Definition
Financial derivatives are financial instruments linked to a specific instrument, financial indicator, or commodity, through which specific financial risks can be traded in financial markets on their own. Financial derivatives include options, futures, and similar instruments, as well as swaps.
Further information
Financial derivatives meet the following conditions: a) they are linked to a financial or non-financial asset, a group of assets, or an index; b) they are tradable or can be offset in the market; and c) no principal amount is anticipated to be repaid.
Financial derivatives fall under category 7 of the financial instruments classification, according to the European System of Accounts 2010.
Classification of financial instruments (European System of Accounts 2010).
Related concepts
References
- Sixth Edition of the IMF’s Balance of Payments and International Investment Position Manual.
- European System of Accounts 2010. Interactive version.
Update date: January 2025
