On November 19, ISDA submitted a request to the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) to clarify whether FASB Accounting Standards Codification (ASC) 815 does not prohibit using the spot method to assess hedge effectiveness for net investment hedges, even when the hedge is not “perfectly effective”.
The request is driven by practical issues faced by companies hedging foreign operations, especially when the available derivative does not exactly match the currency exposure, such as using a hedging instrument denominated in CNH to hedge Chinese renminbi.
In the letter, ISDA proposes amending ASC 815 to allow the spot method and recognition of excluded components in earnings if the hedge is highly effective. ISDA also suggests updating language to focus on the “value of the included component” rather than “fair value”, aiming to resolve ambiguity and make accounting treatment clearer for multinational companies.
Documents (1) for ISDA Submits Agenda Request to FASB EITF on ASC 815
Latest
From Milestone to Modernization
We’re coming to the end of an exceptionally busy year at ISDA, in which we celebrated our 40th anniversary and doubled down on our enduring commitment to safe and efficient derivatives markets. Reflecting on ISDA’s achievements since 1985, it’s clear...
Response on ASIC Derivative Transaction Rules
On December 3, ISDA submitted a response to the Australian Securities and Investments Commission (ASIC) consultation on the remake of the ASIC Derivative Transaction Rules (Clearing) 2015, which are due to sunset on April 1, 2026. ASIC proposed to remake...
IRD Trading Activity Q3 2025
This report analyzes interest rate derivatives (IRD) trading activity reported in Europe. The analysis is based on transactions publicly reported by 30 European approved publication arrangements (APAs) and trading venues (TVs). Key highlights for the third quarter of 2025 include:...
Ardagh Credit Event Processing and Trading
The Credit Derivatives Determinations Committee announced on December 15 that a restructuring credit event has occurred with respect to Ardagh. An ISDA Credit Market Infrastructure Group call was held on December 15 to discuss the processing of this event. The...