Further progress has been made in exploring classification under the Gamma approach.
The IASB has continued its discussions on financial instruments with characteristics of equity, having previously considered the classification under the Gamma approach of instruments meeting the existing puttables exception in IAS 32 and the merits of retaining the exception.
“The development of a classification principle based on defining ‘residual amount’ will require more effort but may help improve consistency in classifying derivatives on own equity.”
At its December meeting, the Board discussed the application of the Gamma approach to derivatives on own equity. In particular, it focussed on some issues that arise in practice when applying the fixed-for-fixed condition in IAS 32.
The macro hedge accounting project was not discussed during the December meeting.
For more detail on these discussions, read Issue 35 of our IFRS Newsletter: Financial Instruments.
The next steps for the project will be to consider the:
In addition, the Board agreed to add to its agenda a narrow-scope project on the classification under IFRS 9 Financial Instruments of financial assets with symmetric make-whole prepayment options. The Board will discuss this topic in January 2017.
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