An instrument whose value or performance changes in reaction to non-financial risks, broadly certain non-financial variables. Simply speaking, it denotes any instrument that is not a financial instrument.

A non-financial instrument may also be a derivative, if it is readily convertible into, and is settled in, cash (cash settlement)- i.e., it is subject to potential net settlement (not delivering or taking delivery of the underlying non-financial item) and it does not constitute part of an entity’s normal usage requirements (pertaining to the underlying)- i.e., own use contracts.