Amendments to the Classification and Measurement of Financial Instruments

Timeline 

The IASB published Exposure Draft Amendments to the Classification and Measurement of Financial Instruments (the ED) in March 2023. Our response to the IASB was submitted on 19 July 2023.  

Background

The ED was issued in response to feedback received by the IASB as part of its Post-implementation Review of the classification and measurement requirements in IFRS 9 Financial Instruments. Read further details on the IASB’s Post-implementation Review and the corresponding UKEB response.

The ED proposed amendments to the following requirements:

• the derecognition of financial liabilities settled using an electronic payment system; and
• assessing contractual cash flow characteristics of financial assets, including those with environmental, social and governance (ESG)-linked features, non-recourse features and contractually linked instruments.

The ED also proposed amendments or additions to the disclosure requirements for:

•    investments in equity instruments designated at fair value through other comprehensive income; and

•    financial instruments with contractual terms that could change the timing or amount of contractual cash flows based on the occurrence (or non-occurrence) of a contingent event.

Finally, the ED proposed transition arrangements for the proposed amendments.

Planned outreach

Our outreach on this project included discussions with stakeholders and public consultation on our draft comment letter. Thank you to all who participated in this project.

Educational Video

We have produced a short video explaining the proposals in the exposure draft for the derecognition of financial liabilities settled with cash using an electronic payment system.   

Final Comment Letter

[A full version of the comment letter is attached below]

The UKEB’s final comment letter welcomed the IASB’s responsiveness to concerns raised by stakeholders on the Request for Information on the Post-implementation Review of IFRS 9 – Classification and  Measurement. It recommended an alternative option for the derecognition of financial liabilities settled with cash using an electronic payment system. It also highlighted a number of areas where further clarification was required to the proposed classification requirements, and provided suggestions as to how such clarity could be achieved.