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Implications for Derivatives and Hedge Accounting under the Dodd-Frank Act


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In July 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act  (the “Act”) to increase government oversight of the financial markets. Title VII of the Act provides both the Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission with regulatory authority over the Over-the-Counter (OTC) derivatives market, mandating certain derivatives to be centrally cleared.

Implications for Derivatives and Hedge Accounting Under the Dodd-Frank Act highlights the financial accounting impacts due to certain factors that companies will need to consider when adopting the clearing mandate in Title VII of the Act. It discusses areas that affected companies should consider when deciding whether to offset derivatives and collateral fair value amounts on their statement of financial positions. It also provides insights into other potential impacts on hedge accounting when centrally cleared derivatives are subject to novation and portfolio compression.

As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

 

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