(4) Changes in Accounting Policies
Fair value measurement of equity securities subject to contractual sale restrictions
The Financial Accounting Standards Board issued Accounting Standards Updates (ASU)
2022-03 Fair Value Measurement: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions in June 2022 which clarifies that a contractual restriction on the sale of an
equity security is an entity-specific characteristic and therefore should not be considered in the fair value measurement of the equity security. The ASU also requires specific disclosures for equity securities subject to contractual sale
restrictions. Nomura has applied this new accounting policy prospectively from April 1, 2024.
Voluntary change in accounting
policy
Effective from April 1, 2024, Nomura has changed its accounting policy in respect of how accounting
guidance provided by Financial Accounting Standards Board Accounting Standards Codification 940 Financial Services Brokers and Dealers (ASC 940) is applied to the Company and its consolidated subsidiaries. For the
year ended March 31, 2024 and prior, ASC 940 was applied on a consolidated basis to all entities included within the consolidated financial statements of Nomura. Effective from April 1, 2024, the Company and consolidated subsidiaries that
are not registered as a broker-dealer (non-BD entities) no longer apply ASC 940.
This accounting policy change is primarily due to a planned expansion of Nomuras banking and investment management
business and is therefore intended to allow certain non-BD entities to prospectively classify purchases of new non-trading debt securities as either held to maturity
(HTM) or available for sale (AFS) as defined in ASC 320 Investments - Debt Securities. Non-trading debt securities classified as HTM are securities that a non-BD entity has both the ability and the intent to hold until maturity and are carried at amortized cost, while non-trading debt securities classified as AFS are carried at
fair value with changes in fair value reported in the consolidated statements of comprehensive income, net of applicable income taxes within Other comprehensive income (loss) and in the consolidated balance sheets, net of applicable income
taxes within Accumulated other comprehensive income (loss), a component of NHI shareholders equity.
As
retrospective application of this accounting policy change is impracticable since it would require use of hindsight regarding historical accounting matters such as the initial classification of non-trading
debt securities, Nomura has applied this new accounting policy prospectively from April 1, 2024.
As part of this
accounting policy change, existing loans for trading purposes and non-trading debt securities held by non-BD entities elect the fair value option on April 1, 2024
and therefore continue to be measured at fair value through earnings. A similar election is made for subsequent originations or purchases of loans held for trading purposes. Such loans continue to be reported in Trading assets in the
consolidated balance sheet with changes in fair value reported in the consolidated statements of income within Revenue - Net gain on trading.
Following the accounting policy change, fair value changes of non-trading debt
securities newly acquired on or after April 1, 2024 and classified as HTM or AFS by non-BD entities are not recognized through earnings, unless an impairment loss is recognized.
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