpart. After seeing the larger child repeatedly strike the smaller sibling in order to get his or her way, a frustrated parent may be tempted to exclaim, "If you hit him again, I will spank you!" It's clear, however, that a caregiver cannot expect his ward to refrain from using force if the caregiver uses force to correct aberrant behavior.

The US Internal Revenue Service (the "IRS"), however, may have placed itself in exactly this position in promulgating changes to the mixed straddle regulations. In final regulations issued on July 17, 2014, the IRS has prevented taxpayers from recognizing losses on identified mixed straddle positions, but will force taxpayers to recognize gains on many of such transactions. In other words, the cure was not to simply prevent selective loss recognition, but instead to force only gain recognition.

Mixed Straddles: Tax Straddles Utilizing Financial Instruments Subject to 60/40 Mark-to-Market Accounting

The Internal Revenue Code of 1986, as amended (the "Code") has long provided rules for straddle positions in actively traded personal property.1 Actively traded personal property includes foreign currency traded in the interbank market,2 debt traded in a debt market3 and stock traded on a national securities exchange or an interdealer quotation system.4 These rules were enacted in response to taxpayer attempts to enter into offsetting positions and trigger the loss leg of straddle before the gain leg was recognized.5 Accordingly, the major emphasis of the tax straddle rules is to prevent taxpayers from recognizing a loss on a leg of a straddle to the extent that the taxpayer has unrecognized gain on another straddle leg.6

A "mixed straddle" exists when four conditions are met: (i) all of the positions in the straddle are capital assets, that is, none of the positions in the straddle are inventory, (ii) at least one, but not all, of the positions, in the straddle are "Section 1256 contracts," (iii) the taxpayer has not made an election under Code § 1256(d) and (iv) the straddle is not part of a larger straddle.7 Section 1256 contracts include regulated futures contracts, certain foreign currency contracts, non-equity options and dealer securities futures contracts.8

The tax accounting for Section 1256 contracts is unique. These contracts are taxed on a mark-to-market basis; 40% of the gain or loss from mark-to- market adjustments is treated as short-term capital gain or loss and the remaining 60% is treated as long-term capital gain or loss.9 A taxpayer that has made an election under Code § 1256(d) elects to forego such treatment for Section 1256 contracts held as part of a mixed straddle.10

The IRS has not promulgated rules for when a straddle is part of a larger straddle. This challenge exists when a straddle leg offsets two or more offsetting positions. For example, assume that a taxpayer has a long position in publicly traded stock. In order to protect the appreciation in such stock, the taxpayer purchases a put option on the stock with a strike price equal to the then trading price of the stock. The taxpayer finds the cost of the put option to be expensive, so in order to reduce the out-of-pocket cost for the at-the-money put option, the taxpayer sells a call option, enabling the call option purchaser to acquire the stock at 115% of the then trading price of the stock. (These two option positions are referred to as a "collar.") In this case, the put option offsets both of the long stock position and the short call option position. Accordingly, even if the options constituted Section 1256 contracts, it is unlikely that the taxpayer would have a mixed straddle because the fourth requirement would be violated.

Furthermore, the mixed straddle regulations do not provide parameters for several important issues. First, no guidance is provided on any duration issues. A mixed straddle can exist even if the mixed straddle is in effect for a much shorter duration than the hedged position. For example, a mixed straddle can exist even if a taxpayer hedges a long 30-year bond position by shorting Treasury futures for one day. It is important to note, however, that if there is a loss in the long position, the short position in the Section 1256 contract would have to be in place for at least 30 days in order to avoid a wash sale.11 The wash sale rule would limit a taxpayer's ability to claim a loss on the long position. Second, a straddle can exist even if the position represented by Section 1256 contract has a much different duration than the hedged bond. For example, a mixed straddle can exist if a taxpayer holding 30-year bonds hedges such bonds by shorting futures for two-year Treasury obligations. Last, it is not clear whether principal amounts of the two sides must be equal. In other words, is all of the gain or loss on a bond portfolio triggered when, in a mixed straddle account, a taxpayer holds $100 million of bonds, but only $10 million of short positions in Treasury futures?

