The OCC has issued a supplement to the Risk Management of Financial Derivatives booklet of the Comptroller’s Handbook that provides guidance on examination procedures to detect, monitor, and evaluate risks related to end-user derivatives and trading activities by national banks and federal savings associations. The supplement issued on March 24 includes minimum scope examination procedures for bank policies, systems, controls and governance structures related to end-user derivatives and trading.

Nutter Notes: The supplement also includes examination procedures for ongoing monitoring of portfolios with end-user derivatives and trading positions to identify new and changing risks. The OCC said that the examination procedures primarily apply to large, complex banks that use derivatives for both trading and risk management purposes.