Glossary entry (derived from question below)
German term or phrase:
auflösen [hedge (relationship)]
English translation:
discontinue
Added to glossary by
Hermeneutica
Dec 20, 2003 18:36
20 yrs ago
German term
Switzerland
Accurate, idiomatic value and service
Native in: Spanish 
, English
Works in: Dutch to English, German to English, French to English, and 16 more.
Hedge oder Hedgebeziehung **auflösen**
German to English
Bus/Financial
IAS 39
IAS 39. Hedge ineffectiveness is a condition requiring Auflösung. I find
1. reversal
2. suspension
3. termination
and I am not sure about which if any to use. Especially "suspension" seems a bit suspect to me, whereas I can see the element of "dissolution" in a reversal, but not so much in a termination.
MTIA! again. Sorry about all these questions but this is a 40k word job ...
1. reversal
2. suspension
3. termination
and I am not sure about which if any to use. Especially "suspension" seems a bit suspect to me, whereas I can see the element of "dissolution" in a reversal, but not so much in a termination.
MTIA! again. Sorry about all these questions but this is a 40k word job ...
Proposed translations
(English)
| 5 +1 | discontinue |
RobinB
|
| 4 +5 | liquidate a hedge position |
William Stein
|
| 4 | eliminate the hedging relationship |
Ralf Lemster
|
| 4 | unwind |
gangels (X)
|
Proposed translations
+1
6 hrs
German term (edited):
Hedge oder Hedgebeziehung **aufl�sen**
Selected
discontinue
is what you do to a hedging relationship under IAS 39. This is a purely accounting transaction, and doesn't necessarily have anything to do with transactions relating to the hedged item (underlying) or the hedge instrument.
And it's all going to get even more complicated under the amended IAS 39 that's just been released...
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Note added at 15 hrs 5 mins (2003-12-21 09:42:33 GMT)
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Should be \"hedging instrument\", of course.
And it's all going to get even more complicated under the amended IAS 39 that's just been released...
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Note added at 15 hrs 5 mins (2003-12-21 09:42:33 GMT)
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Should be \"hedging instrument\", of course.
4 KudoZ points awarded for this answer.
Comment: "Thank you so much, Robin and Ralf! Wish I could split the points!
Dee"
+5
1 min
William Stein
Costa Rica
Costa Rica
Native in English
Costa Rica
Translations that read like originals
Native in: English (Variants: US, UK) 
Works in: French to English, German to English, Spanish to English, and 3 more.
Related KudoZ points
:
1734
German term (edited):
Hedge oder Hedgebeziehung **aufl�sen**
liquidate a hedge position
It just means to cash in the underlying securities
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Note added at 2 mins (2003-12-20 18:39:06 GMT)
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NYMEX.com: Natural Gas
... when the dealer hedge the original swap. The EFS can also be used
to liquidate a hedge. A natural gas marketer who buys natural ...
www.nymex.com/jsp/markets/ng_fut_efs.jsp - 39k
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Note added at 2 hrs 14 mins (2003-12-20 20:51:17 GMT)
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I found a pretty good explanation of IAS 39 at http://www.jmhfs.com/ias39.pdf. The hedge transactions can be considered to be a means of risk management that isn\'t recognized in the income. If the hedges are ineffective at risk management, however, they have to be \"recognized (reclassified) as income\" or \"derecognized as hedges\":
• For all hedges: Documentation of risk management objectives and strategies is required at the inception of the hedge; They must be highly effective – negative correlation of 80% - 125%, between the hedge and the underlying hedged exposure;
Ineffective portion of the hedge must be recognised in earnings immediately; effectiveness must be capable of being measured reliably and on a pre-determined
(i.e. monthly) basis.
--------------------------------------------------
Note added at 2 mins (2003-12-20 18:39:06 GMT)
--------------------------------------------------
NYMEX.com: Natural Gas
... when the dealer hedge the original swap. The EFS can also be used
to liquidate a hedge. A natural gas marketer who buys natural ...
www.nymex.com/jsp/markets/ng_fut_efs.jsp - 39k
--------------------------------------------------
Note added at 2 hrs 14 mins (2003-12-20 20:51:17 GMT)
--------------------------------------------------
I found a pretty good explanation of IAS 39 at http://www.jmhfs.com/ias39.pdf. The hedge transactions can be considered to be a means of risk management that isn\'t recognized in the income. If the hedges are ineffective at risk management, however, they have to be \"recognized (reclassified) as income\" or \"derecognized as hedges\":
• For all hedges: Documentation of risk management objectives and strategies is required at the inception of the hedge; They must be highly effective – negative correlation of 80% - 125%, between the hedge and the underlying hedged exposure;
Ineffective portion of the hedge must be recognised in earnings immediately; effectiveness must be capable of being measured reliably and on a pre-determined
(i.e. monthly) basis.
Peer comment(s):
| agree |
Steffen Walter
5 mins
|
| agree |
silvia glatzhofer
29 mins
|
| agree |
Gareth McMillan
: Pretty safe.
1 hr
|
| neutral |
Ralf Lemster
: Agreed if we're talking about closing out the hedge, but I believe this is about the accounting treatment only PS Your note is ok, but doesn't quite hit the context here (neither does mine, of course)
1 hr
|
|
I think you're right, but I wouldn't say "eliminated". See what you think of my added note.
|
|
| agree |
szilard
: Like in your examples, without "position", only a hedge.
5 hrs
|
| agree |
Jose Paez
7 hrs
|
1 hr
Ralf Lemster
Germany
Germany
Native in German
Germany
The language of financial markets
Native in: German
Works in: English to German, German, German to English, and 1 more.
Related KudoZ points
:
2684
German term (edited):
Hedge oder Hedgebeziehung **aufl�sen**
eliminate the hedging relationship
Given that you specifically mention ineffectiveness as a condition, I believe this isn't about closing out the hedge, but simply about eliminating the hedging relationship for accounting purposes.
IOW both the hedged transaction and the hedging instrument continue to be carried, but are recognised individually, since they no longer qualify as a hedge.
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Note added at 2 hrs 38 mins (2003-12-20 21:15:01 GMT)
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Need to consult my bound volumes... tomorrow, I\'m afraid.
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Note added at 15 hrs 33 mins (2003-12-21 10:09:55 GMT)
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Robin\'s answer is correct, of course - the paragraph I was looking for is IAS 39.156:
\"An enterprise should **discontinue** prospectively the hedge accounting specified in paragraph 153 if any one of the following occurs:
[(a)]
(b) the hedge no longer meets the criteria for qualification for hedge accounting in paragraph 142.\"
IOW both the hedged transaction and the hedging instrument continue to be carried, but are recognised individually, since they no longer qualify as a hedge.
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Note added at 2 hrs 38 mins (2003-12-20 21:15:01 GMT)
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Need to consult my bound volumes... tomorrow, I\'m afraid.
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Note added at 15 hrs 33 mins (2003-12-21 10:09:55 GMT)
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Robin\'s answer is correct, of course - the paragraph I was looking for is IAS 39.156:
\"An enterprise should **discontinue** prospectively the hedge accounting specified in paragraph 153 if any one of the following occurs:
[(a)]
(b) the hedge no longer meets the criteria for qualification for hedge accounting in paragraph 142.\"
1 day 21 hrs
unwind
is the standard wording for derivatives (which a hedge position is), but you 'liquidate' tangible assets
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