Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

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...

Derivatives and Betting: Enforceability and Regulatory Perimeter under FSMA 2000 and the Gambling Act 2005

Published by a LexisNexis Banking & Finance expert

Practice notes

What does this Practice Note cover?

This Practice Note sets out an overview of the legal regime regulating gaming and wagering in relation to financial derivatives, with specific reference to the relevant provisions of the Financial Services and Markets Act 2000 (FSMA 2000) and the Gambling Act 2005 (GA 2005). It indicates when derivative contracts might be categorised as ‘gaming’ or ‘wagering’ under UK law, and summarises how FSMA 2000 and GA 2005 address their enforceability.

Gaming Acts 1845 and 1892

Under section 18 of the Gaming Act 1845 (GA 1845), every agreement made by way of gaming or wagering was void, and no proceedings could be brought to recover any money won on a wager. By section 1 of the Gaming Act 1892 (GA 1892), any promise, whether express or implied, to reimburse any person any sum paid by him under, or in respect of, any contract or agreement avoided by GA 1845, s 18, or to pay any money by way of commission, fee, reward, or otherwise in relation to any such contract, or for any services concerning or connected with it, was void, and no action could...

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Web page updated on 21/05/2026

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