Derivatives derive their value from the values of other financial instruments. Eg a stock option derives its value from the value of a stock and therefore, it is considered a derivative. A swap is also a derivative due to the fact that its value is derived from the interest rate indices.

Conversely, the primary instruments are cash instruments, with value acquired directly from markets - equities, bonds, commodities, etc.

Forward and future contracts, swaps, and options are the most common types of derivatives.