IFRS 9 - Financial Instruments

IFRS 9 Financial Instruments was developed by the IASB and sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The standard replaces IAS 39 Financial Instruments: Recognition and Measurement.

The project was developed in phases, in part jointly with the FASB and has been subject to multiple public consultations. All details of EFRAG's analysis and due process can be found in different projects on this website. Links to these various projects are provided below. For convenience we have included in this project EFRAG's draft and final comment letters on each of those phases.

Project history

In March 2008 the IASB and FASB published a Discussion Paper Reducing Complexity in Reporting Financial Instruments. EFRAG's draft comment letter was published on 23 July 2008. EFRAG's final comment letter was published on 30 September 2008. For further details please go to Financial Instruments - Reducing Complexity

A- Classification and Measurement

In July 2009, the IASB published the Exposure Draft Financial Instruments: Classification and measurement. EFRAG's draft comment letter to this ED was published on 28 July 2009. EFRAG's final comment letter was published on 21 September 2009.

In November 2009, the IASB published the classification and measurement requirements for financial assets. EFRAG published a draft endorsement advice on 2 November 2009 but this was withdrawn shortly afterwards to take more time to consider the output from the IASB.

In October 2010, the IASB added the classification and measurement requirements for financial liabilities to IFRS 9.

For details on this phase please go to Related project

In May 2010, the IASB published the Exposure Draft Fair Value Option for Financial Liabilities. The ED proposed that changes in the credit risk of liabilities that an entity chooses to measure at fair value will not cause volatility in profit or loss. EFRAG's draft comment letter to this ED was published on 9 June 2010. EFRAG's final comment letter to this ED was published on 16 July 2010.

For details on this phase go to Related project

In November 2012 the IASB published its Exposure Draft Classification and Measurement: Limited Amendments to IFRS 9. EFRAG's draft comment letter to this ED was published on 31 December 2013. EFRAG's final comment letter to this ED was published on 16 April 2013.  While EFRAG welcomed the IASB's effort to address accounting mismatches arising from the application of different measurement models to financial assets and insurance liabilities, EFRAG also raised a number of concerns. EFRAG was concerned that there were still not enough financial assets which would not pass the contractual cash flow characteristics test. EFRAG also recommended to introduce bifurcation for financial assets in IFRS 9 and asked to clarify the definition of interest. Finally EFRAG pointed out that the fair value through other comprehensive category did not fully address the concerns of the insurance companies.

In parallel with the consultation on the draft comment letter EFRAG and the partner National Standard Setters (ANC, ASCG, FRC and the OIC) carried out a field-test on the proposed classification and measurement requirements for financial assets contained within IFRS 9 Financial Instruments, as amended by the Exposure Draft Classification and Measurement (Limited Amendments to IFRS 9). The field-test report was published on 17 June 2013.

 For details on this phase go to Related project

In October 2010, the IASB issued the Request for Views on Effective Dates and Transition Methods. For details on this consultation please go to Related project

B- Impairment

In June 2009, the IASB published the Request for Information: Impairment of Financial Assets: Expected Cash Flow Approach. For details on this phase please go to Related project

Information on the proactive work undertaken by EFRAG and FEE on the impairment of financial assets can be found in the following Related project

In November 2009, the IASB published the Exposure Draft Financial Instruments: Amortised Cost and Impairment (ED). On 22 February 2010 EFRAG published its draft comment letter on the ED. On 18 March 2010 EFRAG published a questionnaire relating to the practical and implementation issues arising from the ED. On 7 May 2010 EFRAG published a summary of the responses based on 18 consultations confirming significant operational issues. On 29 June 2010 EFRAG published its final comment letter which was supportive of the measurement principles but expressed significant operational concerns and requested additional guidance or amendments to the ED. For details on this phase go to Related project

In order to make the impairment model more operational, in January 2011 the IASB published Supplementary Document Financial Instruments: Impairment (SD). On 28 February 2011 EFRAG published its draft comment letter on the SD. In February and March 2011 EFRAG undertook outreach activities on the IASB's SD, in close cooperation with the IASB technical staff, which included a survey that was based on a questionnaire followed up by an interview with selected preparers. EFRAG issued its final comment letter on 13 April 2011 which supported a common operational impairment approach for all financial assets based on decoupling of interest income and expected credit losses. EFRAG also expressed concerns about the significant changes to the impairment model and suggested more field-testing and advocated for a holistic approach and an earlier recognition of credit losses in the 'good book'. On 10 May 2011 EFRAG issued a feedback statement on the results of its outreach activities.   For details on this phase please go to Related project

In March 2013, the IASB published the Exposure Draft Financial Instruments: Expected Credit Losses (ED) based on recognition of 12-month expected credit losses and, for instruments subject to significant credit deterioration, lifetime expected credit losses. On 12 April 2013 EFRAG and the National Standard Setters ANC, ASCG, FRC and OIC launched a field-test on the ED. On 16 April 2010 EFRAG published its draft comment letter on the ED. The final comment letter was published by EFRAG on 9 July 2013. While EFRAG expressed conceptual concerns about the 12-month expected credit loss measurement, it accepted the proposals based on expectation that they would result in a more timely recognition of expected credit losses, thereby addressing the weaknesses of an incurred loss model. EFRAG issued a feedback statement on 19 July 2013. On 22 July 2013 EFRAG published a field-test report based on responses from 22 participants.  For details ont this phase please go to Related project

C- General hedge accounting

In December 2010, the IASB published an Exposure Draft on the accounting for hedging activities. EFRAG's draft comment letter to this ED was published on 18 January 2011. EFRAG's final comment letter to this ED was published on 14 March 2011.

In September 2012, the IASB published a Review Draft on the forthcoming hedge accounting requirements. EFRAG published a comment letter on RD which was published on 18 January 2013. EFRAG provided the IASB an overview of the implementation difficulties, including fatal flaws and requests for additional guidance. Also, EFRAG provided input to the IASB's effect analysis. Finally EFRAG commented on the decoupling of macro hedging from the general hedge accounting requirements in IFRS 9 and held the view that the IAS 39 requirements applicable to macro hedging were to remain applicable until the separate macro hedge accounting project was to be finalised.

In addition a consultation was held on the transition from IAS 39 Financial Instruments: Recognition and Measurement to IFRS 9 for macro-hedging practices. As a result of this, EFRAG published a letter on 22 March 2013. In this letter EFRAG proposed to provide entities a simple choice to either apply IAS 39 for all hedges until the new macro hedge accounting project will be finalised or to adopt irreversibly the new hedge accounting (including the exception on portfolio fair value hedges of interest rate risk).

EFRAG and the partner National Standard Setters also carried out a field-test on this Review Draft. The field-test report was published on 24 July 2013.

 For details on this phase please go to Related project

In May 2010 the FASB issued the Exposure Draft Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities. The IASB encouraged its constituents to respond to the FASB. For details on EFRAG's comment letter and due process on the FASB ED, please to to Related project

IFRS 9 Financial Instruments: final publication

In July 2014 the IASB published IFRS 9 Financial Instruments. EFRAG published its draft endorsement advice (DEA) on the standard on 4 May 2015. 

EFRAG published its final endorsement advice (FEA) on the standard on 15 September 2015. In this final endorsement advice EFRAG identified the need for specific requirements addressing how IFRS 9 should be implemented with IFRS 4 Insurance Contracts. Shortly thereafter the IASB issued some proposals to address EFRAG's concerns. For further details please go to Related project

IFRS 9 was endorsed for use in the EU on 22 November 2016, publication in the Official Journal followed on 29 November 2016.