1、1本科毕业论文外文翻译译文标题衍生工具披露它能驯服野兽吗资料来源银行的成本和功放杂志作者卡纳，索娜里CFO杂志的封面故事描绘了侏罗纪公园一个可怕的怪物喷涌出一些希腊字母和深奥的前瞻性公式，它的皮肤点缀一串奇怪的数字，是对衍生工具造成的恐慌和恐惧的生动再现。事实上，在过去的几年里“衍生品”这字眼代表着可怕，是因为很多公司衍生品交易发生巨大损失的故事，如德国金属，普罗克特和甘布尔，吉布森的问候，空气化工产品和化学品，奥兰治县，霸菱（只是仅举几例），成为媒体关注的焦点。衍生物在很大程度上被那些使用如“极其复杂”，“晦涩难懂”这些形容词来形容这些工具（事实上，它很难远离这样的形容词），和把它从华尔街的
2、创新者演变成“火箭科学家”的媒体迷惑了大家。一个每个人都有可能听到的定义（广告传播）“衍生金融工具是价值取决于并从相关资产，参考利率，或指数的价值衍生出的金融合约，”不是很有启发性。一个只有一行的定义难以正确定义这些工具的复杂性质。一些衍生工具相关的损失和随媒体热捧的这些损失引起了财务会计准则委员会（FASB），证券委员会（SEC），美国国会，及其他监管机构的注意。不久，以提高信息披露的要求，并建立一致的标准去处理衍生工具的过程启动了。如果实行了严格的披露要求，衍生工具相关的损失是可以避免的吗也许吧。本文讨论的范围是全面的介绍一些关于衍生金融工具的披露问题和目前监管部门面临着争议的衍生工具的会
3、计处理。一些所涉及的问题是非常有技术性的，然而，本文想法是对目前火热的关于如何考虑衍生工具和信息披露的金额的辩论获得一般的理解。结尾将提供一个框架以帮助银行评估一些由衍生工具所带来的风险。目前披露的要求有与衍生工具的财务报告比较明显相关的两个方面信息披露和会计处理。根据现行规定对衍生工具会计处理的不一致和建立对所有衍生工具适用的透明的标准的难度，在一定程度上是监管机构在披露问题上当前的工作重点。这也2许使分析一些有关衍生工具的披露问题更容易，然后转移到与现行会计准则相关的问题上。在过去几年中，在建立衍生工具的披露要求上已经有很大的发展。FASB声明105涵盖有关金融工具的信息披露，不仅仅是衍生
4、产品，是建立资产负债表外金融交易的风险和信用风险。FASB声明107增加了一个关于金融工具的市场公允价值的披露要求。虽然这不可能涵盖衍生工具规管的各个方面，但将有利于我们更为详细地看待最近的FASB声明119。SFAS119，FASB于1994年10月发出的关于衍生金融工具和金融工具的公允价值的披露的声明。这大大增加了关于衍生工具活动的披露要求，并更详细的解释了一个公司为什么要使用衍生工具。公司必须披露所使用的衍生工具的种类，它们如何核算，以及披露按衍生工具的主要类型分类的某些定量信息，到期日和公允价值。SFAS119透视FASB声明119要求在1994年12月15日后，总资产15亿美元或更多
5、的所有实体在财年结束后对其财务报表提供一定的披露。规模较小的公司给予额外的一年时间去遵守。它区别了作为交易目的而持有或发行的衍生工具，除了以交易为目的而持有的衍生工具，和用来对冲的衍生工具。基于工具的分类，这些工具所产生的收益和损失都以不同的方式体现。交易持有的衍生工具。声明119要求一个公司必须说明其持有或发行的非衍生品交易的目标，了解这些目标所需要的背景，以及为实现这些目标所采用的战略，包括它使用的衍生工具类别。非交易目的持有或发行的衍生工具交易，包括那些对冲资产负债表上的资产和负债，以及用于其他风险管理的目的衍生工具。明显递延的对冲的收益和损失的金额是需要表示出来的。此外，直到预期交易为
6、止，预计将发生时间应该被揭露出来。这包括交易的描述或将导致发生对冲会计认可的递延收入的其他事件。（1995年泰特）此外，公司必须说明它在财务报表上是如何报告每类衍生物的。它必须公开其持有或发行的衍生工具认可或不认可和计量的政策。它也需要说明衍生物和其相关的收益和损失在损益表和资产负债表上报告的位置。一个公司必须了解衍生工具预期交易对冲所需的其他信息，如坚定的承诺和预测交易帐户。（想看到SFAS119全面的核对表请看威廉姆斯的文章。）3对于分析师来说好消息是，现在他们应该能够清楚地分清资产和负债，在一个地方找到所有的披露，并确定相关的账面价值。然而，不要求公司披露的衍生产品交易活动的净收益和净损