The federal income tax consequences from holding a mixed straddle can be extremely adverse. As noted above, gains and losses on Section 1256 are accounted for on a mark-to-market basis, whereas the other leg of a mixed straddle, by definition, is not. Accordingly, if a taxpayer enters into a mixed straddle and, at year-end, the Section 1256 contract is in-the money, the taxpayer would be required to recognize gain on the Section 1256 contract, but would not recognize the corresponding loss on the non-Section 1256 contract leg of the straddle. Applicable regulations also re-characterize the loss from the non-Section 1256 contract leg of a mixed straddle that has not been held for one year or less as a 60% long term capital loss.12This rule prevents taxpayers from using Section 1256 contracts to generate 60% long term capital gains when there is a position offsetting the Section 1256 contract that would generate only a short term capital loss.

The Mixed Straddle Election

Code § 1092(b)(2) authorizes the IRS to provide rules for mixed straddles. This direction of authority provides that the IRS can promulgate rules for mixed straddles on a straddle-by-straddle basis as well as for mixed straddle accounts. The IRS promulgated regulations for both types of mixed straddles.13 In order for taxpayers to take advantage of these rules, they have to either identify the positions in the mixed straddle on a straddle-by-straddle basis or establish an account that is designated as a mixed straddle account. When a taxpayer identifies the legs of a mixed straddle, the positions are referred to as a "section 1092(b) identified mixed straddle."14 When a taxpayer establishes an account into which mixed straddles are placed (eliminating the need for straddle-by-straddle identification), the account is referred to as a "mixed straddle account."15 In both cases, rules are provided that mitigate the negative consequences of a mixed straddle that are described above.

Pre-Straddle Gain or Loss

In order to isolate the consequences of the mixed straddle, temporary regulations provided for a purging of all gain or loss on the mixed straddle positions immediately prior to the establishment of the mixed straddle.16 This purging was accomplished by requiring a taxpayer to recognize all gain or loss on a position that was held prior to the establishment of the mixed straddle immediately prior to the time that the position becomes part of a mixed straddle. These rules follows a direction in the legislative history to the mixed straddle rules in which Congress specifically provided that "pre-straddle gains and losses accrued at the time the mixed straddle is created [will] be recognized at such time."17

Given that the mixed straddle regulations do not provide that the straddle must be in place for any given period of time, certain taxpayers have reported pre-straddle gain or loss when entering into an identified mixed straddle that would be in place for a short period of time. In order to minimize price volatility on the Section 1256 position, taxpayers have used futures contracts over short dated debt instruments to enter into mixed straddles with respect to long-dated bonds. On mixed straddle accounts, certain taxpayers have reported that all gain and loss on a bond portfolio has been triggered when the Section 1256 position relates to less than all of the bonds in the account.18

The 2013 Proposed Regulations and a Congressional View of the Problem

In August 2013, the IRS proposed to reverse its rules that follow the Congressional mandate to cause taxpayers to recognize all gain or loss on positions that become part of an identified mixed straddle.19 Specifically, in REG-112815-12 (August 2, 2013), the IRS determined that the ability to recognize gain or loss on the positions that comprise an identified mixed straddle allows taxpayers "to selectively recognize gains and losses in inappropriate circumstances and without market constraints." The regulations were proposed to be effective as of August 1, 2013. Correlative temporary regulations, issued at the same time, provided that pre-straddle gains and losses would be recognized under the rules that would apply to such gains and losses as if the identified mixed straddle had not been established.20 Although there was no direct mention of the constructive sales rules, the proposed regulations did not override any other rules in the Code or regulations.

The proposed regulations did not apply to mixed straddle accounts.

