At its Thursday meeting via live audio webcast, the NCUA board of directors unanimously approved a final rule modernizing the agency’s derivatives rule by moving it to a more principles-based approach, and a notice and request for comment on the Share Insurance Fund normal operating level policy.
Final derivatives rule
The final derivatives rule modernizes the agency’s derivatives rule and makes it more principles-based while retaining essential safety and soundness components, according to the NCUA. It also includes “guardrails,” such as derivatives training and strong internal controls.
The finalized rule is largely as proposed during its October 2020 meeting, except for a few changes to various sections based on the comments received, the agency said. The changes aim to provide more flexibility for federal credit unions to manage interest rate risk using derivatives, and changes include permitting written options that comply with the final rule and amending the collateral requirements for cleared derivatives. The board did not finalize a change that would have required all counterparties to be domiciled in the United States that was in the proposed rule.
Share Insurance Fund’s normal operating level
The board also approved the issuance of a notice and request for comment on the methodology used to set the National Credit Union Share Insurance Fund’s normal operating level. According to the agency, the board is seeking public comment on the normal operating level’s policy because of the current economic landscape and the pending resolution of the obligations associated with the corporate asset management estates and NCUA Guaranteed Notes Program.
Comments must be received no later than 60 days following publication in the Federal Register.
Share Insurance Fund performance
The board was also briefed on the performance of the Share Insurance Fund in the first quarter of the year. The Share Insurance Fund reported a net income of $67 million and a net position of $19.7 billion for the first quarter of 2021, while the fund’s total assets increased to $19.8 billion at the end of the quarter from $19.1 billion at the end of the fourth quarter of 2020, according to the agency.