CFM27100 - Accounting for corporate finance: hedging: non-qualifying hedged items:

This guidance applies to companies which apply IFRS, New UK GAAP or FRS 26.

Items which cannot be designated hedged items

Certain items cannot be designated as hedged items.

• An entity’s own equity instruments;
• Derivatives (except purchased options as the hedged item in a fair value hedge where a written option is the hedging instrument);
• A net position (e.g. the net of all fixed rate assets and fixed rate liabilities), rather than a specific item;
• General business risks - for example a firm commitment to acquire a business in a business combination cannot be a hedged item, except for foreign exchange risk, because these other risks cannot be specifically identified and measured.