IASB publish ED/2023/2 – Proposed amendments to IFRS 9 and IFRS 7

Today, the IASB published the Exposure Draft ED/2023/2 Amendments to the classification and measurement for Financial Instruments – proposed amendments to IFRS 9 and IFRS 7.

Therein, the IASB addresses several specific requirements of IFRS 9 and IFRS 7 and proposes the following selected improvements:

1. Derecognition of a financial liability settled through electronic transfer – providing an option as regards the timing of derecognition.
2. Applying the contractual characteristics criterion for the purpose of classifying under IFRS 9 (a) instruments which comprise specific ESG elements, (b) instruments with non-recourse features and (c) so-called contractually-linked instruments.
3. Additional disclosure requirements under IFRS 7 for (a) equity instruments, classified at FV-OCI, and (b) instruments for which the timing or amount of contractual cash flows could change upon the (non)occurrence of a contingent event.

Background for these proposed amendments are conclusions drawn by the IASB from its recent Post-Implementation Review (PIR) on IFRS 9 – Part 1, addressing the classification and measurement of financial instruments. During this PIR, having been finalized end of 2022, the IASB acknowledged need for improvements to selected existing IFRS 9 requirements. The first of these proposed amendments, though, results from a submission to and resulting discussion by the IFRS IC, after which the IFRS IC as well as the IASB again acknowledged need for improvements.

The Exposure Draft is open for comments until 19 July 2023.