7、失，不同于其他交易活动的收益和损失，仍然会给予企业一定的回旋余地来操纵损益的披露。像SFAS105和SFAS107是要重点注意的，SFAS119只是一个披露的宣告。也就是说，它指定了额外的披露要求，但并不要求区别衍生工具的确认标准。在衍生工具的分类和认识问题上仍有很多主观性的余地。同时，它不要求公司量化其所持有的衍生工具的风险。现行规定缺少有关衍生工具的利率，外汇，商品价格，或其他市场风险的充分的定量信息。然而，公司被鼓励去超越SFAS119新的最低披露的要求，以获得更多关于其衍生物的利率，外汇，商品价格，或其他市场风险的定量信息。FASB认为，这些信息将有助于形成与公司目标有关的战略。例如，
8、如果一家公司表明，它持有衍生工具的风险管理，定量披露，是为了确认其衍生物的活动是否真能降低风险。有几种方法可以用来报告这方面的信息，包括披露假设股本或年收入在市场价格上几个可能变化的影响。利率重定价日或到期日的差距分析。金融工具的期限。来自衍生工具和在报告期末其他状况的风险价值（VAR），以及年内风险的平均值。风险价值通常被定义为在特定的时间和信心水平下，市场因素发生不利变化的潜在损失。这与压力测试类似，但它是基于历史的市场走势和不基于收益率曲线中的任意运动。举例来说，压力测试可能以收益率曲线虚构的200个基点的增加或减少来决定对收入和股票的影响。风险价值可以测试在过去的一年里，因假定利率的不
9、利变动，10天内潜在的价值损失。人们相信风险价值可能对区分正在使用衍生工具来降低风险和正在使用衍生工具进行炒作的公司是有用的。（1995年泰特）现在是可选的这些披露，可能在不久的将来是被要求的。许多银行和其他非金融机构自愿在其1994年年度报告中提供了这一信息。4外文文献原文TITLEDERIVATIVESDISCLOSUREWILLITTAMETHEBEASTMATERIALSOURCEJOURNALOFBANKCOSTHOWEVER,THEIDEAISTOGAINAGENERALUNDERSTANDINGOFTHEDEBATETHATISCURRENTLYRAGINGABOUTHOWTOA
10、CCOUNTFORDERIVATIVESANDTHEAMOUNTOFINFORMATIONTODISCLOSETOWARDTHEEND,AFRAMEWORKWILLBEPROVIDEDTOHELPBANKSEVALUATESOMEOFTHERISKSPOSEDBYDERIVATIVESCURRENTDISCLOSUREREQUIREMENTSTHEREARETWOFAIRLYDISTINCTASPECTSRELATEDTOFINANCIALREPORTINGOFDERIVATIVESDISCLOSUREANDACCOUNTINGTREATMENTTHEINCONSISTENCIESINACCO
11、UNTINGFORDERIVATIVESUNDERTHECURRENTRULESANDTHEDIFFICULTYINESTABLISHINGTRANSPARENTSTANDARDSFORALLDERIVATIVEINSTRUMENTSARE,TOSOMEEXTENT,RESPONSIBLEFORTHECURRENTFOCUSOFREGULATORSONDISCLOSUREITISPERHAPSEASIERTOANALYZESOMEOFTHEISSUESREGARDINGDISCLOSUREOFDERIVATIVESANDTHENTOMOVEONTOTHEPROBLEMSASSOCIATEDWI
12、THCURRENTACCOUNTINGSTANDARDSOVERTHEPASTFEWYEARS,THEREHAVEBEENASERIESOFDEVELOPMENTSINESTABLISHINGDISCLOSUREREQUIREMENTSFORDERIVATIVESFASBSTATEMENT105COVERSDISCLOSINGINFORMATIONABOUTFINANCIALINSTRUMENTS,NOTJUSTDERIVATIVES,THATCREATEOFFBALANCESHEETRISKANDCREDITRISKFROMFINANCIALTRANSACTIONSFASBSTATEMENT
13、107ADDSADISCLOSUREREQUIREMENTABOUTTHEFAIRMARKETVALUEOFFINANCIALINSTRUMENTSWHILEITISIMPOSSIBLETOCOVEREVERYASPECTOFDERIVATIVESREGULATION,ITWOULDBEBENEFICIALTOLOOKATTHERECENTFASBSTATEMENT119INMOREDETAILSFAS119,DISCLOSUREABOUTDERIVATIVEFINANCIALINSTRUMENTSANDFAIRVALUEOFFINANCIALINSTRUMENTSWASISSUEDBYFAS
