14.7 Manage Unit Derivatives

Policy Statement

Units must continuously monitor all their current derivative agreements and report them monthly.

Reason for the Policy

This policy informs units of their responsibility to monitor their derivative agreements and the process for the creation and submission of the required monthly report.

Applicability of the Policy

This policy applies to all units with current derivative agreements.

Procedure

To manage the unit's derivatives:

Monitor

Monitor the financial position of each agreement, if applicable. Monitor the credit worthiness of all counterparties.

Report

1. Create a monthly report for each outstanding derivative agreement. At a minimum, include the following information:
• Description of the derivative instrument or agreement
• Highlights of all material changes to the instrument or agreement since the last report
• Net Termination Exposure (NTE)
• Bond credit rating of all counterparties
• Material factors regarding the counterparty or the derivative that may impact risk to the system or one of its universities
• Summary of collateral held by the system or one of its universities on behalf of each counterparty and collateral held by each counterparty on behalf of the system or one of its universities
2. Submit the report to the Office of University Accounting and Financial Reporting as soon as possible after the end of each month.