INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC
NEWS RELEASE
For
Immediate Release Wednesday, May 9, 2007
For More Information, Please Contact:
Scott Marra, ISDA New York,
212-901-6013, smarra@isda.org
ISDA Supports a Single Definition and Framework for the Determination
of Fair Value for Financial Instruments
LONDON,
Wednesday, May 9, 2007 – In its formal response to the IASB’s
Discussion Paper on Fair Value Measurement, ISDA is supportive of the guidance
provided by the US Financial Accounting Standards Board (FASB), known as SFAS
157. ISDA believes SFAS 157 is a principles-based accounting standard that
provides an appropriate accounting framework for the measurement of financial
instruments at fair value.
In the response, ISDA strongly supports the definition of fair value provided
in the Discussion Paper as it is consistent with the way the fair value of
a financial instrument is determined in practice. ISDA encourages the
IASB to adopt and apply the principle of an “exit price” consistently for
financial instruments recorded at fair value across all levels of the hierarchy.
ISDA also supports the proposals as they allow for the valuation of a financial
instrument using a price within the bid ask spread.
Whilst there is clearly a need to address any key issues raised by other constituents
on the Discussion Paper, ISDA has encouraged the IASB to move to an Exposure
Draft as quickly as possible, in order to achieve international consistency
in fair value measurement. Some of ISDA’s members
are in the process of adopting SFAS 157, and it is clear that the
“Given the global nature of financial markets, it is critical that there is
a consistent definition of fair value across the different markets,” said
Melissa Allen, Chair of ISDA’s European Accounting
Committee and Managing Director, Credit Suisse. “This would enhance the comparability
of global financial reporting and ensure all organizations are operating on
a level playing field.”
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 approximately 780 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.