14、BINOCTOBER1994ITGREATLYINCREASEDTHEDISCLOSUREREQUIREMENTSFORDERIVATIVESACTIVITYANDCALLEDFORAMOREDETAILEDEXPLANATIONOFWHYACOMPANYUSESDERIVATIVESCOMPANIESAREREQUIREDTODISCLOSETHEKINDSOFDERIVATIVESUSED,HOWTHEYAREACCOUNTEDFOR,ANDTODISCLOSECERTAINQUANTITATIVEINFORMATIONCATEGORIZEDBYMAJORTYPESOFDERIVATIVE
15、S,ANDBYMATURITYANDFAIRVALUESFAS119ACLOSERLOOKFASBSTATEMENT119REQUIRESALLENTITIESWITH150MILLIONORMOREINTOTALASSETSTOPROVIDECERTAINDISCLOSURESINTHEIRFINANCIALSTATEMENTSISSUEDFORFISCALYEARENDINGAFTERDECEMBER15,1994SMALLERCOMPANIESWEREGIVENANADDITIONAL6YEARTOCOMPLYITDISTINGUISHESBETWEENDERIVATIVESHELDOR
16、ISSUEDFORTRADINGPURPOSES,THOSEHELDFORPURPOSESOTHERTHANTRADING,ANDTHOSEUSEDFORHEDGINGBASEDONTHECATEGORIZATIONOFTHEINSTRUMENTS,GAINSANDLOSSESARISINGFROMTHESEINSTRUMENTSAREREFLECTEDINDIFFERENTWAYSDERIVATIVESHELDFORTRADINGSTATEMENT119REQUIRESACOMPANYTODISCLOSETHEAVERAGEANDENDOFPERIODFAIRVALUESOFDERIVATI
17、VESHELDORISSUEDFORTRADINGTHEREQUIREMENTTONETGAINSORLOSSESFROMDERIVATIVETRADINGACTIVITIESDURINGTHEREPORTINGPERIODWASDROPPEDTHISINFORMATIONMUSTBEDISCLOSEDSEPARATELYFOREACHCLASS,BUSINESSACTIVITY,RISK,ORANYOTHERMANAGEMENTCATEGORYDERIVATIVESNOTFORTRADINGUNDER119,ACOMPANYMUSTSTATEITSOBJECTIVESFORHOLDINGOR
18、ISSUINGNONTRADINGDERIVATIVES,THECONTEXTNEEDEDTOUNDERSTANDTHOSEOBJECTIVES,ANDITSSTRATEGIESFORACHIEVINGTHOSEOBJECTIVES,INCLUDINGCLASSESOFDERIVATIVESITUSESNONTRADINGDERIVATIVESHELDORISSUEDFOROTHERTHANTRADINGPURPOSES,INCLUDINGTHOSETHATHEDGEONBALANCESHEETSASSETSANDLIABILITIES,ASWELLASTHOSEUSEDFOROTHERRIS
19、KMANAGEMENTPURPOSESTHEAMOUNTOFTHEHEDGINGGAINSANDLOSSESTHATISEXPLICITLYDEFERREDNEEDSTOBESTATEDALSO,THEPERIODOFTIMEUNTILTHEANTICIPATEDTRANSACTIONSAREEXPECTEDTOOCCURSHOULDBEREVEALEDTHISINCLUDESADESCRIPTIONOFTHETRANSACTIONSOROTHEREVENTSTHATRESULTINTHERECOGNITIONININCOMEDEFERREDBYHEDGEACCOUNTINGTATE1995A
