---
kind: "section"
citation: "12 C.F.R. § 703.103"
title: "12"
number: "703.103"
heading: "Requirements related to the characteristics of permissible Interest Rate Risk Derivatives."
url: "https://uscodex.org/cfr/12/703.103"
---

# §703.103. Requirements related to the characteristics of permissible Interest Rate Risk Derivatives.

- (a) Under this subpart, a Federal credit union may only enter into Derivatives that have the following characteristics:
  - (1) Are for the purpose of managing Interest Rate Risk;
  - (2) Denominated in U.S. dollars;
  - (3) Based on Domestic Interest Rates or the U.S. dollar-denominated London Interbank Offered Rate (LIBOR);
  - (4) A contract maturity equal to or less than 15 years, as of the Trade Date; and
  - (5) **Not used to create Structured Liability Offerings for members or nonmembers.**
- (b) A Federal credit union may not engage in embedded options required under U.S. Generally Accepted Accounting Principles (GAAP) to be accounted for separately from the host contract.

## Notes

### Source

Source: 86 FR 28247, May 26, 2021, unless otherwise noted.

### Authority

Authority: 12 U.S.C. 1757(7), 1757(8), 1757(14) and 1757(15).

### Source

Source: 68 FR 32960, June 3, 2003, unless otherwise noted.