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Washington
CFTC sets Sept. 12 swaps meeting
WASHINGTON (9/7/12)--Proposed rules that would enhance customer protections and final rules that would adapt existing regulations to incorporate swaps are scheduled to be discussed at a Sept. 12 Commodity Futures Trading Commission (CFTC) open board meeting.

The meeting is scheduled to begin at 9:30 a.m. ET at CFTC headquarters in Washington.

The CFTC said the proposed rule would enhance protections that are afforded to customers and customer funds that are held by futures commission merchants and derivatives clearing organizations.

A broadcast of the meeting will be made available to the public through a webcast and a toll-free phone line.

The CFTC earlier this year finalized definitions of swaps, security-based swaps and security-based swap agreements, and these new swap definitions are in effect.

Under a recent CFTC proposal, credit unions and other co-ops with $10 billion or more in assets would avoid swap clearing requirements when loans that are originated for members are sold on to other entities. This exemption also would be extended to swap transactions that are used to hedge against risks associated with member loans.

The exemption would apply to cooperatives whose members are non-financial entities, financial entities to which the small financial institution exemption applies, and cooperatives. Credit unions and other financial institutions with under $10 billion in assets are already exempt under a separate CFTC proposal.

The exemptions would help minimize the additional costs and fees associated with mandatory clearing and provide flexibility for credit unions to use non-cleared swaps, Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn has said.

National Credit Union Administration regulations currently permit a limited number of federal credit unions to use certain derivatives, such as interest-rate swaps and caps, to hedge or reduce their interest-rate risks. Some state-chartered credit unions also have similar derivatives authority for risk management purposes. Relatively few credit unions use derivatives to hedge interest-rate risk.
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