Fryzel also encouraged comments from credit unions, trades and other industry stakeholders regarding who should pay for the program.

The new authority mitigates risk to the share insurance fund, so it could be argued that the entire industry should shoulder the cost, he said.

However, Fryzel added that those credit unions that don't have the authority could also rightly argue that only those who have the authority should pay.

Additionally, Fryzel said he would like to hear suggestions regarding whether the NCUA should seek to cover all costs for the program or just part, and if application fees, annual fees or other fee structures would be appropriate.

Representatives from CUNA and NAFCU who attended the meeting expressed concern about the fees.

“The fee is a big deal,” said Paul Gentile, CUNA executive vice president of strategic communications and engagement. “The NCUA knows these credit unions already, so what is the fee paying for?”

NAFCU Regulatory Counsel Tessema Tefferi said he's also concerned the fees could create a barrier to entry for credit unions interested in seeking derivative authority, and could also set a dangerous precedent for future rules.

Comments on the proposed rule will be due 60 days after it is published in the Federal Register.

The derivate authority would be available only to credit unions that have more than $250 million in assets, have an overall CAMEL rating of three or better with a management rating of two or better, and can demonstrate to the NCUA how derivatives are part of the credit union's overall interest rate risk strategy.

The authority would have two levels. Level II would have higher transaction limits, but would also require more stringent requirements, a higher application fee and more supervision.

The NCUA estimated between 75 and 150 credit unions would apply for the authority, with 75% seeking Level I, and the remaining 25% seeking Level II.

The rule would only permit derivative swaps and caps, which Matz called “plain vanilla.”

J. Owen Cole, director of the Division of Capital and Credit Markets, explained that derivative swaps involve a credit union entering into an agreement where it would pay out a fixed rate while receiving a floating rate.

In today's low rate environment, the fixed rate would likely be higher at first, Cole said. However, should rates increase, the floating rate would likely pay more, hedging interest rate risk.

With a derivative cap, a credit union would receive a check if rates rise above the cap. However, should rates not risk, Cole said, the risk would be that if rates don't rise, the credit union would pay out a one-time premium expense without receiving any financial benefit.

The board Thursday also approved a number of technical amendments to existing regulations, many of them relating to the new Office of National Examinations and Supervision, and the transfer of rulemaking authority for many consumer protection laws to the Consumer Financial Protection Bureau.

In presenting the final rule changes, staff attorney John Brolin told Matz the move creates no substantive changes or impact on credit unions.