Utilizing a live audio webcast Thursday, the NCUA’s board of directors held its monthly meeting, unanimously approving a proposed rule on derivatives and a final rule regarding corporate credit unions.
The proposed rule would modernize the NCUA’s derivatives rule and make it more principles-based as well as allow more flexibility for federal credit unions to manage their interest rate risk through these financial instruments, according to the NCUA.
The proposed changes include:
- eliminating the pre-approval process for federal credit unions that are complex with a Management CAMEL component rating of one or two;
- eliminating the specific product permissibility; and
- eliminating the regulatory limits on the amount of derivatives a federal credit union may purchase.
Comments on the proposed derivatives rule will be accepted for 60 days following publication in the Federal Register.
According to the NCUA, the final rule regarding corporate credit unions updates and simplifies provisions of the NCUA’s corporate credit union regulation, including:
- permitting a corporate credit union to make a minimal investment in a credit union service organization without the CUSO being classified as a corporate CUSO under the NCUA’s rules;
- expanding the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board; and
- amending the minimum experience and independence requirement for a corporate credit union’s enterprise risk-management expert.
Comments on the final corporate credit union rule will be accepted for 30 days following publication in the Federal Register.
Cybersecurity briefing
The board also received briefing on cybersecurity considerations for boards of directors during the COVID-19 pandemic, which included a warning that, throughout the COVID-19 pandemic, the financial services industry — including credit unions — remains a “major target” for hackers and thieves who are adapting their techniques to take advantage of an increased use of remote operations.
The special advisor to the chairman for cybersecurity said that boards of directors play a critical role in strengthening their institution’s cyber preparedness levels, and as they evaluate their institution’s information security programs, should evaluate their responses to four questions:
- Have business impact and business process scenarios been reviewed and revised in the continuity plans based on the operating conditions of COVID-19?
- How are policies and procedures related to remote access being strengthened to address the heightened risks created by employees working from home?
- Has the incident management plan been updated for leadership and employees in a remote working environment?
- How is the business changing its strategic priorities in the short, mid, and long term to address the potential change to norms?
The cybersecurity briefing and a cybersecurity resources webpage are both available on the NCUA website.
Additional details about Thursday’s meeting can also be accessed on NCUA’s website. The next NCUA board meeting is Nov. 19.