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HMRC internal manual

Stamp Taxes on Shares Manual

From
HM Revenue & Customs
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Derivatives: introduction: what is a derivative market

While a stock exchange is an exchange or market place permitting its members to trade stocks and shares, other markets exist specifically covering the writing and trading of derivatives on assets other than stocks and shares.

For example:

The Commodity Derivative Market - covers derivative contracts written on gas, water, electricity, wheat etc;

The International Petroleum Exchange - is Europe’s leading energy futures and options exchange;

The Currency Market - covers derivative contracts written on price movements in global currencies;

The Stock Indices market - covers derivative contracts on price movements on leading stock exchange indices or sectors.

As derivative trading on these markets or exchanges do not involve settlement of ‘stock or marketable securities’ (Stamp Duty) or ‘chargeable securities’ (Stamp Duty Reserve Tax), there are no stamp taxes implications.

There is, however, one further derivative market that can have stamp implications. The Equity Derivative Market allows members to write and trade derivative contracts based on the underlying price or value of stocks and shares.