Featured Product

    FASB Proposes Guidance to Assist in Transition to New Reference Rates

    September 05, 2019

    FASB proposed an Accounting Standards Update (topic 848) that would provide temporary optional guidance to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. The comment period for the proposed update ends on October 07, 2019. The guidance would apply only to contracts or hedging relationships that reference London Interbank Offer Rate (LIBOR) or another reference rate that is expected to be discontinued due to reference rate reform. The effective date would be the date of issuance of the final guidance. The guidance would not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022.

    The guidance is intended to help stakeholders during the global market-wide reference rate transition period. Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, which is the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR and other interbank offered rates (IBORs) toward rates that are more observable or transaction-based and less susceptible to manipulation, FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition. This proposed Accounting Standards Update would provide optional expedients and exceptions for applying generally accepted accounting principles, or GAAP, to contract modifications and hedging relationships affected by the reference rate reform. An entity can elect to apply the proposed amendments as follows:

    • The optional expedients for contract modifications would be applied consistently for all contracts or transactions within the relevant Topic, Subtopic, or Industry Subtopic within the Codification that contains the guidance that otherwise would be required to be applied.
    • The optional expedients for hedging relationships would be elected on an individual hedging relationship basis.

    In response to concerns about structural risks of IBORs and particularly the risk of cessation of LIBOR, regulators worldwide have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The examples of reference rates undergoing reform include US LIBOR, GBP LIBOR, EURIBOR, CHF LIBOR, and JPY LIBOR. 

     

    Related Links

    Comment Due Date: October 07, 2019

    Keywords: Americas, US, Banking, Insurance, Securities, Accounting, Interest Rate Benchmark, Reference Rate Reform, LIBOR, IBORs, GAAP, Topic 848, FASB

    Related Articles
    News

    APRA to Transition to Annual Stress Testing of Large Banks in 2020

    APRA published key findings of the stress testing assessment conducted on authorized deposit-taking institutions.

    February 21, 2020 WebPage Regulatory News
    News

    EC Consults on Review of Non-Financial Reporting Directive

    EC is launched a consultation on the review of the Non-Financial Reporting Directive or NFRD (Directive 2014/95/EU, as part of its strategy to strengthen sustainable investment in Europe.

    February 20, 2020 WebPage Regulatory News
    News

    EIOPA Consults on Standards for Supervisory Reporting Under PEPP Rule

    EIOPA is consulting on the implementing technical standards for supervisory reporting and cooperation, as mandated by the Pan-European Personal Pension Product (PEPP) Regulation (Regulation 2019/1238).

    February 20, 2020 WebPage Regulatory News
    News

    ECB Report on Transfer of Liquidity from EONIA Products to €STR

    ECB published a report on the transfer of liquidity from the cash and derivatives products of the Euro Overnight Index Average (EONIA) to the Euro Short-Term Rate (€STR).

    February 19, 2020 WebPage Regulatory News
    News

    ESRB Publishes Report on Systemic Cyberattacks

    ESRB published a report that explores systemic implications of cyber incidents, such as cyberattacks.

    February 19, 2020 WebPage Regulatory News
    News

    FSB Chair Sets Out Key Deliverables for G20 Presidency of Saudi Arabia

    FSB published a letter from the Chair Randal K. Quarles to the G20 finance ministers and Central Bank governors ahead of the meetings in Riyadh on February 22-23.

    February 19, 2020 WebPage Regulatory News
    News

    CFTC Proposes Rules on Derivative Position Limits and Swap Execution

    CFTC approved a proposed rule on position limits for derivatives and a proposed rule amending requirements for certain Swap Execution Facilities and real-time reporting.

    February 19, 2020 WebPage Regulatory News
    News

    BIS Appoints Heads of Innovation Hubs in Singapore and Switzerland

    BIS announced key personnel appointments to the Innovation Hubs in Singapore and Switzerland.

    February 19, 2020 WebPage Regulatory News
    News

    BOJ Deputy Governor Speaks on Interest Rate Benchmark Reform in Japan

    The Deputy Governor of BOJ Masayoshi Amamiya spoke in Tokyo about how Japan should proceed with interest rate benchmark reform over the next two years until the end of 2021, when the discontinuation of LIBOR is expected.

    February 19, 2020 WebPage Regulatory News
    News

    OSFI Proposes New Benchmark Rate for Qualifying Uninsured Mortgages

    OSFI announced that it is considering a new benchmark rate for determining the minimum qualifying rate for uninsured mortgages.

    February 18, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4708