The IASB met on July 25, 2023 to continue its discussion on the Dynamic Risk Management (DRM) model. The IASB discussed the qualifying criteria for determining an entity’s current net open risk position and whether financial assets and financial liabilities denominated in more than one currency could be designated in the same DRM model. The IASB also discussed whether non-linear derivatives (such as interest rate options) and ‘off-market’ derivatives (derivatives that have a non-zero fair value on initial designation) would be eligible to be designated derivatives in the DRM model. The IASB tentatively decided that non-linear derivatives, except for net written options, would be eligible to be designated derivatives when their use is consistent with an entity’s risk management strategy. Finally, the IASB tentatively decided that off-market derivatives would be eligible to be designated derivatives when their use is consistent with an entity’s risk management strategy. However, only the fair value changes that arise after the date of initial designation are considered when measuring the DRM adjustment.

Re­view the IASB Update on the IFRS Web site.