Today, we filed a comment letter in support of proposed changes to the NCUA’s Derivatives rule intended to modernize and make it more principles-based. We agree with the agency that the proposal retains key safety and soundness components, while providing more flexibility for FCUs to manage their interest rate risk through the use of Derivatives. Specifically, the proposal would eliminate some of the existing prescriptive requirements in the Derivatives rule, including removal of the application process for FCUs with at least $500 million in assets that have a CAMEL rating of 1 or 2.

While we largely support the proposal, we ask the agency to monitor certain proposed changes to ensure relevant sections of the rule continue to achieve their stated purposes, such as changes to the section pertaining to regulatory violations.