20、DDITIONALLY,ACOMPANYHASTODESCRIBEHOWITREPORTSEACHCLASSOFDERIVATIVESINITSFINANCIALSTATEMENTSITMUSTDISCLOSEITSPOLICYFORRECOGNIZINGORNOTRECOGNIZINGANDMEASURINGTHEDERIVATIVESITHOLDSORISSUESITISALSOREQUIREDTOSTATEWHERETHEDERIVATIVESANDTHEIRRELATEDGAINSANDLOSSESAREREPORTEDINTHEINCOMESTATEMENTANDONTHEBALAN
21、CESHEETACOMPANYMUSTMAKEKNOWNADDITIONALINFORMATIONABOUTDERIVATIVESITACCOUNTSFORASHEDGESOFANTICIPATEDTRANSACTIONS,SUCHASFIRMCOMMITMENTSANDFORECASTEDTRANSACTIONSFORACOMPREHENSIVECHECKLISTOFSFAS119SEEARTICLEBYWILLIAMSTHEGOODNEWSFORANALYSTSISTHATNOWTHEYSHOULDBEABLETODISTINGUISHCLEARLYBETWEENASSETSANDLIAB
22、ILITIES,FINDALLDISCLOSURESINONEPLACE,ANDIDENTIFYTHEASSOCIATEDCARRYINGVALUESHOWEVER,NOTREQUIRINGCOMPANIESTODISCLOSENET7TRADINGGAINSANDLOSSESFROMDERIVATIVES,ASDISTINCTFROMGAINSANDLOSSESFROMOTHERTRADINGACTIVITIES,WILLSTILLGIVECOMPANIESSOMELEEWAYTOMANIPULATETHEDISCLOSUREOFGAINSANDLOSSESITISIMPORTANTTONO
23、TETHATLIKESFAS105ANDSFAS107,SFAS119ISADISCLOSUREONLYPRONOUNCEMENTTHATIS,ITSPECIFIESADDITIONALDISCLOSUREREQUIREMENTS,BUTDOESNOTREQUIREDIFFERENTRECOGNITIONSTANDARDSFORDERIVATIVESTHISSTILLLEAVESROOMFORALOTOFSUBJECTIVITYINMATTERSOFCLASSIFYINGANDRECOGNIZINGDERIVATIVESALSO,ITDOESNOTREQUIRECOMPANIESTOQUANT
24、IFYTHERISKOFTHEDERIVATIVESTHEYHOLDCURRENTREGULATIONSFALLSHORTOFFULLQUANTITATIVEINFORMATIONABOUTDERIVATIVESINTERESTRATE,FOREIGNEXCHANGE,COMMODITYPRICE,OROTHERMARKETRISKSHOWEVER,COMPANIESAREENCOURAGEDTOGOBEYONDTHENEWMINIMUMSFAS119DISCLOSUREREQUIREMENTSTOMOREQUANTITATIVEINFORMATIONABOUTTHEIRDERIVATIVES
25、INTERESTRATE,FOREIGNEXCHANGE,COMMODITYPRICE,OROTHERMARKETRISKSFASBBELIEVESTHISINFORMATIONWILLHELPRELATEACOMPANYSSTRATEGIESTOITSOBJECTIVESFOREXAMPLE,IFACOMPANYSTATESITHOLDSDERIVATIVESTOMANAGERISK,QUANTITATIVEDISCLOSURESAREEXPECTEDTOCONFIRMWHETHERITSDERIVATIVESACTIVITIESDOINFACTREDUCERISKSEVERALAPPROA