The proposed regulations would have devastated the tax planning for insurance companies. Specifically, insurance companies hold long-term bonds, frequently until maturity. The financial crisis of 2008 and 2009 resulted in substantial losses on the bond portfolios of many insurance companies. Regulators would force the insurance companies to sell the loss positions, generating capital losses. The insurance companies, however, could not recognize gains on bonds that have appreciated because such bonds could not be sold by the insurers without regulatory disruption. In order to match the recognized capital losses with the unrecognized capital gains, when the insurance companies entered into hedges of the bonds, they would frequently create mixed straddles.

The creation of the mixed straddles allowed the insurance companies to unlock these built-in gains. In order preserve this tax planning opportunity, representatives of the insurance industry lobbied the IRS to preserve the existing rules.21 The IRS responded by changing the proposed effective date of the proposed regulations from a retroactive date of August 1, 2013 to the date that is 30 days after the promulgation of final regulations.22

Interestingly, in its tax reform efforts, Congress appears to be much more sympathetic to the plight of the insurance industry than is the IRS. Specifically, the tax reform proposals made by Rep. Dave Camp (R-MI), former Chairman of the HouseWays & Means Committee, would alleviate the character mismatch challenge for insurance companies beginning in 2015 by allowing insurance companies to treat debt instruments as ordinary property assets for hedge purposes only.23 As a result, gains and losses on bond hedging transactions would be treated as ordinary, even though the bond would remain a capital asset in the hands of the insurance company.

The Final IRS Regulations on Identified Mixed Straddles

On July 17, 2014, the IRS promulgated final regulations regarding identified mixed straddles.42 The final regulations, published in the Federal Register on July 18, 2014, provide for an effective date 30 days after that, or August 16, 2014. The preamble to the final regulations specifically provides that following the original Congressional mandate of purging gains and losses on identified mixed straddles "undermines the realization requirements reject that generally govern gain and loss recognition." The final regulations provide limited relief for the insurance industry, however, by providing for a prospective effective date, as promised in October 2013. Thus, the final regulations will allow insurance companies with built-in gains on existing bond positions to use identified mixed straddle elections to trigger such gains until August 16, 2014.

Technically, new Treasury Regulation § 1.1092(b)-6(a) provides that "unrealized gain or loss on the day prior to the day the identified mixed straddle is established with respect to such position or positions is taken into account at the time, and has the character, provided by the provisions of the Internal Revenue Code that would apply to the gain or loss if the identified mixed straddle were not established." Treasury Regulation § 1.1092(b)-6(b) provides that the holding period "killer" rule applies to the mixed straddle itself.25 The loss disallowance rule operates with respect both to unrecognized gain existing before the straddle is created as well as gain accrued during the existence of the identified mixed straddle.26

As was the case with the 2013 proposed regulations, the new rules on pre-straddle gains and losses do not apply to mixed straddle accounts.

The new final regulation is illustrated by several examples, but all of the examples ignore (or assume away) the application of the constructive sales rules. In the first example, a taxpayer holding a depreciated position in a Section 1256 contract identifies the Section 1256 contract as part of an identified mixed straddle. The example concludes that the built-in loss in the Section 1256 is recognized on the last day of the year. The example assumes that there is no change in value of the Section 1256 contract but, even if there were, presumably the loss would still be available if the Section 1256 contract appreciated after the establishment of the identified mixed straddle.27

In a second example, a taxpayer holds an appreciated non-Section 1256 position that has a short-term holding period prior to the establishment of an identified mixed straddle. The identified mixed straddle is in place for a period that, when combined with the taxpayer's pre-identified mixed straddle holding period, meets the long-term capital gain holding period. When the identified mixed straddle is terminated, the non-Section 1256 contract is disposed of. Since the taxpayer could not add the holding period during which the identified mixed straddle was in effect to its holding period, the example concludes that the gain from the disposition of the non-Section 1256 position is a short-term gain.

A third example in the regulations finesses the constructive sales issue by positing that the identified mixed straddle is terminated prior to the 30th day of the succeeding tax year.28 (More on this below.)

