{"data":{"id":"us/12-cfr-703.102","jurisdiction":"us","citation":"12 CFR 703.102","heading":"Definitions.","body":"For purposes of this subpart:\nCounterparty means a Swap Dealer, Derivatives Clearing Organization, or exchange that participates as the other party in a derivatives transaction with a Federal credit union.\nDerivative 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.\nDerivatives Clearing Organization has the meaning as defined by the Commodity Futures Trading Commission (CFTC) in 17 CFR 1.3.\nDomestic interest rates means interest rates derived in the United States and are U.S. dollar-denominated.\nEarnings at Risk means the changes to earnings, typically in the short term (for example, 12 to 36 months), caused by changes in interest rates.\nEconomic 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.\nExternal 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.\nFutures Commission Merchant (FCM) has the meaning as defined by the CFTC in 17 CFR 1.3.\nInterest Rate Risk means the current and prospective risk to a credit union's capital and earnings arising from movements in interest rates.\nIntroducing Broker means a futures brokerage firm that deals directly with the client, while the trade execution is done by an FCM.\nMargin 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.\nMaster 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.\nNet Economic Value means the measurement of changes in the economic value of Net Worth caused by changes in interest rates.\nNet Worth has the meaning specified in part 702 of this chapter.\nNon-cleared means transactions that do not go through a Derivatives Clearing Organization\nRegional Director means an NCUA Regional Director or the Director of the Office of National Examinations and Supervision.\nSenior 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.\nStructured 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.\nSwap Dealer has the meaning as defined by the CFTC in 17 CFR 1.3.\nThreshold 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.\nTrade Date means the date that a Derivatives order (new transactions, terminations, or assignments) is executed with a Counterparty.","path":["Title 12—Banks and Banking","CHAPTER VII—NATIONAL CREDIT UNION ADMINISTRATION","SUBCHAPTER A—REGULATIONS AFFECTING CREDIT UNIONS","PART 703—INVESTMENT AND DEPOSIT ACTIVITIES","Subpart B—Derivatives"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-12.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:24:16Z","sha256":"ee2473193ad13096188aeaebe8d43650850d87f7528f203dbd350b54ff4faed0","source_id":"us-cfr","stale":true,"prev":"us/12-cfr-703.101","next":"us/12-cfr-703.103"},"notice":"GroundRules: Original legal text. Not legal advice."}