Towards transparency (TT Dec05 p36-38)

IAS 39 Financial Instruments: Recognition and Measurement should not curb the use of currency options. Accounting issues can be surmounted and FX options are an effective tool to manage risk. As past derivative catastrophes have shown, many corporations have lacked the technology and knowledge to revalue their option positions properly. If an organisation relies on Black-Scholes, there is a real risk that a sudden loss will materialise.