Section 584: Hybrid derivatives with embedded derivatives
1542.This section treats a relevant contract divided in accordance with generally accepted accounting practice between one or more embedded derivatives and a host contract as a number of relevant contracts for the purposes of this Part. It is based on paragraph 2B of Schedule 26 to FA 2002.
1543.It applies if a relevant contract that is not itself a derivative for accounting purposes is so divided into one or more embedded derivatives and the remaining rights and liabilities (“the host contract”) which by themselves amount to a relevant contract.
1544.The host contract is also treated as a relevant contract with the same consequences as for the embedded derivative (in this respect, this section differs from its two successors).
1545.A relevant contract which may be treated as containing such deemed relevant contracts is called a “hybrid derivative” (subsection (4)). Subsection (5) lists the provisions which apply in relation to a hybrid derivative.
