FASB 133 represents one of the most far reaching accounting-rule changes in memory, and will have particular effect on capital markets participants. The rule replaces a tangle of prior accounting rules relating to derivative instruments, and requires all derivatives to be carried as assets and liabilities at fair market value, with changes in value taken into earnings as they occur. Most controversially, the rule establishes special procedures for recognizing income related to derivatives that are intended as hedges of other investments.

Peter Greenberg, Line Manager of the Maximis investment accounting system, discussed the impact of FASB 133 on buy-side and sell-side firms, placing special emphasis on the modifications to systems that will be necessary to fulfill the rule. He illustrated how the rule could be implemented using Maximis and QuantTools.

Peter Greenberg currently works with several of the top institutional investors in the country on FASB 133 issues and has helped find simple solutions to complex accounting problems. Mr. Greenberg has worked closely with a number of major market particpants in mortgage backed securities and fixed income derivatives, including Nomura, Citigroup, and the Clinton Group.

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