4 Risk Mitigation Accounting—Proposed amendments to IFRS 9 and IFRS 7

21 May 2026 Agenda Paper 4

OFFICIAL - PUBLIC

Executive Summary

Project Stage

Project Type

Influencing

Project Scope

Significant

Purpose of the paper

The purpose of this paper 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’ Exposure Draft (ED) IASB/ED/2025/1 Risk Mitigation Accounting – Proposed amendments to IFRS 9 and IFRS 7;
• to provide Board Members with an overview of the latest stakeholder feedback gathered; and
• to inform Board Members about the IASB discussion held in May 2026 about extending the comment period for the IASB’s Exposure Draft (ED)

Summary of the Issue

The UKEB published its Draft Comment Letter, and related ITC, on 28 April 2026 for public consultation with a comment period of approximately 60 days, for the influencing phase of the project relating to the ED.

On Tuesday 19 May 2026, the IASB will discuss whether to align its ED’s comment letter deadline (currently set as 31 July 2026) with the final submission date for the fieldwork results, namely 30 November 2026. This change, if confirmed, will have implications for the UKEB’s project planning and timeline.

Decisions for the Board

1. Do Board Members have any questions or comments on the matters presented in this paper?
2. Do Board Members agree with the Secretariat’s recommendation of extending the comment period for the invitation to comment on the UKEB’s DCL to approximately 175 days if the IASB extend its comment period? a) If yes, do Board Members approve that the amended Project Initiation Plan and Invitation to Comment be re-published on the UKEB project page with the amended comment deadline?

Recommendation

In the event the IASB extends the consultation period for its ED, the Secretariat recommends extending the UKEB’s DCL comment period from approximately 60 days to approximately 175 days. As a result, the Project Initiation Plan and Invitation to Comment will need to be updated and re-published on the UKEB website.

Background: Risk Mitigation Accounting—Proposed amendments to IFRS 9 and IFRS 71

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, 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 ED 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.

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.

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

UKEB Draft Comment Letter

1 The UKEB’s Draft Comment Letter (DCL) and Invitation to Comment were published on 28 April 2026 for public consultation. The UKEB’s comment deadline is 28 June 2026.

Stakeholder outreach activities

2 As agreed by the Board, the Secretariat is undertaking targeted stakeholder outreach activities during the UKEB’s public consultation period to gather stakeholder feedback on the IASB’s ED and the UKEB’s DCL.

3 Subsequent to the UKEB April 2026 meeting, the Secretariat has engaged separately with two industry bodies, for UK banks and building societies respectively. Their members are assessing the proposals in the IASB’s ED. We are currently in the process of arranging further outreach with them and their members (potentially in the form of roundtables) to gather their members’ feedback.

4 The Secretariat has also had one-to-one meetings with a building society and a UK large bank. The Secretariat will continue to engage with UK stakeholders, including organising a UKEB Financial Instruments Working Group RMA roundtable in the Summer.

IASB’s discussion of whether to extend its ED’s comment period

5 At the ASAF March 2026 meeting the UKEB (and a European regional standard setter) recommended to the IASB to change its comment letter deadline so that it aligns with the completion of fieldwork. At the same meeting, two other National Standard Setters indicated that they did not support a delay⁵.

6 On 19 May 2026, the IASB will discuss whether to align its ED’s comment letter deadline (currently set as 31 July 2026) with the final submission date for the fieldwork results, namely 30 November 2026. The rationale for the IASB staff’s recommendation is presented in IASB staff agenda paper 4. As the IASB discussion takes place after the publication of this paper, the Secretariat will provide a verbal update to the Board on the outcome of the IASB’s decision.

7 Assuming the IASB agrees to align the comment letter deadline with the final submission date for fieldwork results (and once it is formally announced by the IASB), the Secretariat recommends extending the comment period for the invitation to comment on the UKEB’s DCL from approximately 60 days to approximately 175 days.

8 The Secretariat considers that extending the UKEB’s comment period is likely to:

1. improve the overall quality of feedback received, as stakeholder would have further progressed their analyses and fieldwork;
2. allow the Secretariat to reach out to additional stakeholders likely to be impacted by the proposals in the IASB’s ED; and
3. consequently, lead to a better informed UKEB’s Final Comment Letter.

9 If the Board agrees with the Secretariat’s recommendation, the Project Initiation Plan (PIP) and Invitation to Comment will be updated to reflect these changes and will be re-published on the UKEB's project page. These amendments will then be announced by the UKEB using the usual communication channels. We do not consider that this necessitates an updated PIP to be brought back to the Board.

10 The significant changes would be as follows:

Estimated DCL consultation period (approx. 30 175 days): April – June 21 October 2026

Questions for the Board

1. Do Board Members have any questions or comments on the matters presented in this paper?
2. Do Board Members agree with the Secretariat’s recommendation of extending the comment period for the invitation to comment on the UKEB’s DCL to approximately 175 days if the IASB extend its comment period? a) If yes, do Board Members approve that the amended Project Initiation Plan and Invitation to Comment be re-published on the UKEB project page with the amended comment deadline?

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the timing of when financial instruments reprice to benchmark interest rates; and

the amount of financial instruments that reprice in a particular period.