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Derivative definition

What does Derivative mean? A derivative is a contract whose value or payoff is derived from an underlying asset, index or reference measure, for example a floating rate of interest, a currency exchange rate, an equity index or a commodity price. In practice, lawyers see derivatives as options, futures, forwards and swaps (including interest rate, currency and commodity derivatives), traded on exchanges or over the counter for hedging, risk management, speculation or arbitrage. The term is descriptive across legal contexts. For regulatory purposes, the UK perimeter classifies derivatives as specified investments under the Financial Services and Markets Act 2000 (Regulated Activities) Order...

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UK EMIR for pension schemes: indefinite clearing exemption, PS23/2-aligned reporting reforms and uncleared margin obligations

Practice notes
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This Practice Note

This Practice Note examines the European Market Infrastructure Regulation (EMIR), Assimilated Regulation (EU) 648/2012 (UK EMIR) as it has operated in the UK since IP completion day (11 pm on 31 December 2020) and the duties it places on pension schemes. For details on how UK EMIR departs from EMIR (EU) 648/2012 (OJ L 201, 27.7.2012, p. 1) (EU EMIR) and the circumstances in which EU EMIR applies, see Practice Note: UK EMIR—essentials. EU EMIR is the key EU instrument governing the over the counter (OTC) Derivatives market. It extends to counterparties to derivatives transactions, including EU pension arrangements and common investment funds, central counterparties (CCPs) and trade repositories, although the range of obligations in EU EMIR has been introduced on a staged basis. EU EMIR took effect on 16 August 2012, with most provisions applying once the relevant technical standards had come into force. It has been modified by a number of measures, including:

  • Regulation (EU) 2019/834 (OJ L 141/42) (referred to as EU EMIR Refit)
  • Regulation (EU) 2019/2099 (OJ L 322/1) (referred to as EU EMIR 2.2)

On 7 February 2024 the Council and the Parliament reached a provisional political agreement on a review of...

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David McCallum
David McCallum

David McCallum is Of Counsel in the Capital Markets and Derivatives team of CMS Cameron McKenna Nabarro Olswang LLP advising investment banking clients on derivatives and structured products linked to a wide range of asset classes including equities, indices, commodities, credit, funds and FX. David in particular focuses on securitised and OTC credit transactions and the drafting and structuring of proprietary indices....

Web page updated on 22/05/2026

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