NISM Series XIII Common Derivatives Certification Exam Notes
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Recognition of Derivatives: All derivative contracts must be recognised on the balance sheet and measured at fair value.
Fair Value Measurement: Fair value means the ‘exit price’ — the amount paid to transfer a liability or received to transfer an asset, factoring in credit risk and collateral.
No Hedge Accounting: If hedge accounting is not used, derivatives must be measured at fair value with changes recognised in profit and loss.
Using Hedge Accounting: Entities may apply hedge accounting if they can identify risk management objectives, hedged risks, measurement methods, and document all aspects at inception and ongoing.
Partial Hedge Accounting: Entities can apply hedge accounting for some contracts and fair value accounting for others.
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