CCP Rule Book Changes on Settled-to-Market Model/Impact on Hedge Acctg

On January 4, 2017, ISDA’s Accounting Committee issued a confirmation letter to the Staff of Office of the Chief Accountant of the Securities and Exchange Commission (SEC) related to an ISDA whitepaper on the accounting Impact of central counterparty rule book changes. The SEC staff confirmed all the conclusions of the ISDA Accounting Committee outlined in the whitepaper and follow-up submission – namely i) that the changes to the rule books of LCH and CME, as supported by legal opinions from external counsel, should result in the presentation of variation margin amounts as settlement of the derivative exposure and not collateral against it for purposes of applying the accounting and presentation guidance in ASC 815 (US GAAP covering derivatives and hedging); and ii) that the de-designation and re-designation of existing hedging relationships under ASC 815 would not be required solely because of these changes to the respective CME and LCH rule books. ISDA recognizes the significance of the continued application of hedge accounting when the hedging derivative has been affected by these rule changes and its importance to clearing members and end users.

Creating Value - IQ June 2025

Ever since its establishment 40 years ago, ISDA has worked to enhance the safety and efficiency of derivatives markets. That has motivated everything we do – from the development of standard documentation and the rollout of new digital solutions to...

Paper on EC’s Sustainability Omnibus Proposal

On June 9, ISDA published a position paper setting out its views on the European Commission’s (EC) Sustainability Omnibus Package. In the paper, ISDA urges European authorities to: Ensure a proportionate, harmonized and symmetrical approach to the use of derivatives...