The Bank of Russia has announced changes to the regulation of credit institutions' open currency positions (OCPs). The new regulations introduce a limit on balance-sheet OCPs, accounting for 50% of equity, and establish criteria for fictitious and unreliable hedging of foreign exchange risk. These measures are designed to better balance the currency structure of credit institutions' assets and liabilities while preventing understatement of foreign exchange risk.
The calculation procedure for OCPs has been revised by the Bank of Russia. It now aligns more closely with intrabank economic approaches and considers the actual effect of foreign exchange risk on financial results under IFRS. This adjustment aims to help credit institutions manage their OCPs in compliance with the new limits.
Moreover, the Bank of Russia has modified the rules regarding non-compliance with OCP limits, allowing more time for credit institutions to cover positions opened due to emergency situations caused by external factors.
Credit institutions will be required to implement these new approaches starting July 1, 2024. Provisions concerning the quality of hedging transactions must be adhered to from October 1, 2024.