Background

In March 2017, the IC discussed the accounting for centrally cleared client derivative contracts from the perspective of the clearing member. The IC concluded that the clearing member first applies the requirements for financial instruments. More specifically:

1. If the transaction(s) results in contracts that are within the scope of IFRS 9/IAS 39, the clearing member applies the requirements in IFRS 9 (IAS 39) to those contracts.
2. If the transaction(s) results in contracts that are not within the scope of IFRS 9/IAS 39 and another Standard does not specifically apply, the clearing member should apply the hierarchy in IAS 8.10-12 to determine an appropriate accounting policy for the transaction(s).

The IC concluded that the requirements in existing Standards provide an adequate basis for addressing this issue and decided not to add the issue onto its agenda.

Staff analysis of comment letters received

Five comment letters were received. Most respondents agreed with the IC’s technical analysis. No substantive comments were raised apart from drafting suggestions and a request to clarify how the IC’s conclusion would affect the accounting of cash collaterals.

The Staff noted that the implementation guidance accompanying IFRS 9 at D.1.1 provides specific requirements on the recognition of cash collateral, which is unaffected by the agenda decision. Accordingly, no amendment to the tentative agenda decision is considered necessary.

Staff recommendations

The Staff recommend that the Committee finalise the agenda decision, subject to drafting changes to bring the wording of the agenda decision in line with the scope requirements of IFRS 9/IAS 39.

Discussion

The IC approved the Staff recommendation with no significant discussion.