IAS39 amended to allow for macro hedging
Controversial International Accounting Standards Board (IASB) proposals for the marking-to-market of derivatives, known as IAS39, are to be amended to allow for ‘macro hedging’.
Last August the IASB proposed that macro-hedging be allowed as long as the company split the macro portfolio into time periods based on expected re-pricing dates, and that they designate assets or liabilities against them as hedged items. They proposed that all the assets from which the hedged amount is drawn must be items whose fair value changes in response to the risk being hedged and that could have qualified for fair-value hedging under IAS 39 if hedged individually.
“This amendment is a further step in our project to ease the implementation of IAS 39 for the thousands of companies required to implement international standards in 2005,” said David Tweedie, IASB chairman. “The IASB has made it clear that any amendments must be within the basic principles of hedge accounting contained in IAS 39, but that we will work within those principles to simplify the application of the standard. This amendment does not mark the end of the board’s work on the subject of financial instruments.”
The IASB added that it also intends to set up an international working party to examine the fundamentals of IAS39 with a view to ultimately replacing it, “in due course”.
“The financial instruments working party will assist in improving, simplifying and ultimately replacing IAS 39, and examine broader questions regarding the application and extent of fair-value accounting – a topic on which the IASB has not reached any conclusion,” said the IASB.Any replacement could take several years, it said.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
One year on, regulators still want a cure for bank runs
Broad support for higher outflow assumptions on uninsured deposits, but that won’t save insolvent banks
Watchlist and adverse media monitoring solutions 2024: market update and vendor landscape
This Chartis report updates Watchlist monitoring solutions 2022 and focuses on solutions for sanctions (name and transaction) screening and monitoring adverse media and its related elements
Basel Committee reviewing design of liquidity ratios
Focus on LCR and NSFR after Silicon Valley Bank and Credit Suisse, but assumptions may not change
Risk, portfolio margin, regulation: regtech to the rescue
A white paper outlining the complexity of setting the course for risk, margin and regulation
Prop shops recoil from EU’s ‘ill-fitting’ capital regime
Large proprietary trading firms complain they are subject to hand-me-down rules originally designed for banks
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Most read
- Basel Committee reviewing design of liquidity ratios
- Breaking out of the cells: banks’ long goodbye to spreadsheets
- Too soon to say good riddance to banks’ public enemy number one