12 C.F.R. § 956.6 Use of hedging instruments.
Title 12 - Banks and Banking
(a) Applicability of GAAP. Derivative instruments that do not qualify as hedging instruments pursuant to GAAP may be used only if a non-speculative use is documented by the Bank. (b) Documentation requirements. (1) Transactions with a single counterparty shall be governed by a single master agreement when practicable. (2) A Bank's agreement with the counterparty for over-the-counter derivative contracts shall include: (i) A requirement that market value determinations and subsequent adjustments of collateral be made at least on a monthly basis; (ii) A statement that failure of a counterparty to meet a collateral call will result in an early termination event; (iii) A description of early termination pricing and methodology, with the methodology reflecting a reasonable estimate of the market value of the over-the-counter derivative contract at termination (standard International Swaps and Derivatives Association, Inc. language relative to early termination pricing and methodology may be used to satisfy this requirement); and (iv) A requirement that the Bank's consent be obtained prior to the transfer of an agreement or contract by a counterparty. [66 FR 8321, Jan. 30, 2001]
Title 12: Banks and Banking
PART 956—FEDERAL HOME LOAN BANK INVESTMENTS
§ 956.6 Use of hedging instruments.
