9.12.2004 Official Journal of the European Union L 363/1 (Acts whose publication is obligatory) COMMISSION REGULATION (EC) No 2086/2004 of 19 November 2004 amending Regulation (EC) No 1725/2003 on the adoption of certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards the insertion of IAS 39 (Text with EEA relevance) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (!), and in particular Article 3(1) thereof, Whereas: By Commission Regulation (EC) No 1725/2003 (?) certain international standards and interpretations that were extant at 1 September 2002 were adopted. On 17 December 2003 the International Accounting Stan- dard Board (IASB) published revised International Accounting Standard (IAS) 39 Financial Instruments: rec- ognition and measurement as part of the IASB’s initiative to improve 15 standards in time for them to be used by companies adopting IAS for the first time in 2005. The purpose of the revision was the further improvement of the quality and consistency of the body of existing IAS. On 31 March 2004, the IASB issued an amendment to IAS 39 Financial Instruments: recognition and measure- ment on fair value hedge accounting for a portfolio hedge of interest rate risk. The general objective of the amend- ment is to simplify the implementation of IAS 39 by enabling fair value hedge accounting for a portfolio hedge of interest rate risk. () OJ L 243, 11.9.2002, p. 1. (3 OJL261,13.10.2003, p. 1. Regulation as amended by Regulation (EC) No 707/2004 (O] L 111, 17.4.2004, p. 3) 4 Pursuant to Regulation (EC) No 1606/2002, it is the objec- tive of the Commission to have a stable platform of inter- national accounting standards in place as from 1 January 2005. However, certain important provisions in IAS 39 are still the subject of unfinished discussions between the IASB, the European Central Bank, prudential supervisors and the banking industry. These provisions relate to the option to fair value all financial assets and liabilities and to hedge accounting. Each of these provisions concern areas which are completely autonomous, distinct and separate from the rest of the standard. In order to respect the date of 1 January 2005, it is necessary to introduce IAS 39 with the exception of these provisions. IAS 39 introduces an option to fair value all financial assets and liabilities without any restrictions. However, the [ASB has recently published an Exposure Draft (a consultative paper) which proposes an amendment to IAS 39 in order to restrict the fair value option contained in the standard. The proposed amendment is a direct response to concerns expressed by the European Central Bank, by prudential supervisors represented in the Basel Committee as well as by securities regulators of the Member States who are con- cerned that the fair value option could be used inappropri- ately, in particular in the case of a company’s own liabili- ties. The Commission considers these questions as important and requiring further examination. The IASB has received many comments on this proposed amend- ment and is expected to take a final decision on this issue by the end of 2004. The Regulation permits the fair value option to be applied to financial assets. However, in the case of financial assets that are not traded in active and lig- uid markets, companies should take care to apply the fair value option to financial assets in a way that leads to reli- able measurement. The full fair value option should not apply until the IASB has developed a solution to this issue and until the Com- mission is able to recognise that an appropriate solution for this issue has been found. Since the full fair value option is only an option, the provisions relating to this option are clearly distinct and separable from the other parts of the standard.