22 February 2013

Derivatives Counterparty Risk: Impact of New IFRS Fair Value Requirements

Posted In: Derivatives, IFRS

During the financial crisis — and the bankruptcy of Lehman Brothers and the near-meltdown of insurance behemoth AIG — derivatives counterparty credit risk (CCR) was increasingly recognised as a key risk category and a source of systemic risk. Despite the systemic risk implications of derivatives-related CCR, there is often inadequate disclosure around this key risk category.

In a recently published issue brief, CFA Institute examines the impact of IFRS 13 Fair Value Measurement on the reporting of derivatives counterparty risk, including highlights of areas where information deficiencies currently exist and how IFRS 13 may improve transparency around CCR.

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About the Author(s)

Vincent Papa, PhD, CPA, FSA, CFA

Vincent Papa, PhD, CPA, FSA Credential, CFA, was the director of financial reporting policy at CFA Institute. He was responsible for representing the interests of CFA Institute on financial reporting and on wider corporate reporting developments to major accounting standard setting bodies, enhanced reporting initiatives, and key stakeholders. He is a member of ESMA’s consultative working group for the Corporate Reporting Standing Committee, EFRAG user panel, and a former member of the IFRS Advisory Council, Capital Markets Advisory Committee, and Financial Stability Board Enhanced Disclosure Task Force. Prior to joining CFA Institute, he served in investment analysis, management consulting, and auditing roles.