IAS39 option gets banking approval

A new draft of one of the controversial parts of financial instruments standard IAS39 could gain European approval after it won the support of the banking community.

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At a meeting in London yesterday, the International Accounting Standards Board put forward its proposals for a new version of the fair value option, one of the areas carved out of IAS39 by the European Commission, to bankers, insurers and regulators.

The majority agreed that the proposals represented a workable solution. This approval could allow the IASB to publish a final version of the option by June, which could then be put forward to the EC for inclusion in the carved-out version of the standard.

Should the EC approve this, it would go a long way to settling the ongoing dispute between the standard-setter and the politicians, although there are still major differences in the more significant area of interest rate hedging.

The IASB has since set up a working group to look at these vital issues.

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