ALEXANDRIA, Va. — How much expertise should a federal credit union have on staff and should it be required to have a minimal CAMEL rating or net worth?

Those are among the questions that the NCUA Board sent out for a 60-day comment period on Thursday.

The agency has been engaged since last year in trying to come up in a policy for allowing credit unions to trade in certain kinds of derivatives, especially as a way of protecting against interest rate risk.

The other questions are: Should a FCU have to demonstrate that it has a “material” interest rate risk or other risk management need to be granted independent derivatives authority? Should FCUs be limited to interest rate swaps and caps and should swaps be limited to pay-fixed/receive-floating instruments? Should the NCUA establish exposure limits or mandate the credit union's board to establish them? Are there “ways to mitigate counterparty risk besides posting collateral?”

NCUA Chairman Debbie Matz said the agency's goal is to “safely allow more credit unions to use derivatives responsibly as a hedge against interest rate risks.”

The agency initially sought input last June but Matz said some of the responses from trade associations and credit unions indicated that the agency needed to have more information before issuing a final rule. There is a 60-day period to respond to the agency's questions.

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