Rolling contracts is a common practice – either due to changes in forecast or as part of a structured rolling program. This can create accounting complexities for designated hedges. First, new documentation must be prepared for the rolled-to contract, even though it is essentially a continuation of the previous hedge relationship. Also, when the contract is rolled forward, any OCI related to the original contract must be tracked and released to earnings when the hedged item occurs, along with any OCI related to the new contract. This can be especially complex when a contract is rolled multiple times, partially rolled or is rolled into multiple contracts. Hedge Trackers’ hedge accounting software, AcappellaFX, is a simple solution for tracking rolled trades. When you roll a trade in AcappellaFX, the system tracks the OCI balance associated with prior trades associated with prior trades until the last rolled trade is completely triggered and released. The system also creates all required hedge inception documentation, continuing the original hedge relationship, for the new contract.
- For a partial roll, you can split the trade in the exposure window prior to rolling it or simply change the “Roll Amount” directly in the roll screen.
- Also, you can change the “Roll to Date” in the “Select Exposures To Be Rolled” pop-up box. If you have exposures/trades with more than one “Roll to Date” the system will bifurcate the original trade into two separate trades and roll each with its own forward trade and compensating trade.