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Hedge oder Hedgebeziehung **auflösen**

English translation: discontinue

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GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
German term or phrase:auflösen [hedge (relationship)]
English translation:discontinue
Entered by: Hermeneutica
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18:36 Dec 20, 2003
German to English translations [PRO]
Bus/Financial / IAS 39
German term or phrase: Hedge oder Hedgebeziehung **auflösen**
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 ...
Hermeneutica
Switzerland
Local time: 04:27
discontinue
Explanation:
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.
Selected response from:

RobinB
Germany
Local time: 04:27
Grading comment
Thank you so much, Robin and Ralf! Wish I could split the points!

Dee
4 KudoZ points were awarded for this answer

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Summary of answers provided
4 +5liquidate a hedge position
William Stein
5 +1discontinueRobinB
4unwindgangels
4eliminate the hedging relationship
Ralf Lemster


  

Answers


1 min   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +5
Hedge oder Hedgebeziehung **auflôsen**
liquidate a hedge position


Explanation:
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.


William Stein
Costa Rica
Local time: 21:27
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 1734

Peer comments on this answer (and responses from the answerer)
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
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6 hrs   confidence: Answerer confidence 5/5 peer agreement (net): +1
Hedge oder Hedgebeziehung **auflösen**
discontinue


Explanation:
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...

--------------------------------------------------
Note added at 15 hrs 5 mins (2003-12-21 09:42:33 GMT)
--------------------------------------------------

Should be \"hedging instrument\", of course.

RobinB
Germany
Local time: 04:27
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 1929
Grading comment
Thank you so much, Robin and Ralf! Wish I could split the points!

Dee

Peer comments on this answer (and responses from the answerer)
agree  Ralf Lemster: Thanks, Robin
8 hrs
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1 hr   confidence: Answerer confidence 4/5Answerer confidence 4/5
Hedge oder Hedgebeziehung **auflösen**
eliminate the hedging relationship


Explanation:
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.\"

Ralf Lemster
Germany
Local time: 04:27
Native speaker of: German
PRO pts in pair: 2684
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1 day 21 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
unwind


Explanation:
is the standard wording for derivatives (which a hedge position is), but you 'liquidate' tangible assets

gangels
Local time: 20:27
Native speaker of: Native in EnglishEnglish, Native in GermanGerman
PRO pts in pair: 5500
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