derivative contracts

derivative contracts
A derivative, derivatives or derivative contracts are financial instruments whose value derives from the value and characteristics of underlying products. The underlying assets (often referred to as the "underlying" or "underlier") are extremely varied and range from commodities, currencies and indices to individual shares. The main feature of a derivative is that it allows the user to take an exposure in relation to the underlying asset without actually requiring a direct investment in it. Derivatives include futures, options and swaps.
For UK corporation tax purposes, derivative contracts are defined as contracts that satisfy the conditions contained in Schedule 26 to the Finance Act 2002.
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USA
A contract that operates and is valued by reference to the value or performance of an underlying asset, entity, rate, index or instrument. Underlying assets range from commodities, currencies, debt obligations and indices to individual equity shares and baskets of equities. Derivatives allow the user to take on exposure to an underlying asset without actually requiring a direct investment in the asset. Derivatives include futures, options and swaps.
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Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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  • derivative — de·riv·a·tive 1 /də ri və tiv/ n: a contract or security that derives its value from that of an underlying asset (as another security) or from the value of a rate (as of interest or currency exchange) or index of asset value (as a stock index) ◇… …   Law dictionary

  • derivative contract — A derivative, derivatives or derivative contracts are financial instruments whose value derives from the value and characteristics of underlying products. The underlying assets (often referred to as the underlying or underlier ) are extremely… …   Law dictionary

  • derivative counterparty — An entity which enters into derivative contracts (used for the purposes of efficient portfolio management or to protect against exchange risks) with the fund or other counterparty. Related links portfolio Practical Law Dictionary. Glossary of UK …   Law dictionary

  • Derivative (finance) — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Derivative instruments — Contracts such as options and futures whose price is derived from the price of the underlying financial asset. The New York Times Financial Glossary …   Financial and business terms

  • exchange-traded derivative contracts — Some derivatives are traded on organized exchanges. These derivatives usually have margin requirements. Common exchange traded derivatives include futures and options. Other derivatives, such as swaps, are not exchange traded but are traded in… …   Financial and business terms

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  • Derivative — A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common… …   Investment dictionary

  • derivative — A financial instrument, the price of which has a strong relationship with an underlying commodity, currency, economic variable, or financial instrument. The different types of derivatives are futures contracts, forwards (see forward dealing),… …   Big dictionary of business and management

  • derivative — A financial instrument, the price of which has a strong correlation with an underlying commodity, currency, economic variable or financial instrument. The different types of derivatives are futures contracts, forwards (see forward dealing), swaps …   Accounting dictionary

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