Classification criteria

Financial assets held for trading include financial instruments held with the intention of generating, in the short term, profit from differences in their price.

Recognition criteria

Debt and equity instruments, together with contracts held for trading purposes are classified in this category. Initial recognition is at the instrument’s fair value, not considering the attributable costs and income from this instrument that are taken to profit or loss.

Measurement criteria

Also subsequent to initial recognition, financial assets held for trading purposes are measured at fair value. To determine the fair value of such instruments quoted on an active market, market quotations are used.

Equity instruments not quoted in an active market and for which fair value cannot be reliably determined, are measured, instead, at cost. If a market for a financial instrument is not active, an entity establishes fair value by using a measurement technique that makes maximum use of market inputs and includes recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis, and internal models or measurement techniques generally used for pricing financial instruments.

Derecognition criteria

Financial assets held for trading are derecognised the moment in which all the financial asset’s risks and rewards have been transferred. If the risks and rewards are maintained, these financial assets continue to be recognised, even though the ownership has actually been transferred to a third party. In such cases, a financial liability is recognised equal to the amount collected at the moment of transfer.

Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are only derecognised if all control of the asset has been transferred. If, instead, control has been maintained, the financial assets are recognised proportionally to the entity’s continuing involvement in the asset, measured by exposure to changes in value in the transferred assets and by changes in the cash flows from the same.

Lastly, as far as concerns the transfer of rights to collect on the financial asset, the cash assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more companies is taken on.