Regulators Poised To Lift Ban On Swaps Trading By Credit Unions

By Megan R. Wilson

Federal regulators are ready to lift the ban on derivatives trading by credit unions after more than two years of work.

proposed rule that will be published in Wednesday’s Federal Register would allow credit unions to make derivatives swaps that hedge against fluctuating interest rates. Credit unions would still be barred from trading complex financial instruments, including mortgage-backed securities.

The Credit Union National Association (CUNA) and other industry groups met regularly with regulators as the rules were being crafted, and are concerned that the proposal would make the cost of participating in the derivatives market too high.

“We have concerns about establishing a process where you have to pay to play,” said Mary Dunn, CUNA’s senior vice president and deputy general counsel.

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