The delay of IFRS 9 hedge accounting (phase III) is disappointing news for many; particularly the commodity and option hedgers who were hoping to take advantage of the more favourable provisions in the new standard as soon as possible.

Since the financial crisis, many organisations have experienced significant P&L volatility on their cross currency interest rate swaps through movements in currency basis. Recently, a new technique for applying hedge accounting to these instruments has emerged…

One of the proposed changes from IAS 39 in the new standard IFRS 9 is the removal of the ability to make ‘basis adjustments’ to non-financial hedged items. This could be a major issue for many importers who hedge their currency risk. The whole process of capturing gross margin in the ERP/Stock Management system may need to change or importers may risk losing margin on sales.