Derivative Hedging Services

Risk versus reward in balance sheet management is one of the most critical challenges credit unions face. Recently, the NCUA authorized some federal credit unions to boost interest rate risk mitigation strategies by purchasing derivatives.

Credit unions have had access to derivative instruments since 2005. However, using them to hedge risk is uncharted territory for most. Catalyst Strategic Solutions' Derivative Hedging Services guide credit unions through the process of launching a derivative hedging program.

Features & Benefits:

  • Derivative hedging allows credit unions to hold more long term, high yield assets without the associated interest rate risk.
  • Hedging can help stabilize credit unions’ cost of funds.
  • Derivatives are a viable alternative to selling an asset or taking out a borrowing, with minimal balance sheet impact.
  • Instruments may be used to hedge a credit union’s mortgage pipeline.
  • Catalyst Strategic Solutions has the necessary experience and expertise to help credit unions launch a successful derivative hedging program.
  • Expert advisors identify and deploy strategies to optimize the performance of credit union assets.  Protecting the credit union's earnings streams and equity capital are key.
  • The systems and the expertise in place to assist credit unions with implementing a derivative hedging program.
  • Catalyst Corporate was a derivative vendor under NCUA’s investment pilot program.
  • Catalyst Corporate has managed the execution of derivative transactions for interest rate risk mitigation since the late 90s.