OCC Announces the Addition of Supplemental Examination Procedures in Comptroller's Handbook

The Office of the Comptroller of the Currency ("OCC") announced that it is supplementing the examination procedures in the "Risk Management of Financial Derivatives" booklet of the Comptroller's Handbook. The OCC stated that, since the publication of "Risk Management of Financial Derivatives," national banks (particularly large banks) significantly expanded their end-user derivatives and trading activities, requiring focused examination procedures to detect, monitor and evaluate these activities' risks. The new procedures expand on and replace the general procedures for evaluating banks' participation in the derivatives markets, as well as set the examination scope. The new supplemental examination procedures include:

• minimum scope procedures for the policies, procedures, systems, controls and governance structures related to end-user derivatives and trading activity, including internal audit, the board of directors' risk committee, market risk management, valuation and model governance; and
• ongoing monitoring of portfolios with end-user derivatives and trading positions to identify new and changing risks.

See: End-User Derivatives and Trading Activities: Supplemental Examination Procedures.