Trading and non-trading credits and debits

Trading derivative contracts

A company will have a trading derivative contract if it entered or acquired the derivative contract for the purposes of its trade (CTA09/S573(1)).

A bank or financial trader that sells or deals in derivatives will enter into or acquire such derivative contracts for trade purposes. But equally a company that uses a derivative for purposes that are ancillary to trading operations will satisfy the requirement. Examples are:

a manufacturer using a commodity derivative to hedge raw material prices;

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