Last update 17/08/2019
A financial asset or financial liability that:
- is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
- on initial recognition is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
- is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).
Additional guidance is provided in IFRS 9 BA section on IFRS 9 Appendix A Definitions:
Financial assets and liabilities held for trading
BA.6 Trading generally reflects active and frequent buying and selling, and financial instruments held for trading generally are used with the objective of generating a profit from short-term fluctuations in price or dealer’s margin.
BA.7 Financial liabilities held for trading include:
- derivative liabilities that are not accounted for as hedging instruments;
- obligations to deliver financial assets borrowed by a short seller (ie an entity that sells financial assets it has borrowed and does not yet own);
- financial liabilities that are incurred with an intention to repurchase them in the near term (eg a quoted debt instrument that the issuer may buy back in the near term depending on changes in its fair value); and
- financial liabilities that are part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking.
BA.8 The fact that a liability is used to fund trading activities does not in itself make that liability one that is held for trading.
Debt instruments (including hybrid contracts), Derivatives and Equity instruments that failed the SPPI test (solely payment of principal and interest) and are held for trading are valued at fair value through profit or loss.
Examples are: Derivative assets and investments in debt and equity securities that are held in a trading portfolio. Derivative liabilities and other trading liabilities
Held for trading
Held for trading
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