26、CHESCOULDBEUSEDTOREPORTTHISINFORMATION,INCLUDINGDISCLOSINGHYPOTHETICALEFFECTSONEQUITY,ORONANNUALINCOMEOFSEVERALPOSSIBLECHANGESINMARKETPRICESGAPANALYSISOFINTERESTRATEREPRICINGORMATURITYDATESDURATIONOFTHEFINANCIALINSTRUMENTSVALUEATRISKVARFROMDERIVATIVESANDFROMOTHERPOSITIONSATTHEENDOFTHEREPORTINGPERIOD
27、,ASWELLASTHEAVERAGEVALUEATRISKDURINGTHEYEARVARISGENERALLYDEFINEDASTHEPOTENTIALLOSSFROMADVERSECHANGESINMARKETFACTORSFORASPECIFIEDTIMEPERIODANDASPECIFIEDCONFIDENCELEVELITISSIMILARTOSTRESSTESTING,EXCEPTTHATITISBASEDONHISTORICALMARKETMOVEMENTSANDNOTONANARBITRARYMOVEMENTINTHEYIELDCURVEFOREXAMPLE,ASTRESST
28、ESTMAYDETERMINETHEEFFECTONINCOMEANDEQUITYFORAHYPOTHETICAL200BASISPOINTSINCREASEORDECREASE8INTHEYIELDCURVEVARMIGHTMEASURETHEPOTENTIAL10DAYLOSSESINVALUEFROMASSUMEDADVERSECHANGESININTERESTRATESOVERTHELASTYEARITISBELIEVEDTHATVARMAYALSOBEUSEFULFORDISTINGUISHINGCOMPANIESTHATAREUSINGDERIVATIVESTOREDUCERISK
29、ANDTHOSETHATAREUSINGDERIVATIVESFORSPECULATIONTATE1995SUCHDISCLOSURES,NOWOPTIONAL,MAYBEREQUIREDINTHENEARFUTUREMANYBANKSANDOTHERNONFINANCIALINSTITUTIONSVOLUNTARILYPROVIDEDTHISINFORMATIONINTHEIR1994ANNUALREPORTSOTHERREGULATORYBODIESHAVEADDEDTOTHECONFUSIONTHESECSPARKEDOFFAFURIOUSCONTROVERSYINNOVEMBER199
30、5,WHENITPROPOSEDANEWRULEREQUIRING,RATHERTHANENCOURAGING,COMPANIESUSINGDERIVATIVESTOPROVIDETHEFOLLOWINGINFORMATIONINTHEANNUALREPORTSMANAGEMENTDISCUSSIONANDANALYSISSECTIONATABLEOFCASHFLOWSLISTEDBYMATURITYDATESOFTHEDERIVATIVESBANKSALREADYPROVIDESIMILARINFORMATIONFORINTERESTRATESONTHEIRASSETSANDLIABILIT
31、IESASTATEMENTOFHOWEARNINGSORTHEFAIRVALUEOFDERIVATIVESWOULDCHANGEIFINTERESTRATESMOVEDUPORDOWNONEPERCENTAGEPOINTACALCULATIONOFPOSSIBLELOSSESANDTHEIRLIKELIHOODRESULTINGFROMUNFAVORABLEMARKETMOVESOVERTIME,ORVALUEATRISKVARBERTON,NOVEMBER1995NOTSURPRISINGLY,THISPROPOSALRAISEDANOUTCRYFROMTHEBUSINESSCOMMUNIT
