ISDA®
ISDA - INTERNATIONAL SWAPS
NEWS RELEASE
For Immediate Release, Monday,
January 31, 2011
For More Information, Please
Contact:
Rebecca O'Neill, ISDA London, +44 203 088 3586, roneill@isda.org
Cesaltine Gregorio, ISDA New York, +1 212-901-6019, cgregorio@isda.org
Deirdre Leahy, ISDA New York, +1 212-901-6021, dleahy@isda.org
ISDA Comments on Proposals Issued by the
IASB and FASB
LONDON, Monday, January 31, 2011 – The
International Swaps and Derivatives Association, Inc. (ISDA) welcomes the
efforts of the International Accounting Standards Board and the Financial
Accounting Standards Board to seek convergence on their current US GAAP and
IFRS models regarding offsetting of assets and liabilities in the balance
sheet.
ISDA believes
that reporting derivatives positions on a net basis where netting is
enforceable gives the best information for users of financial statements. Net
presentation is consistent both with the way derivatives are managed by the
entity and with the regulatory treatment of them. It therefore provides the
most relevant and risk sensitive information.
ISDA believes
the Boards' proposal to report derivatives on a gross basis rather than a net
basis on the balance sheet is counterintuitive, may lead to complexity in
practice and can obscure the real position of the entity. It is likely to be
misleading when presenting the leverage, credit risk and liquidity risk
position of an institution. Misperceptions regarding the risk exposure of
derivatives users may impede the ability of corporations, government entities
and financial institutions to effectively manage the business and financial
risks to which they are exposed.
About ISDA
ISDA, which represents participants
in the privately negotiated derivatives industry, is among the world’s largest
global financial trade associations as measured by number of member firms. ISDA
was chartered in 1985, and today has over 800 member institutions from 54
countries on six continents. These members include most of the world’s major
institutions that deal in privately negotiated derivatives, as well as many of
the businesses, governmental entities and other end users that rely on
over-the-counter derivatives to manage efficiently the financial market risks
inherent in their core economic activities. Information about ISDA and its
activities is available on the Association's web site: www.isda.org.
ISDA® is a registered trademark of the
International Swaps & Derivatives Association, Inc.