FRED 62 proposes to amend paragraphs 34.22 and 34.42 of FRS 102 to require disclosure of financial instruments held at fair value on the basis of a fair value hierarchy consistent with EU-adopted IFRS as follows:

A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.

Level 3: Inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

Overall we support the proposals.  Our key comments are as follows:

• the proposals will reduce the costs of complying with FRS 102 for many financial institutions and enable them to present information on a basis consistent with International Financial Reporting Standards (IFRSs); and
• it is important that the amendments are issued in final form as early as possible in 2016 and in particular in time for financial institutions with 31 December 2015 year ends to approve their accounts and meet regulatory filing deadlines without having to incur unnecessary costs in complying with the existing FRS 102 requirements for only one year.

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter.