Featured Product

    ISDA Issues Response to IASB Draft on Interest Rate Benchmark Reform

    June 19, 2019

    ISDA issued a response to the IASB exposure draft on interest rate benchmark reform (ED/2019/1). The letter welcomes the steps taken by IASB to amend old and new standards on financial instruments, namely IAS 39 and IFRS 9. IASB had, in May 2019, proposed the Phase I amendments in response to the challenges posed by the interbank offered rates (IBOR) reform in relation to the uncertainty caused by the hedge accounting forward-looking rules of IFRS. The response of ISDA points out that IASB should accelerate the work to address the next phase of issues arising from IBOR reform.

    The detailed responses are included as an appendix to the response letter. The response letter highlights that, while it will be necessary to provide some disclosure of how entities apply the relief, ISDA suggests any incremental disclosure over the one already required by IFRS 7 (Financial instruments: Disclosures) should be kept to a minimum. Quantitative disclosure should relate only to the nominal value of hedging instruments and hedged items to which the relief is applied.

    ISDA requests IASB to consider Phase II in parallel with completing the Phase I amendments. The Phase II issues that are especially urgent are as follows:

    • Clarification that entities can future-proof their hedge designations to reference a transition from an IBOR to a risk-free rate (RFR), so as to allow continuity of the hedge relationship.
    • On transition from IBOR to a RFR, guidance that the consequential change to the hedge designation will not trigger the discontinuance of the hedging relationship.
    • Relief from the retrospective hedge effectiveness test under IAS 39 for hedging relationships affected by IBOR reform. A condition for applying the relief would be that the underlying economic relationship between the hedged item and the hedging instrument is expected to continue until the transition is complete, similar to the requirements of IFRS 9. The relief would be helpful for the entities that are unable to change their hedge accounting approach to IFRS 9 due to the need to continue operating a macro cash flow or portfolio fair value hedge accounting model, which IFRS 9 cannot presently accommodate.

     

    Related Links

    Keywords: International, Accounting, Banking, IFRS 9, IAS 39, Financial Instruments, Hedge Accounting, IBOR, Phase I, Phase II, Interest Rate Benchmarks, IASB, ISDA

    Featured Experts
    Related Articles
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News
    News

    IOSCO Welcomes Work on Sustainability-Related Corporate Reporting

    The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    News

    BoE Allows One-Day Delay in Statistical Data Submissions by Banks

    The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.

    September 14, 2022 WebPage Regulatory News
    News

    ACPR Amends Reporting Module Timelines Under EBA Framework 3.2

    The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.

    September 14, 2022 WebPage Regulatory News
    News

    APRA to Modernize Prudential Architecture, Reduces Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.

    September 12, 2022 WebPage Regulatory News
    News

    PBC Issues List of Systemic Banks, Adds 2 Foreign Banks to CERB List

    The China Banking and Insurance Regulatory Commission (CBIRC) published the administrative measures for internal control of wealth management companies, which come into force on the day of promulgation.

    September 09, 2022 WebPage Regulatory News
    News

    PRA Publishes Discussion Paper on Its Future Approach to Policy

    The Prudential Regulation Authority (PRA) proposed its approach to policy-making as it takes on wider rulemaking responsibilities under the Financial Services and Markets Bill.

    September 08, 2022 WebPage Regulatory News
    News

    ECB Publishes Opinion on Proposed Regulation on Data Act

    The European Central Bank (ECB) published its opinion on the proposal for a regulation on harmonized rules on fair access to and use of data (Data Act).

    September 08, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8511