Thus, the definition of a derivative instrument
used in Statement 53 is based on the "essential characteristics" approach.
This Statement changes the disclosure requirements for derivative instruments
and hedging activities.
To be characterized as effective, the derivative instrument
must have the ability to offset between 80% and 125% of the changes in the fair value or cash flows of the hedged item.
While the vast majority of organizations responding require a specific assessment of the risks being managed for derivative instruments
to qualify for special treatment, practice varied in the criteria organizations use to define and evaluate risk and the business levels at which risks are measured.
Can the entity begin to use new strategies or derivative instruments
that will now qualify as hedges under Statement no.
A derivative instrument
does not require an initial net investment in the contract that is equal to the notional amount (or the notional amount plus a premium or minus a discount) or that is determined by applying the notional amount to the underlying.
09 per share) in the first quarter of 2010, which included unrealised gains on derivative instruments
IFIs aim to utilise derivative instruments
to hedge against risk and to improve risk monitoring practices.