by John Ferry
International Accounting Standards Board (IASB) rules that require financial instruments to be accounted for at fair value, known as IAS 39, could have a detrimental effect on sales of complex derivatives products, traders have warned.
| “A disconnect could develop between the accounts used for day-to-day management and to compensate staff, and the profits that are being reported to shareholders” Tony Cliffortd, Ernst & Young |
For any profits on a trade to be recognized on the balance sheet on a ‘day one’ basis (as soon as the trade is done) IAS 39 requires that all input variables to the pricing model be recognizable measurements.
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