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IFRS 13 — Portfolios

Date recorded:

The Committee received a request to clarify the interaction between the use of Level 1inputs and the portfolio exception set out in IFRS 13.

Back in 2010, during the development of IFRS 13 the IASB (and FASB) discussed the fair value measurement of financial instruments within a portfolio. They decided to permit an exception to fair value principles by permitting entities to measure their net exposure to either market risks or credit risk arising from a group of financial assets and financial liabilities in certain circumstances (paragraph 48 of IFRS 13).

There was a perception that the portfolio exception was aimed at Levels 2 & 3 of the fair value hierarchy.

One Committee member pointed out that the exception applied to Level 1 in the US. Another Committed member said that if the issue goes to the agenda then it should be dealt with jointly with FASB.

There was a limited amount of technical discussion about whether the blockage could be applied at Level 1 and what the unit of valuation was. At the moment people could reach the opposite conclusion on the issue.

One Committee member questioned whether taking on this issue to the Committee’s agenda would be the best use of its time as it was not clear how wide spread the issue was. Unless there was a quick fix, the issue would not appear to meet the agenda criteria.

The conclusion was to neither accept nor reject the issue at this stage, but to give it some further thought.

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