12 CFR § 703.103 - Requirements related to the characteristics of permissible Interest Rate Risk Derivatives.

---
identifier: "/us/cfr/t12/s703.103"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "12 CFR § 703.103 - Requirements related to the characteristics of permissible Interest Rate Risk Derivatives."
title_number: 12
title_name: "Banks and Banking"
section_number: "703.103"
section_name: "Requirements related to the characteristics of permissible Interest Rate Risk Derivatives."
chapter_name: "NATIONAL CREDIT UNION ADMINISTRATION"
subchapter_number: "A"
subchapter_name: "REGULATIONS AFFECTING CREDIT UNIONS"
part_number: "703"
part_name: "INVESTMENT AND DEPOSIT ACTIVITIES"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "12 U.S.C. 1757(7), 1757(8), 1757(14) and 1757(15)."
regulatory_source: "68 FR 32960, June 3, 2003, unless otherwise noted."
cfr_part: "703"
---


# 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.