WOCCU Urges Basel Committee to Preserve Access for Credit Unions to Interest-Rate Derivatives

WOCCU urged the Basel Committee on Banking Supervision (Basel Committee) to preserve community-based financial institutions’ access to interest-rate derivatives in order to hedge interest rate by adopting revisions to the leverage ratio that utilizes the standardized approach to counterparty credit risk (SA-CCR) for a banks’ leverage ratio capital requirements with respect to client cleared derivatives. 

WOCCU notes that unless such revisions are made, smaller users of interest rate swaps and caps may no longer be able to access interest rate derivatives at fair rates, or at all.  This access is important as it helps promote safety and soundness by helping credit unions hedge interest rate risks related various items that may be in their portfolios or similar fixed-rate investments.

These comments were filed as part of the Basel Committee’s Consultative Document:  Leverage Ratio Treatment of Client Cleared Derivatives and a copy of WOCCU’s letter can be viewed here.