# 703.102 Definitions.
For purposes of this subpart:
*Counterparty* means a Swap Dealer, Derivatives Clearing Organization, or exchange that participates as the other party in a derivatives transaction with a Federal credit union.
*Derivative* means a financial contract that derives its value from the value and performance of some other underlying financial instrument or variable, such as an index or interest rate.
*Derivatives Clearing Organization* has the meaning as defined by the Commodity Futures Trading Commission (CFTC) in 17 CFR 1.3.
*Domestic interest rates* means interest rates derived in the United States and are U.S. dollar-denominated.
*Earnings at Risk* means the changes to earnings, typically in the short term (for example, 12 to 36 months), caused by changes in interest rates.
*Economic Effectiveness* means the extent to which a Derivatives transaction results in offsetting changes in the Interest Rate Risk that the transaction was, and is, intended to provide.
*External Service Provider* means any entity that provides services to assist a Federal credit union in carrying out its Derivatives program and the requirements of this subpart.
*Futures Commission Merchant* (FCM) has the meaning as defined by the CFTC in 17 CFR 1.3.
*Interest Rate Risk* means the current and prospective risk to a credit union's capital and earnings arising from movements in interest rates.
*Introducing Broker* means a futures brokerage firm that deals directly with the client, while the trade execution is done by an FCM.
*Margin* means the minimum amount of eligible collateral, as defined in § 703.104(c), that must be deposited between parties to a Derivatives transaction, as detailed in a Master Services Agreement.
*Master Services Agreement* means a document agreed upon between two parties that sets out standard terms that apply to all transactions entered into between those parties. The most common form of a Master Services Agreement for Derivatives is an International Swap Dealer Association Master Agreement.
*Net Economic Value* means the measurement of changes in the economic value of Net Worth caused by changes in interest rates.
*Net Worth* has the meaning specified in part 702 of this chapter.
*Non-cleared* means transactions that do not go through a Derivatives Clearing Organization
*Regional Director* means an NCUA Regional Director or the Director of the Office of National Examinations and Supervision.
*Senior Executive Officer* has the meaning specified in § 701.14 of this chapter and includes any other similar employee that is directly within the chain of command for the oversight of a Federal credit union's Derivatives program.
*Structured Liability Offering* means a share product created by a Federal credit union with contractual option features, such as periodic caps and calls, similar to those found in structured securities or structured notes.
*Swap Dealer* has the meaning as defined by the CFTC in 17 CFR 1.3.
*Threshold Amount* means an unsecured credit exposure that a party to a Derivatives transaction is prepared to accept before requesting additional eligible collateral, as defined in § 703.104(c), from the other party.
*Trade Date* means the date that a Derivatives order (new transactions, terminations, or assignments) is executed with a Counterparty.