National Credit Union Administration (NCUA)is preparing to ease the reins on the use of financial derivatives and allow more credit unions to deal in a variety of instruments that would help them hedge interest rate risk, including interest rate swaps, caps, floors, options and collars.

Dealing in financial derivatives has been restricted under a ten-year pilot program to a small number of credit unions who must be approved by NCUA. Many of the authorized users did so through dealers that had proven expertise, such as WesCorp Federal Credit Union. But proposed rules would open these commonly used tools to many more credit unions.

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