32、YCOMPANIESARGUEDTHATCREATINGASOFTWAREPROGRAMFORSUCHDISCLOSURESWOULDBEUNNECESSARYANDVERYCOSTLYTODEVELOPFIRMSARECONCERNEDTHATSUCHELABORATEDISCLOSURESMIGHTMAKEUNSOPHISTICATEDINVESTORSAPPREHENSIVEABOUTLEGITIMATEHEDGINGACTIVITIESHENCE,SUCHREGULATORYMEASURESMIGHTDETERFIRMSFROMUSINGDERIVATIVES,MAKINGITDIFF
33、ICULTFORTHEMTOEFFECTIVELYHEDGETHEIRRISKSSOMESEETHEVOLUMEOFDISCLOSUREABOUTDERIVATIVESBECOMINGDISPROPORTIONATELYGREATERTHANTHEDISCLOSURESOFOTHERMORESIGNIFICANTBUSINESSRISKSFOREXAMPLE,INTHEPHARMACEUTICALINDUSTRY,RESEARCHANDDEVELOPMENTISABSOLUTELYCRITICALTOANENTERPRISESSUCCESSANDGROWTHBECAUSEOFTHEMAGNIT
34、UDEOFRESOURCESDEVOTEDTOTHESEACTIVITIES,SUCHFIRMSEXPOSURETORISKFARANDAWAYEXCEEDSTHEEXPOSURETHATFINANCIALINSTITUTIONSCREATEKEAMEY1995THISISANIMPORTANTLESSONFORANALYSTSWHOMUSTBECAREFULNOTTOLOSESIGHTOFTHEBIGPICTURE9ACCOUNTINGISSUESWHATSONTHEHORIZONCURRENTACCOUNTINGGUIDANCEFORDERIVATIVESISINADEQUATEANDIN
35、CONSISTENT,ANDDOESNOTCOVERMANYDERIVATIVEPRODUCTTYPESFOREXAMPLE,UNDERCURRENTACCOUNTINGRULES,HEDGESUSEDTOPROTECTCOMMODITYPRICESAREMARKEDTOMARKETWHILETHOSEUSEDINFINANCIALTRANSACTIONS,SUCHASINTERESTSWAPS,ARENOTTHISDIFFERENCEHASBEENCAUSINGCONFUSIONAMONGFINANCIALSTATEMENTUSERSWILLIAMS1995ITISTHESHEERVARIE
36、TYANDDIVERSITYOFDERIVATIVESTHATLEADSTODIFFICULTIESINESTABLISHINGSTANDARDPROCEDURESTOACCOUNTFORTHESEINSTRUMENTSDERIVATIVESCANBEUSEDTOHEDGEAGAINSTCHANGESINTHEVALUEOFANASSETDUETOINTERESTRATECHANGESANDOTHERBUSINESSRISKS,ORTOMAKELEVERAGEDBETSONPRICEANDYIELDCHANGESTOINCREASEINCOMEOVERTHATWHICHISAVAILABLEF
37、ROMMORECONVENTIONALINSTRUMENTSTHEYCANALSOBEUSEDTOLOWERTHEBORROWINGCOSTSOFCOMPANIESDERIVATIVESCANBEBOTHONANDOFFBALANCESHEETDERIVATIVESECURITIESSUCHASCMOS,LOS,ETC,AREINCLUDEDINTHEINVESTMENTSSECTIONONTHEBALANCESHEET,2BUTSINCEOPTIONS,FUTURES,FORWARDS,ANDSWAPSARECONTRACTS,THEYREMAINOFFTHEBALANCESHEETITIS
