7 Risk Mitigation Accounting: Proposed amendments to IFRS 9 and IFRS 7: Verbal Update

File information

Publication date
16 April 2026
Format
PDF, 217.8 KB
Download original PDF

23 April 2026 Agenda Paper 7

Executive Summary

Project Stage

IASB Research / Pipeline Discussion Paper Redeliberation Exposure Draft Redeliberation Final Standard Post Implementation Review
UKEB Research / Influencing Research / Influencing Monitoring Influencing Monitoring Endorsement Influencing

Project Type

Influencing

Project Scope

Significant

Purpose of this update

The purpose of this verbal update is:

  • to inform Board Members of the latest status of the Draft Comment Letter (DCL) and the accompanying Invitation to Comment (ITC) on the IASB's Exposure Draft (ED) IASB/ED/2025/1 Risk Mitigation Accounting—Proposed amendments to IFRS 9 and IFRS 7; and
  • to provide Board Members with an overview of the latest stakeholder feedback gathered, including those expressed in the UKEB Financial Instruments Working Group (FIWG) meeting held on 22 April 2026.

Summary of the Issue

On 3 December 2025, the IASB published the Exposure Draft (ED) IASB/ED/2025/1 Risk Mitigation Accounting—Proposed amendments to IFRS 9 and IFRS 7, with the comment period ending on 31 July 2026.

The IASB is also conducting field tests of the proposals, with preliminary results due on 31 July 2026, and final results by 30 November 2026.

The UKEB considered and approved, subject to the comments made at the March 2026 Board meeting and to further refinement by a dedicated committee of Board Members, the DCL with a comment period of approximately 60 days, and related ITC for the influencing phase of the project relating to the ED.

Background: Risk Mitigation Accounting—Proposed amendments to IFRS 9 and IFRS 7

The implementation of IFRS 9 Financial Instruments aimed to introduce improved hedge accounting requirements. However, it did not provide a solution for complex risk management situations where risks are managed dynamically. In such cases entities were permitted to continue applying IAS 39 Financial Instruments: Recognition and Measurement2.

The IASB has noted that entities find it challenging to account for their dynamic risk management activities. The current requirements are not designed for such situations, and the constraints make it difficult for entities to faithfully represent the economic effect of such risk management activities3.

In response, the IASB has published an ED that aims to provide a more faithful representation of the entity's economic position for such risk management activities. The scope of the ED is limited to interest rate repricing risk4, in instances where entities meet the criteria to demonstrate that this risk is being managed dynamically.

Consistent with the existing hedge accounting requirements of IFRS 9, the proposed requirements are voluntary. The IASB proposes to withdraw IAS 39 when the proposed amendments are available for use.

A summary of the proposed changes can be found in the IASB's snapshot document.

  • the timing of when financial instruments reprice to benchmark interest rates; and
  • the amount of financial instruments that reprice in a particular period.

    • Footnotes

    1. Exposure Draft: Risk Mitigation Accounting—Proposed amendments to IFRS 9 and IFRS 7. ↩

    2. See paragraphs 6.1.3 and 7.2.21 of IFRS 9. ↩

    3. This is noted by the IASB in paragraph IN7 of the ED. ↩

    4. Repricing risk is defined as a type of interest rate risk that exposes an entity to variability in the cash flows from, and the fair value of, financial instruments, arising from differences in:

         ↩