IFRS 9 expected to boost options with corporates

New rules limit options volatility in P&L; some hedgers already taking advantage, banks claim

Welcome boost: IFRS 9 allows earnings results volatility to be smoothed out

Dealers are predicting an increase in the use of options by non-financial corporates under new accounting standards. The new approach would address an options-specific source of earnings volatility that has made corporate hedgers reluctant to use the product.

Under the current International Accounting Standard (IAS) 39 rules, the mark-to-market of the time value of an option is reported in a hedger's profit and loss (P&L) statement. The new International Financial Reporting Standard 9 (IFRS 9)

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