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.