A cash flow hedge is a hedge of the exposure to the variability of cash flow that:
- is attributable to a particular risk associated with a recognized asset or liability. Such as all or some future interest payments on variable rate debt or a highly probable forecast transaction and
- could affect profit or loss (IAS 39, §86b)
This is mostly an accountant’s definition.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.