It is always easy to find fault with a classification. There are a hundred ways of arranging any set of objects, and something may almost always be said against the best, and in favour of the worst of them. But the merits of a classification depend on the purposes to which it is instrumental.
John Stuart Mill
Auguste Comte and Positivism
Classification as used here attempts to arrange traded financial derivatives into product classes or groups based on similar or related properties; properties as identified within a defined scheme of taxonomies; and similarity of properties as meaningful within some context.
The motivation for classification here is not much different to classification in biology in that the focus is not so much on the naming of things but on coming up with the best possible ordering of our knowledge base about the properties of the objects being classified such that the ordering gives us the greatest contextual command of the knowledge already acquired about the objects, and also leads us in the most direct way to the acquisition of more.
In plain English and as an example, within the context of classification for risk based P&L attribution policy as an example, we want to think of how to order the properties of financial derivative contracts in such a way that we can group them around the types of risk sensitive behavior they are likely to exhibit and thus how their P&L behavior may be best explained. Additionally, a fundamentally intuitive grouping helps shed light on more risk-sensitive properties that may be applicable within groups.