Regulatory Alerts1994-03-14
Instruction No. 94-04 of March 14, 1994, on the Accounting for Interest Rate Financial Derivative Transactions (Consolidated Version)
The Banking Commission issued Instruction No. 94-04 to establish accounting rules for interest rate financial derivative transactions, defining criteria for designated hedging and the treatment of option premiums. The regulation mandates the recognition of unrealized gains or losses in specific regularization accounts for hedged items and requires clear distinction between client and proprietary margin deposits. It further requires institutions to report nominal value exposures and identify contractual commitments by maturity and transaction type.
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