CORPORATIONS ACT 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

PART 7.1 - PRELIMINARY  

Division 3 - What is a financial product?  

Subdivision B - The general definition  

SECTION 763C   763C   WHEN A PERSON MANAGES FINANCIAL RISK  


For the purposes of this Chapter, a person manages financial risk if they:


(a) manage the financial consequences to them of particular circumstances happening; or


(b) avoid or limit the financial consequences of fluctuations in, or in the value of, receipts or costs (including prices and interest rates).

Note 1: Examples of actions that constitute managing a financial risk are:

  • (a) taking out insurance; or
  • (b) hedging a liability by acquiring a futures contract or entering into a currency swap.
  • Note 2: An example of an action that does not constitute managing a financial risk is employing a security firm (while that is a way of managing the risk that thefts will happen, it is not a way of managing the financial consequences if thefts do occur).


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