38、PRIMARILYDISCLOSURESRELATEDTOOFFBALANCESHEETDERIVATIVESTHATHAVEFOXEDREGULATORSOVERTHEPASTYEARSINJULY1995,FASBWASREADYTOMOVEAHEADWITHAPROPOSALTHATWOULDREQUIREALLDERIVATIVESTOBEMARKEDTOMARKETUNDERTHEPROPOSAL,THECHANGEINFAIRVALUEFORDERIVATIVESCLASSIFIEDASTRADINGACCOUNTDERIVATIVES,WOULDBERECOGNIZEDINEAR
39、NINGSINTHEPERIODTHEYOCCURUNREALIZEDCHANGESINTHEFAIRVALUEOFDERIVATIVESHELDFORRISKMANAGEMENTPURPOSESWOULDBERECORDEDASASEPARATECOMPONENTOFEQUITYUNTILREALIZEDALLREALIZEDGAINSANDLOSSESWOULDBERECOGNIZEDINEARNINGSTHISAPPROACHWOULDTREATALLKINDSOFDERIVATIVESEQUALLYITWOULDALSOCREATEASIGNIFICANTMISMATCHBECAUSE
40、DERIVATIVESUSEDFORRISKREDUCTIONPURPOSESMAYNOTBEACCOUNTEDFORINTHESAMEMANNERASTHEONBALANCESHEETASSETSORLIABILITIESBEINGHEDGEDANEXAMPLEUSEDTOILLUSTRATETHISPOINTWOULDBEONEWHEREACOMPANYISSUEDVARIABLERATEDEBTANDSIMULTANEOUSLYENTEREDINTOANINTERESTRATE10SWAPTOCONVERTTHERATETOAFIXEDRATEUNDERTHEPROPOSAL,THEIN
41、TERESTRATESWAPWOULDBECARRIEDATFAIRVALUE,WITHUNREALIZEDGAINSANDLOSSESRECORDEDINEQUITY,WHILETHEDEBTWOULDBEREPORTEDATCOSTKEARNEY1995FASBSPROPOSALTOMARKTOMARKETALLDERIVATIVESWASSHARPLYANDPUBLICLYCRITICIZEDBYTHESPCORPORATIONTHECREDITRATINGAGENCYSAIDTHATTHEFASBPLANWOULDCAUSEGREATERVOLATILITYINTHEEQUITYSEC
42、TIONOFACOMPANYSBALANCESHEET,ANDCOULDDISTORTAREPORTINGCOMPANYSECONOMICVIABILITYTHROUGHSHARPCHANGESINEQUITYFASBREQUIREDUNREALIZEDGAINSORLOSSESUSEDFORHEDGINGTOBECHARGEDAGAINSTEITHEREQUITYOREARNINGSITISBELIEVEDTHATCOMPANIESWOULDMOSTCERTAINLYCHOOSEEQUITYBECAUSECOMPANIESFEELTHATITLOOKSLESSDAMAGINGTOSHAREH
43、OLDERSSPFAVORSIMPROVEDFOOTNOTEDISCLOSURESTHATREMAINOFFTHEBALANCESHEETANDDONOTAFFECTEQUITYORPROFITFASBSPLANTOMARKONLYTHEDERIVATIVESIDEOFTHEHEDGETOMARKET,WHILENOTDOINGTHESAMETOTHEUNDERLYINGASSET,WOULDOBSCURETHETRANSACTIONRATHERTHANDISCLOSEMOREABOUTITSUNDERLYINGRISKSALSO,ITISDIFFICULTTOMARKTOMARKETBANK
44、LOANSWHOSEINTERESTRATEYIELDSAREHEDGEDWITHSWAPS,WHICHAREDERIVATIVESBERTON,MARCH1995THEFASBAPPROACHWOULDPARTICULARLYHURTBANKS,FINANCIALINSTITUTIONS,ANDBROKERAGEHOUSESTHATUSESWAPS,OPTIONSANDFUTURES,ANDFORWARDSTOHEDGEINTERESTANDEXCHANGERATECHANGESBRINGINGUNREALIZEDGAINSANDLOSSESFROMCURRENTHEDGESUSINGDER
