Question ID: 739
Regulation Reference: Guidelines on recognition and valuation of assets and liabilities other than technical provisions
Article: 35
Status: Final
Date of submission: 31 Aug 2016
Question
Should unsettled trades at a reporting date, which are recognised under the trade date accounting from IAS 39 for fincial assets and which are due (will be settled in 3 days), be categorised by CIC code and hence reported on the Solvency II balance sheet based on that CIC code? Or should these be reported as a receivable or payable from Trade? Should assets which are sold but settled in two days be recognised as if the trade is already performed?
If the trades are beyond the settlement date (thus past due), should they then be reported as past due.
EIOPA answer
Trade date accounting according to IAS 39 Financial Instruments, paragraphs 38 and AG53-AG55 means that in the case described an asset (here: financial instrument with CIC code) is recognised at trade date. Equally, trade date accounting would mean at trade date the derecognition of the assets that will be transferred at settlement date.
If the trades are not settled after settlement date, they are presumably not executable and the transaction needs to be reversed (in case of trade date accounting).