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Washington
CFTC Approves CUNA-supported CU Swap Exemption Rule
WASHINGTON (8/23/13)--A final rule that will provide credit unions and other cooperative businesses with a clearing exemption for certain swaps was published by the Commodity Futures Trading Commission (CFTC) on Thursday.
 
The Credit Union National Association supported the exemption proposal, which was opposed by the banks.

CUNA Deputy General Counsel Mary Dunn said the exemption ''will help minimize the additional costs and fees associated with mandatory clearing and provide flexibility for credit unions to use non-cleared swaps," However, she added, the exemption will not have a significant impact on the overall swap market because of the small number of entities eligible for the exemption.
 
The CFTC rule will permit credit unions and other co-ops with $10 billion or more in assets to avoid swap clearing requirements when loans are originated for members. This exemption also will be extended to swap transactions that are used to hedge against risks associated with member loans.

The CFTC published the final rule, "Clearing Exemption for Certain Swaps Entered Into by Cooperatives," Thursday in the Federal Register. The rule will become effective on Sept. 23.
 
The exemption would apply to cooperatives whose members are non-financial entities, financial entities to which the small financial institution exemption applies, and cooperatives. Credit unions and other financial institutions with under $10 billion in assets are already exempt under a separate CFTC final rule.
 
"As not-for-profit cooperatives, all well-managed credit unions, consistent with safety and soundness, should be able to elect not to clear swaps that are for the purpose of hedging interest rate risks," Dunn added.
 
For more on the CFTC final rule, use the resource link.
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CFTC Release
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