45、IVATIVESONTOTHEBALANCESHEETWOULDSTIFLETHEUSEOFTHESEINSTRUMENTS,EVENFORECONOMICALLYVIABLETRANSACTIONSOUTOFFEARTHATTHECOMPANYMAYLOOKWORSETHANITISAFTERALL,THEREASONTHATANUMBEROFDERIVATIVESARESOATTRACTIVEISBECAUSEOFTHEIROFFBALANCESHEETNATURETHETHORNYISSUEOFHOWTOACCOUNTFORGAINSANDLOSSESONDERIVATIVESREMAI
46、NSUNRESOLVEDTHEPROBLEMISTHATCOMPANIESOFTENFINDTHEMSELVESFORCEDTOACCOUNTFORDERIVATIVESATCURRENTMARKETVALUESWHENITISUNCLEARHOWMUCHMONEYTHEYSTANDTOGAINORLOSEATTHEENDOFTHECONTRACTONEALTERNATIVEWOULDBETOALLOWCOMPANIESTOREPORTCHANGESINTHEVALUEOFADERIVATIVEINTHEIREARNINGSFORTHEFISCALPERIODINWHICHTHECHANGET
47、AKESPLACE,ORTHEYCOULDMAKEANADJUSTMENTTOTHEIRASSETVALUEWHENTHECONTRACTISINITIATEDANDMAKECHANGESINEARNINGSONLY11WHENTHECONTRACTISCONCLUDEDANDGAINSORLOSSESARERECOGNIZEDANOTHERCHOICEWOULDBETOSCRAPCURRENTRULESANDHAVECOMPANIESMARKTOMARKET,ORREPORTTHEVALUEOFTHECONTRACTSATTHEPRICETHEYWOULDFETCHINTHEOPENMARK
48、ETTHATAPPROACHWOULDMEANTHATCOMPANIESWOULDHAVETOSTARTDISCLOSINGTHEMARKETVALUEOFTHEIRASSETSANDLIABILITIES,AFARCRYFROMCURRENTRULES,WHICHREQUIREMARKINGTOMARKETONLYINSOMEINSTANCESEVENSOMEQUANTJOCKSFINDTHEMOREEXOTICDERIVATIVESTRICKYTOEVALUATENOTSURPRISINGLY,REGULATORS,WHODONOTHAVEWALLSTREETSTECHNOLOGYANDP
49、RICINGMODELS,FINDITDIFFICULTTOASSESSTHERISKTAKENBYBUYERSOFEXOTIC,CUSTOMIZEDDERIVATIVESISTHEONLYALTERNATIVETOREGULATESPECIFICDERIVATIVES,RATHERTHANOPTINGTOSETGUIDELINESFORTHETOTALAMOUNTOFRISKCONCLUSIONIMPROVEDDISCLOSUREANDCONSISTENTACCOUNTINGSTANDARDSWILLCERTAINLYGOALONGWAYTOWARD“TAMINGTHEDERIVATIVEBEAST“HOWEVER,ITISONLYIFINCREASEDEXTERNALDISCLOSUREGOESHANDINHANDWITHSTRINGENTINTERNALCONTROLS,THATDERIVATIVESWILLNOLONGERREMAINADIRTYWORDANEXAMINATIONOFTHEISSUESADDRESSEDINTHISPAPERREVEALSTHATTHEREARENOEASYANSWERSTOTHEQUESTIONSPOSEDREGULATORS,DERIVATIVEDEALERS,ANDENDUSERSMUSTWORKTOGE
