28 February 2013
The International Accounting Standards Board (IASB) today published for public comment an Exposure Draft of proposed amendments to IAS 39 Financial Instruments: Recognition and Measurement. Corresponding requirements are proposed to be included in the forthcoming hedge accounting chapter in IFRS 9 Financial Instruments.
The objective of the proposed amendments is to introduce a narrow scope exception to the requirement for the discontinuation of hedge accounting in IAS 39. Specifically, they propose an exception when a derivative that has been designated as a hedging instrument, is novated from one counterparty to a central counterparty (CCP), as a consequence of new laws or regulations if specific conditions are met (in this context, novation of the derivative contract is the substitution of the original counterparty to the contract for a new counterparty, being a CCP).
The IASB considered the fact that the legislative changes that would require such novation of derivatives would be widespread across jurisdictions. These legislative changes were prompted by a G20 commitment to improve transparency and regulatory oversight of over-the-counter derivatives in an internationally consistent and non-discriminatory way.
The IASB is aware that these new laws or regulations could come into effect in some jurisdictions very soon. Consequently the IASB has published this Exposure Draft with a short (30-day) comment period.
The Exposure Draft can be accessed via the project website or on the ‘Comment
on a proposal´ page on www.ifrs.org.
The IASB requests comments on the Exposure Draft by 2 April 2013.