To maintain transparency in capital markets, regulators require firms to provide detailed information on their trading systems; trade and valuation reporting; capital plan; and accounting approaches. This is mandated globally, from SEC and FINRA in the U. S. to EBA and ESMA in Europe, with regulations including EMIR, AIFMD, Form PF, EBA Prudent Valuation and more.
IFRS 9 | SPPI and Expected Credit Loss Solution
In July 2014, the International Accounting Standards Board (IASB) issued IFRS 9 Financial Instruments, replacing IAS 39. The standard updates the model for balance sheet classification and measurement of financial instruments, impairment of financial securities, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.
Bloomberg’s IFRS 9 SPPI Test solution assists clients in performing the contractual cash flows test required by the updated IFRS 9 classification and measurement model. The solution automates the process of reviewing individual security prospectuses and legal documents by scanning over 70 unique security attributes for each financial instrument and identifying potentially non-SPPI features or cash flows.
Intesa Sanpaolo Selects Bloomberg IFRS 9 SPPI Data to Streamline Adoption of New Accounting Standard. View the press announcement.
Our Expected Credit Loss (ECL) accounting solution saves you significant time, money and manpower, not as a one-off, but continuously, as credit risk models need to be validated and enhanced annually. With Bloomberg, you no longer need to hire large numbers of credit risk personnel, build credit risk models or bolster the accounting department’s resources to interpret and implement IFRS 9 components. Bloomberg’s ECL solution is an implementation-ready product that provides the necessary transparency to management.
IAS / GAAP | Fair Value Hierarchy Leveling Tool Solution
Effective 2011, any reporting entity that is subject to IAS (International Accounting Standards) or U.S. GAAP (Generally Accepted Accounting Principles) has to disclose assets in the fair value hierarchy.
Bloomberg’s Fair Value Hierarchy Leveling Tool (FVHL Tool) enables clients to customize and store their own rules to determine fair value leveling results, either 1, 2 or 3, at a certain point in time, while aligning with the high quality, independent evaluated price provided by Bloomberg Valuation Service (BVAL). The market data used to drive the FVHL Tool is the identical underlying data used by BVAL to price each fixed income security. The FVHL Tool helps clients respond to the accounting requirements set forth by ASC 820 and IFRS 13 as they extend beyond the original fair value reporting standards FAS 157 and IAS 39.
ASC 820 & IFRS 13| Pricing Transparency Solution
The accounting standards ASC 820 Fair Value Measurement in the U.S. and IFRS 13 Fair Value Measurement internationally require increased disclosures around the sources, inputs and methodology used to calculate the fair value of financial instruments presented in the financial statements. A key component of both of these standards is the requirement for companies to include a “leveling” table in the notes to the financial statements, which classifies all investments presented at fair value as Level 1, 2 or 3, based on the significance of unobservable inputs.
Bloomberg’s Pricing Transparency & Leveling tools provide an objective, consistent and defensible solution for many of the regulatory and accounting issues facing our clients today by exposing the underlying market data used in the BVAL pricing models.
IRS Section 871(m) Solution
The U.S. Internal Revenue Service (IRS) regulation under Section 871(m) requires withholding on certain notional principal contracts, derivatives and other equity-linked instruments with payments that reference dividends on U.S. equity securities and indices. Withholding is required when those amounts are paid to a non-U.S. person. Contracts linked to equity indexes are deemed to be in scope based on whether the index is categorized as “qualified” or “non-qualified”. In addition, the delta of a contract at issuance (the ratio comparing the change in price of an underlying asset to the change in price of a derivative) must be 0.8 or higher.
Discover how 871(m) will impact your day-to-day operations. Bloomberg’s data solution for 871(m) facilitates identification of in-scope instruments, providing high quality delta calculations and test indices for qualification.
Stamp Act Solution
Handling taxes imposed by global authorities can be a serious challenge for financial firms. Many international broker dealers and wealth managers, for example, deal with tax-eligible securities on behalf of clients but remain responsible for remitting payments to relevant authorities. To streamline this process, firms first need an efficient and dependable way to identify tax- and levy-eligible instruments and map them to security databases. This requires both a comprehensive security master database and the ability to monitor daily fluctuations in eligibility as new listings and de-listings take place.
Bloomberg’s Stamp Tax solution helps financial firms identify eligible instruments quickly, accurately and dynamically. Drawing on Bloomberg’s vast data resources, this solution provides updated eligibility data at the security level. It offers complete mapping between the relevant tax datasets and our comprehensive reference database, which helps ensure extensive coverage of eligible securities. With this daily file, firms gain access to the data required to calculate payments properly, comply with tax requirements and avoid unexpected liability.
The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions (FFIs) to register and report information about U.S. taxpayers to the IRS. In addition, FFIs must either withhold tax on transactions that involve specific eligible instruments or pay an equivalent penalty.
The Bloomberg FATCA withholding solution offers a more streamlined approach for FFIs. Drawing on our unparalleled data resources—including industry-standard terms and conditions, corporate actions and entity data—the solution provides FATCA-specific, security-level details for instruments across fixed income, equity, muni and mortgage asset classes. Consolidating this data in one solution helps firms identify affected instruments quickly and accurately.