Macro hedging – Support for project, but views differ

Macro hedging – Support for project, but views differ

This IFRS Newsletter: Financial Instruments reports on the IASB macro hedging discussions


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We report on the latest discussions on the IASB’s macro hedge accounting project.

Feedback received on the IASB’s macro hedging discussion paper indicates that there is broad acceptance of the need for the project.

In its February meeting, the IASB discussed a summary of feedback from users of financial statements and, for a number of sections of the DP, a detailed analysis of feedback received from all respondents.

For more detail on these discussions, read Issue 21 of our IFRS Newsletter: Financial Instruments.

Applying the PRA

Respondents broadly agreed that the DP identified the main limitations of current IFRS as it relates to dynamic risk management (DRM) activities. 

However, there were mixed views as to whether the portfolio revaluation approach (PRA) would address these limitations. 

Most respondents seemed to support a project that only addresses accounting mismatches.

Scope of the PRA

Many respondents preferred a PRA scope focused on risk mitigation, rather than a scope focused on DRM. Most supported optional application of the PRA.

Other issues discussed

Many respondents supported incorporating behaviouralisation into the PRA, particularly for core demand deposits.

Meanwhile, there were mixed views on the use of PRA through other comprehensive income as an alternative approach.

The IASB staff will provide an analysis of feedback received on the remaining sections during its March meeting.

Visit our IFRS Newsletters web page for the latest discussions on these issues. And go to our IFRS – Financial instruments hot topics page for more on these and other aspects of financial instruments accounting under IFRS.

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