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IASB meeting summaries and observer notes

IASB meeting summaries and observer notes

 IASB meeting December 2012



The IASB met to continue the discussion on the proposed revaluation approach for macro hedging activity. Previous meetings have considered the revaluation approach within the context of financial institutions' dynamic management of interest rate risk. At this meeting the IASB discussed the application of the proposed revaluation approach for other risks.

Risks other than interest rate

The staff presented their initial findings on the outreach they have undertaken so far, in order to identify instances in which macro hedging activity for open portfolios is undertaken for risks other than interest rate risk, and to consider the relevance of a revaluation approach to that activity. The staff noted that some corporates do undertake macro hedging activity for foreign exchange (FX) risk and/or commodity risk.
It was discussed that the proposed revaluation approach would appear to be helpful in accounting for some macro hedging activity undertaken for FX and commodity price risk. However it was recognised that additional outreach would be required to fully understand this, in particular within the context of the application of the new hedging requirements of IFRS 9 Financial Instruments.

In addition, it was also discussed that although much of the guidance on the revaluation approach would be applicable to macro hedging activity regardless of the particular hedged risk, some additional consideration would be required for certain issues that were particular to commodity and/or FX risk management.

The staff observed that they would use the comment period of the upcoming Discussion Paper to obtain a better understanding of the potential application of the model for other risks. It was noted that once the model is described in full, it would be easier to obtain such input.

No decisions were made.

Next steps

The staff will continue drafting the Discussion Paper, for which the initial focus will be documenting an overview of the revaluation model after consideration of the IASB discussions to date.


Date: 12/14/2012