Featured Product

    ESMA Issues Response to IASB Draft on Interest Rate Benchmark Reform

    June 18, 2019

    ESMA published a letter to IASB as a response to the IASB exposure draft on interest rate benchmark reform. ESMA supports the IASB initiative to provide, in a staged approach, a timely response to the increasing level of uncertainty about the possible financial reporting impact of the long-term viability of some interest rate benchmarks. Additionally, ESMA issued a letter to European Financial Reporting Advisory Group (EFRAG) on the draft comment letter of EFRAG on the IASB exposure draft on interest rate benchmark reform. Appendices to the letters set out detailed comments on the exposure draft of IASB.

    The response letter to IASB highlights the following key points:

    • ESMA agrees with the proposals set out in the exposure draft to amend old and new standards on financial instruments, namely IAS 39 and IFRS 9. The proposals address the issues that affect the application of hedge accounting requirements in the period before the replacement of an existing interest rate benchmark with an alternative interest rate, by setting out well-specified exceptions to the relevant requirements in IFRS 9 and IAS 39. 
    • ESMA recommends that IASB should consider providing clarifications about limitations on the application of the proposed exceptions, which are included in the basis for conclusions of the exposure draft, as amendments to the accompanying authoritative guidance of both IFRS 9 and IAS 39. This would promote consistent application and facilitate both implementation and enforceability of the proposed changes.
    • ESMA urges IASB to proceed rapidly toward finalization of the proposed amendments, so that they can be applicable for the preparation of the 2019 annual financial statements.
    • ESMA concurs with IASB that there are other issues that might affect financial reporting when an existing interest rate benchmark is replaced with an alternative benchmark as part of a second phase. ESMA highlighted that addressing these "post-replacement" accounting issues is urgent and, therefore, encourages IASB to address these aspects as soon as possible.

    In the view of ESMA, the next phase of the proposed changes should consider and address issues that relate, among others, to the application of the guidance on de-recognition and modification of financial instruments, the implications for the determination of fair value, and the implications on hedge accounting of changes in the contractual terms and in the contractual documentation.

     

    Related Links

    Keywords: International, Europe, Accounting, Banking, IFRS 9, IAS 39, Financial Instruments, Hedge Accounting, IBOR, Interest Rate Benchmark, IASB, ESMA

    Featured Experts
    Related Articles
    News

    MAS Concludes Blockchain Payments Prototype Shows Commercial Potential

    MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.

    July 13, 2020 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    APRA Updates Reporting Validation Rules in July 2020

    APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    July 10, 2020 WebPage Regulatory News
    News

    PRA to Partly Apply EBA Guidelines on Disclosures for COVID Measures

    PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.

    July 10, 2020 WebPage Regulatory News
    News

    EBA Updates List of Correlated Currencies Under CRR

    EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5469