Financial Instrument

Definition

Financial Instrument. A written contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity

A financial instrument can be thought of as a template that defines an arrangement structure that remains to be fleshed out with terms and parameters in order to establish a specific instance of the contract.

It is a tradeable asset of any kind, either cash, evidence of an ownership interest in an entity, or a contractual right to receive or deliver cash or another financial instrument.

Example

Examples of financial instruments include:

• Cash
• evidence of an ownership interest in an entity, or
• a contractual right to receive (or deliver) cash, or another financial instrument.

In Forfeiting, the rights under the financial instrument are normally independent of the underlying transaction which gave rise to the financial instrument, since they rely on the legal obligations created by the legal status of the financial instrument itself.

See Also

• http://ec.europa.eu/internal_market/accounting/docs/consolidated/ias32_en.pdf

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.