Introduction to held for trading (HFT)
- Held-for-trading security is a debt or an equity investment bought with the intention to sell within a short period. The time period is usually less than a year. While holding onto the asset, the investor expects to increase the security value and then ultimately sell it for a profit.
Understanding Held-For-Training Securities
They are short-term assets. The value of these investments is recorded at fair value, and unrealised gains and/or losses are covered as earnings.
The original cost is determined by their fair value when making the purchase. The market value of trading securities keeps changing, and investors must report unrealised gains or losses as earnings.
Examples For Held-For-Training Securities
- Derivative liabilities that are not hedging instruments
- Commitments to deliver financial assets after borrowing them
- Financial liabilities acquired to repurchase in the future
- Financial liabilities that are operated together and for which there is proof of a recent pattern of short-term profit-taking.
