RESOLUTION OF BOARD OF THE NATIONAL BANK OF UKRAINE

of August 31, 2007 No. 309

About approval of the Instruction for financial accounting of transactions with derivative financial instruments in banks of Ukraine

According to article 41 of the Law of Ukraine "About the National Bank of Ukraine", article 68 of the Law of Ukraine "About banks and banking activity", for the purpose of enhancement of financial accounting of transactions with derivative financial instruments in banks of Ukraine the Board of the National Bank of Ukraine DECIDES:

1. Approve the Instruction for financial accounting of transactions with derivative financial instruments in banks of Ukraine it (is applied).

2. Bring in the Instruction for financial accounting of foreign currency transactions and bank metals in banks of Ukraine approved by the resolution of Board of the National Bank of Ukraine of 17.11.2004 No. 555, registered in the Ministry of Justice of Ukraine 29.11.2004 for No. 1511/10110, such changes: 2.1. In Item 2.1 of Chapter 2 to exclude such accounts:

3810 AP "Revaluation of Financial Instruments in Foreign Currency and Bank Metals Which Are Considered on Off-balance Accounts";

5104 P "Results of revaluation of hedging transactions";

6209 AP "Result from Trading Activities with Other Financial Instruments";

9201 And "Currency and bank metals which are purchased according to forward contracts for the purpose of hedging";

9202 And "Currency and bank metals which are purchased according to forward contracts on other transactions";

9211 P "Currency and bank metals which are sold according to forward contracts for the purpose of hedging";

9212 P "Currency and bank metals which are sold according to forward contracts on other transactions";

9351 And "Assets to obtaining according to forward contracts for the purpose of hedging";

9352 And "Assets to obtaining according to forward contracts on other transactions";

9353 And "Assets to obtaining according to the purchased option contracts for the purpose of hedging";

9354 And "Assets to obtaining according to other option contracts";

9361 P "Assets to departure according to forward contracts for the purpose of hedging";

9362 P "Assets to departure according to forward contracts on other transactions";

9363 P "Assets to departure according to the purchased option contracts for the purpose of hedging";

9364 P "Assets to departure according to other option contracts".

2.2. Items 3.3 - 3.6 Chapters 3 to exclude.

2.3. To exclude Item 7.13 of Chapter 7.

2.4. Exclude Chapter 8.

With respect thereto to consider Chapters 9 and 10 respectively Chapters 8 and 9.

3. To accounting department (V. I. Rychakivskaya) after state registration in the Ministry of Justice of Ukraine to report contents of this resolution to territorial administrations of the National Bank of Ukraine and banks for management and use in work.

4. The resolution becomes effective since January 1, 2008.

5. To impose control over the implementation of this resolution on territorial administrations of the National Bank of Ukraine.

Approved by the Resolution of Board of the National Bank of Ukraine of August 31, 2007 No. 309

The instruction for financial accounting of transactions with derivative financial instruments in banks of Ukraine

Section I. General provisions

Chapter 1. Basic principles

1.1. This Instruction determines the methodological principles of display in financial accounting of information on transactions with derivative financial instruments in banks of Ukraine.

1.2. This Instruction is developed according to the Laws of Ukraine "About banks and banking activity", "About the National Bank of Ukraine", "About financial accounting and the financial reporting in Ukraine", the main requirements of international accounting standards and Provisions (standards) of financial accounting.

1.3. Financial accounting of derivative financial instruments is performed according to international accounting standards and this Instruction, and also taking into account requirements of regulatory legal acts of the National Bank of Ukraine.

1.4. Display in financial accounting of transactions with derivative financial instruments which are not provided by this Instruction is performed according to their economic essence and the principles of international accounting standards.

1.5. Terms which are used in this Instruction are used in such values:

underlying asset - subject of the terminal contract (derivative): securities, means, commodity resources, stock indexes, interest rates and other market indicators;

gross - basis - settlement system under the contract on gross basis;

currency swap - purchase sale of one currency for another on the terms of the return redemption for certain date in the future on certain rate;

variation margin - result of revaluation of the exchange derivative which is listed by Clearing House from the account of the party which lost, into the account of the party which won;

the built-in derivative tool is component of the hybrid (combined) tool which also includes the basic agreement about the non-productive tool what the variation of some cash flows from the combined tool is result of

expenses on transactions - the taxes, duty, the fees and commission charges paid to brokers, dealers, agents and consultants, the exchange charges or fees, other actual expenses connected with acquisition or sale of derivative financial instruments and which would not be if transaction on acquisition or sale of derivative financial instruments was not performed;

the internal cost of the option stake is difference between the spot price of underlying asset and at the price of accomplishment of the option;

the internal cost of the put option is difference between the price of accomplishment of the option and the spot price of underlying asset;

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