ISDA IFRIC comment letter - hedging with purchased options final

ISDA ® International Swaps and Derivatives Association, Inc. One Bishops Square London E1 6AO United Kingdom Telephone: 44 (20) 3088 3550 Facsimile: 44 (20) 3088 3555 email: isdaeurope@isda.org website: www.isda.org Tricia O’Malley IFRIC Coordinator 30 Cannon Street London EC4M 6XH United Kingdom IFRIC Tentative Agenda Decision: IAS 39 Financial Instruments: Recognition and Measurement – Hedging future cash flows with purchased options Dear Ms O’Malley ISDA would like to raise concerns on behalf of our members over the likely impact of the draft wording for a proposed IFRIC tentative decision rejecting a potential agenda item. The issue that we refer to relates to the cash flow hedging requirements of IAS 39 and how to assess effectiveness for cash flow hedges of highly probable future transactions with purchased options. ISDA fully supports the views and technical analysis contained in a letter produced by the London Investment Banker’s Association (LIBA), which we have included in the appendix to this letter. ISDA, which represents participants in the privately negotiated derivatives industry, is the largest global financial trade association, by number of member firms. ISDA was chartered in 1985, and today has over 797 member institutions from 54 countries on six continents. These members include most of the world's major institutions that deal in privately negotiated derivatives, as well as many of the ...