The Constructive Sales Rules

By 1997, Congress had become concerned that certain transactions, including the use of forward contracts to sell already-owned stock, "did not result in the recognition of gain by the taxpayer."29 In response to a number of well-publicized transactions in which taxpayers made use of planning techniques to monetize equity positions without current tax, Congress added Section 1259 (sometimes referred to as the "constructive sales rules") to the Code. In general, Code § 1259 requires that a taxpayer recognize gain, but not loss, upon entering into a "constructive sale" of an "appreciated financial position" in an amount equal to the amount of gain that would have been recognized if the position had been sold, assigned, or otherwise terminated at its fair market value on the date of the constructive sale. An "appreciated financial position" is defined as any position with respect to stock, certain debt instruments, or partnership interests if there would be gain if the position were sold, assigned or otherwise terminated at its fair market value.30

The constructive sales rules do not apply to positions in "plain vanilla" debt instruments. A debt instrument is exempt from the constructive sales rules if it unconditionally entitles a holder to a specified principal amount, interest is payable on the debt instrument at a fixed rate or at a qualified variable rate and the debt is not convertible into stock of the issuer.31 The constructive sales rules also do not apply to hedges of positions in plain vanilla debt instruments.32 For this purpose, positions include interest in future contracts, short sales and options.33 The constructive sales rules do not apply to positions that are subject to mark-to- market treatment.34 The constructive sales rules also do not apply to positions in nonmarketable securities that are settled within one year.35

Code § 1259(c) provides that a constructive sale of an appreciated financial position takes place, inter alia, if the taxpayer enters into a short sale of the same or substantially identical property or a futures or forward contract to deliver the same or substantially identical property. For purposes of the constructive sales rules, a forward contract results in a constructive sale of an appreciated financial position only if the forward contract provides for delivery of a substantially fixed amount of property for a substantially fixed price.36 Although the statute does not offer any guidance with respect to what constitutes a "substantially fixed amount of property," the Senate Committee Report accompanying the constructive sale rules provides that a forward contract that provides for "significant" variation in the amount of property to be delivered does not result in a constructive sale.37

The constructive sales rules provide an exception for certain closed transactions.38 Specifically, a constructive sale will be ignored if the transaction is closed before the 30th day of the succeeding tax year and the taxpayer holds the appreciated financial position un-hedged for at least 60 days thereafter. (Hedges are permitted, provided that they are removed by the 30th day of the subsequent taxable year.39)

Interaction of the New Identified Mixed Straddle Regulation and the Constructive Sales Rules

Many identified mixed straddle transactions will result in constructive sales. To the extent of this overlap, taxpayers that enter into identified mixed straddles will trigger the gain inherent in the non-Section 1256 contract position by reason of entering into the identified mixed straddle. Taxpayers who enter into identified mixed straddle transactions with respect to appreciated Section 1256 contracts should not be affected by the constructive sales rules because these rules specifically carve-out positions that are subject to mark-to-market treatment. Accordingly, the timing rule illustrated in Treasury Regulation § 1.1092(b)-6(d)(Ex. 1) would apply even if the Section 1256 contract in that example referenced as asset potentially subject to the mark-to-market rules.

In addition, insurance companies desiring to trigger gain inherent in their bond portfolios are unlikely to be able to make affirmative use of the constructive sales rules. As recited above, the constructive sales rules do not apply to "plain vanilla" debt instruments. A significant portion of the bond portfolios of insurance companies are likely to be composed of debt instruments that are within this definition.

For all other taxpayers, however, the mixed straddle rules will become a "heads I win, tails you lose" proposition because of the constructive sales overlap. For taxpayers holding appreciated financial positions who enter into identified mixed straddles, gain will be triggered, but loss will be deferred. Taxpayers who desire to avoid this predicament will be required to terminate their identified mixed straddles before the 30th day of the succeeding tax year to take advantage of the statutory exception for closed transactions. Otherwise, the use of the identified mixed straddle rules will remain a one-way proposition.

