Featured Product

    ISDA Responds to FASB Proposal on Derivatives and Hedging Standard

    January 22, 2020

    ISDA published its response to the FASB’s proposed Accounting Standards Update on derivatives and hedging (Topic 815). In its response, ISDA supports the efforts of FASB to clarify and improve the US Generally Accepted Accounting Principles (GAAP) applicable to hedging activities. However, the ISDA response suggests the need for improvements via a phase-two hedge improvements project, including changes related to the hedged risk in a cash flow hedge.

    While the FASB efforts to provide clarification on certain matters in the proposed Update is appreciated, ISDA encourages FASB to add a phase-two targeted hedge accounting improvements project to its agenda. ISDA believes that such project could address certain practice issues and other matters that remain unresolved or have arisen since the issuance of Accounting Standards Update 2017-12 on targeted improvements to accounting for hedging activities under Topic 815, which would be more than technical corrections.

    Additionally, ISDA believes certain changes are needed for with respect to Issue 1 in the proposed Accounting Standards Update, which will provide clarification for preparers for certain topics included in Accounting Standards Update No. 2017-12. The amendments in this proposed Update have been classified under four issues.

    • Issue 1 is related to changes in hedged risk in a cash flow hedge.
    • Issue 2 is related to contractually specified components in cash flow hedges of non-financial forecasted transactions.
    • Issue 3 is related to foreign-currency-denominated debt instrument as hedging instrument and hedged item (Dual Hedge).
    • Issue 4 is related to using the term prepayable under the shortcut method. 

    ISDA agrees with the proposed Update on Issues 2, 3, and 4 and does not have any specific comments in relation to those Issues. With respect to Issue 1, the ISDA members believe certain changes to the proposed Update will make it more operable, including an improvement to the existing Topic 815 guidance related to a change in hedged risk within a designated hedging relationship. 


    Related Links

    Keywords: Americas, US, Banking, Accounting, Accounting Standards Update, Derivatives and Hedging, Hedge Accounting, Topic 815, FASB, ISDA

    Related Articles

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699