Boon to US leverage ratios as FASB ditches netting proposals
Derivatives accounting proposals abandoned to relief of dealers - but move deals a blow to hopes of convergence between US standards and IASB
The Connecticut-based Financial Accounting Standards Board (FASB) has voted to preserve rules that allow the netting of derivatives and repo transactions in the US – pleasing banks, which had worried reporting their derivatives positions on a gross basis would cause them to blow through leverage ratio limits. But the decision also dashes hopes of convergence between US standards and those promulgated by the International Accounting Standards Board (IASB), which is more conservative on netting.
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