Mark Leeds is a tax partner in Mayer Brown's New York office and the editor-in-chief of Derivatives: Financial Products Report. Mark will be speaking about the changes to the straddle rules at PLI's Advanced Swaps and Other Derivatives 2014 Conference in New York on October 17, 2014.

Footnotes

1 Code § 1092(a)/

2 Code § 1092(d)(7)(B),

3 Treas. Reg. § 1.1092(d)-1(b)(1)(vii).

4 Treas. Reg. § 1.1092(d)-1(b)(1)(I)(i), (ii).

5 See Staff of the Joint Committee on Taxation, General Explanation of the Economic Recovery Tax Act of 1981, p. 282.

6 See Code § 1092(a)(1).

7 Temp. Treas. Reg. § 1.1092(b)-5T(e).

8 Code § 1256(b)(1).

9 Code § 1256(a)(1), (3).

10 It is worth noting that the definition of a mixed straddle in Code § 1256(d)(4) is not identical to the definition of a mixed straddle in Temp. Treas. Reg. § 1.1092(b)-5T(e). The IRS had specific authority to create this disparate treatment. See Code § 1092(b)(2)(C).

11 Temp. Treas. Reg. § 1.1092-1T(a)(1); F.S.A. 1993-664.

12 Temp. Treas. Reg. § 1.1092(b)-2T(b)(2).

13 Temp. Treas. Reg. § 1.1092(b)-3T (rules for mixed straddles, determined on a straddle-by-straddle basis); Temp. Treas. Reg. § 1.1092(b)-4T (rules for mixed straddle accounts).

14 Temp. Treas. Reg. § 1.1092(b)-3T(a).

15 Temp. Treas. Reg. § 1.092-4T(b)(1).

16 Temp. Treas. Reg. § 1.1092(b)-3T(b)(6) (straddle-bystraddle rule); Temp. Treas. Reg. § 1.1092-4T(c)(5).

17 H.R. Rep. No. 98-861, 98th Cong., 2nd Sess. 912 (1984).

18 See Sheppard, Trouble with Mixed Straddle Regulations, Tax Notes (October 28, 2013).

19 T.D. 9627, 2013-35 I.R.B., REG-112815-12 (Aug. 1, 2013).

20 Temp. Treas. Reg. § 1.1092-6T, as promulgated by T.D. 9627 (August 1, 2013).

21 See Letter to Messrs. Mark J. Mazur andWilliam J. Wilkins of the Treasury and IRS, respectively, Re: Public Comments on Temporary and Proposed Identified Mixed Straddle Regulations, from PriceWatershouseCoopers (September 12, 2013), reprinted at Tax Analysts, Document No. 2013-22030.

22 RIN 1545–BK99 (FR Doc. 2013–25360 Filed Oct. 25, 2013).

23 Prop. Code § 1221(b)(4).

24 T.D. 9678 (July 17, 2014).

25 See Temp. Treas. Reg. § 1.1092(b)-2(a)(1).

26 Treas. Reg. § 1.1092-6(c).

27 Treas. Reg. § 1.1092(b)-6(d)(Ex. 1)

28 Treas. Reg. § 1.1092(b)-6(d)(Ex. 3)

29 See Joint Committee on Taxation, General Explanation of Tax Legislation Enacted in 1997, p. 173 (December 17, 1997).

30 Code § 1259(b)(1).

31 Code § 1259(b)(2)(A).

32 Code § 1259(b)(2)(B).

33 Code § 1259(c)(3).

34 Code § 1259(b)(2)(C).

35 Code § 1259(c)(2).

36 Code § 1259(d)(1).

37 S. Fin. Rep. No. 105-33, 105th Cong., 1st Sess. 125-6 (1997).

38 Code § 1259(c)(3)(A).

39 Code § 1259(c)(3)(B).

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2014. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.