LIBOR Transition: Accounting Considerations for Balance Sheet Hedges

On March 20, 2020, the Financial Accounting Standards Board (the “FASB”) issued ASC 848, “Reference Rate Reform” which offers institutions more simplified and lenient hedge accounting rules through the end of 2022 to help ease reference rate transition.

Throughout this piece, we describe the relief available under ASC 848 to counterparties who have previously qualified for hedge accounting. We also describe the changes that must be made to hedge documentation and pitfalls to avoid for contract modifications.

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About Derivative Path, Inc.

Derivative Path is a San Francisco Bay Area-based FinTech company with additional offices in New York City and Chicago. The company provides a technology-led solution to assist financial institutions, buy-side, and commercial end-users in executing and managing their over-the-counter interest rate derivative and foreign exchange transactions. The Derivative Path team is comprised of derivative industry veterans who have held senior positions with some of the world’s largest capital markets firms, such as Wells Fargo, ABN AMRO, Société Générale, Bank of America, Barclays, AIG, Brown Brothers Harriman, and JPMorgan Chase.

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