Financial Instruments – The FICE project continues

Financial Instruments – The FICE project continues

This IFRS newsletter reports on the IASB's July discussions on financial instruments.


KPMG in the UK


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We report on the IASB’s latest discussions on its project on financial instruments with characteristics of equity.

Further progress has been made in exploring the classification of derivatives on own equity

The discussions continue…

At its July meeting, the Board continued its discussions on financial instruments with characteristics of equity (the ‘FICE project’), having previously considered possible ways to attribute profit or loss and other comprehensive income (OCI) to derivative equity claims.

The Board focused its discussion on how to apply the Gamma approach1 to:

  • the classification of derivatives on own equity;
  • asset/equity exchange derivatives; and
  • liability/equity exchange derivatives. 


“The FICE project has highlighted challenges in classifying derivatives on own equity but also provides welcome opportunities to enhance consistency.”

Chris Spall

KPMG’s global IFRS financial instruments leader


The macro hedge accounting project was not discussed during the July meeting.

The Board discussed a sweep issue regarding the interaction of IFRS 4 Insurance Contracts and IFRS 9 and agreed to revise the disclosure requirements for entities that apply the temporary exemption from applying IFRS 9 (as part of the proposed IFRS 4 amendments), limiting the SPPI assessment to those financial assets that are not held for trading or managed on a fair value basis.

For more detail on these discussions, read Issue 31 of our IFRS Newsletter: Financial Instruments


1 See September 2015 IFRS Newsletter: Financial Instruments.

Next steps for the project

A next step for the project will be to consider the separate presentation requirements for different classes of liabilities including variable-for-fixed derivatives and some application challenges in applying the fixed-for-fixed condition. At future meetings, the Board will also discuss:

  • classification of instruments meeting the existing puttables exception; 
  • additional details of the definition of the residual amount for non-derivative and derivative obligations;
  • accounting for conditional alternative settlement outcomes;
  • approaches to attribution of profit or loss and other comprehensive income to classes of equity instruments on recognition, derecognition and reclassification of such instruments; and
  • possible improvements to disclosures about classes of equity claims other than ordinary shares.

Find out more

Visit our IFRS Newsletters 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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