IASB Exposure Draft ED/2019/1 Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)

The Malaysian Accounting Standards Board (MASB) is inviting comments from the public for the purpose of formulating responses to the International Accounting Standards Board (IASB) on Exposure Draft ED/2019/1 Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39).

The proposed amendments respond to the increasing level of uncertainty about the long-term viability of some interest rate benchmarks following the fundamental review undertaken by the Financial Stability Board (FSB). Arising from this review, in some jurisdictions there is already clear progress towards replacing the existing interest rate benchmarks with alternative, nearly risk-free interest rates that are based, to a greater extent, on transaction data (alternative interest rates). This has, in turn, led to uncertainty about the long-term viability of some existing interest rate benchmarks. In the Exposure Draft, interest rate benchmark reform refers to this market-wide replacement of an existing interest rate benchmark, such as IBOR, with an alternative interest rate based on the FSB’s recommendations (the reform).

The proposals in the Exposure Draft modify specific hedge accounting requirements so that entities would apply those hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows of the hedging instrument are based is not altered as a result of interest rate benchmark reform. The IASB proposes to amend the hedge accounting requirements only as specified in this Exposure Draft. The proposals are not intended to provide relief from any other consequences arising from interest rate benchmark reform. Also, if a hedging relationship no longer meets the requirements for hedge accounting for reasons other than those specified by this Exposure Draft, then discontinuation of hedge accounting is still required.

To download the Exposure Draft, click here.

Invitation to comment

The Exposure Draft is open for comment until 24 May 2019.

You may provide your comments online or email us at technical@masb.org.my.