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International Financial Reporting Standards

The views expressed in this presentation are those of the presenter,not necessarily those of the IASB or IFRS Foundation

 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Hedge Accounting Webcast8 November 2010

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Hedge accounting relationship to riskmanagement

Risk managementobjective:

Seeks to linkrisk management and

financial reporting(top down)

Accountingobjective:

Seeks to managetiming of recognition

of gains or losses(bottom up)

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Effectiveness Assessment

Originalhedge ratio

Revised hedge ratio

New trend

Rebalancing

‘Perfect’ ratio with

benefit of hindsight

One (continuing) risk management and hedgeaccounting relationship

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Option Premium

Treatment as a cost of hedging -reflects economics

Intrinsic value (IAS 39)

Time Value(cost of hedging)

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Presentation of fair value hedges

•

Hedge Accounting in one place—

OCI

• Transparency for hedging effectiveness and

ineffectiveness

• Balance Sheet carrying amounts not adjusted

Comprehensive picture of hedge accountingeffects in one place

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Disclosures

Total entity risk exposure(no specific disclosure requirements) 

Hedged exposure(Exposure torisks being

hedged)

IFRS 7Disclosurerequirements

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Next steps…

•

Deliberations on general hedge accounting modelhave been completed

 – Board has asked staff to begin drafting

 – Deliberations on portfolio hedge accounting to continue

• Exposure draft expected in Q4 2010

• Continued outreach

• IFRS in Q2 of 2011

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Questions or comments?

Expressions of individual viewsby members of the IASB andits staff are encouraged. Theviews expressed in thispresentationare those of the presenter.

Official positions of the IASB onaccounting matters aredetermined only after extensivedue process and deliberation.

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Questions

Could you please elaborate on hedging a component of risk for nonfinancial hedged items. Specially for items with a Fixed component whichis link to a commodity index?

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Questions

Why present fair value hedge differently?

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Questions

would the corridor effectively expand to 50200%?

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Questions

I do welcome any attempt to help accountingnot betray business decisions and riskmanagement. I understand that "macro" hedge

accounting is set aside to allow further

discussions. Can you please give us a flavour ofthe Board current view on this topic that is more

than impacting for retail banks for instance.Thank you.

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Questions

is the effectiveness test based on howmanagement measure risk?

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 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Questions

what in practice for premium on option(representing time value) ? Can it be capitalizedand taken in P&L when underlying impacts P&L ?

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