What is a hedging transaction?

A hedging transaction is a transaction that meets both of the following conditions:

1. You entered into the transaction in the normal course of your trade or business primarily to manage the risk of:
   • Price changes or currency fluctuations on ordinary property you hold (or will hold), or;
   • Interest rate or price changes, or currency fluctuations, on your current or future borrowings or ordinary obligations.
2. You clearly identified the transaction as being a hedging transaction before the close of the day on which you entered into it.