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Washington
Comment Call asks for derivatives investment details
WASHINGTON (3/5/12)--The National Credit Union Administration (NCUA) is considering allowing more credit unions to hedge interest rate risks (IRR) by using limited types of derivatives, and the Credit Union National Association (CUNA) is asking credit unions to comment on the issue in a new comment call.

The NCUA currently allows a limited number of federal credit unions to engage in derivatives through an investment pilot program, and the agency could permit more credit unions to independently use derivatives to hedge IRR. The agency in an advanced notice of proposed rulemaking has suggested that credit unions that demonstrate a relevant, material IRR exposure, have demonstrated the ability to manage derivatives, and have the net worth and financial health needed to manage derivatives could be allowed to invest in interest rate swaps and interest rate caps.

CUNA has asked if additional limits should be established to ensure that federal credit unions do not engage in derivatives that are greater than their IRR exposure

The comment call also asks for comment on how the NCUA could improve the process of hedging IRRs, and recommendations on how best to account for and report derivatives.

Comments on the ANPR are due to the NCUA by April 3. CUNA will accept comments until March 16.

For the full comment call, use the resource link.


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