The Basel III capital requirements will obligate credit unions to treat member shares that can be redeemed without restrictions as liabilities on the balance sheets of the financial institutions. Alternatively, shares that credit unions can refuse to redeem can be treated as capital for Basel III purposes, the Credit Union Times reports.

Glen Westley reviewed the impact that implementing the Basel Committee on Banking Supervision’s most recent draft will have on credit unions in a World Council of Credit Unions web seminar held during the week that ended February 3, according to the media outlet.

Although the capital requirements mostly pertain to larger lending institutions, credit unions could potentially be subject to the new regulations, the media outlet reports.

The Basel III requirements would obligate eligible banks to establish a "buffer" of capital considered to be highly liquid by regulators, additional capital for banks who engage in excessive lending, and a ratio of capital to leverage that would protect banks in case their predictions of risk prove incorrect, according to the media outlet.

The National Credit Union Administration (NCUA) recently issued a request for comments on derivatives policies that the financial entities could use to manage risk, Credit Union Times reports. 

Malaysia's central bank announced on January 30 that it plans to make the trading of ringgit-based interest rate derivatives available to a greater range of market participants, which is meant to boost the competitiveness of the banks in the region.

The lending institution also plans to allow residents to trade foreign currencies through licensed onshore banks, according to Dow Jones Newswires. The country's central bank plans to allow licensed onshore banks to offer ringgit-denominated interest rate derivatives to both non-residents and financial entities that are not banks. The new regulations involving both currency trading and derivatives transactions will be instated on January 31.

The central bank said in a statement that "the above measures will contribute towards increasing the liquidity, depth and participation of a wider range of players in the domestic financial markets," Reuters reports.

Azrul Azwar Ahmad Tajudin, chief economist at Bank Islam, told the media outlet that the new offerings are designed to level the playing field, putting local banks on the same playing field as foreign competitors.

Reuters reports that the new offerings are part of a 10-year plan that is designed to help the Asian country attract more capital from foreign investors. 

Exchange operator CME Group and Chinese iron services firm Mysteel released a statement on January 20 indicating that they are planning to collaborate on the creation of over the counter (OTC) derivatives that will help market participants manage risk related to iron.

Mysteel has established partnerships with more than 20 metallurgical market entities and positioned itself as a major player in the country's steel e-commerce sector. The company gathers data on more than 60 cities throughout the country and currently boasts more than 600,000 members.

CME Group has generated a range of financial products that now offer market participants the ability to hedge their exposures related to iron and steel.

Harriet Hunnable, CME Group Managing Director, Metals, said in the statement that "this new opportunity with Mysteel will help us develop the tools needed for our customers to manage price risk associated with conducting business in the steel industry in China."

Reuters reports that a perfect example of the growing trading activity related to ferrous-based derivatives is the volume of iron-ore swaps transactions. Data provided by the media outlet indicates that July trading volume of these risk-management tools came close to an annualized rate of 50 million tons. 

Hong Kong Exchanges and Clearing (HKEX) plans to offer the first yuan-denominated derivative later in 2012. The futures and securities exchange is considering offering similar tools that could be used for risk management purposes, according to The Standard.

The bourse stated that it is researching the possibility of offering risk-management tools for hedging commodities that are denominated in the yuan, the media outlet reports.

HKEX chief executive Charles Li Xiaojia has stated that his exchange could either work with the Hong Kong Mercantile Exchange or serve as its competitor, according to the media outlet. The Hong Kong-based bourse currently offers dollar-denominated products that provide investors with exposure to gold.

"We are coming to a moment when China will become so international, but also frustrated that they cannot manage the commodities sector on their terms," Li said on January 19, the media outlet reports.

The HKEX is considering offering derivatives products denominated in both onshore and offshore yuan, according to the media outlet. In 2013, the exchange might launch various products denominated in offshore yuan such as money market derivatives, a forex basket index and bond products.
Li also announced that HKEX is discussing a potential joint venture with Shanghai and Shenzhen exchanges that would involve index compilations and equity derivatives, Reuters reports.

The National Credit Union Association (NCUA) Board has stated that it plans to address several risk management concerns at its meeting on January 26.

The group plans to review how derivatives, interest rate risk and loan workouts will impact credit unions at the meeting, according to Credit Union Times. The board is planning to issue a final ruling that will require federally-insured credit unions to establish policies related to interest rate risk.

The board is scheduled to issue an announcement indicating that it plans to approve a proposed regulation that would affect the use of derivatives, the media outlet reports. The board is requesting comments on whether federal credit unions (FCUs) with a certain level of financial stability need third parties to use derivatives or whether they can do it on their own.

Current NCUA regulations permit FCUs to make derivatives trades as a part of pilot programs that must be approved by the credit association, according to the media outlet.

In August, the NCUA Board released a proposal for comment that would expand the use of derivatives from a handful of natural person credit unions to a larger collection of the financial organizations, Credit Union Journal reports.