More complete disclosure of derivatives use could help calm nervous investors and regulators, two officials of Chase Manhattan Corp. told reporters this week.

At a seminar sponsored by the New York State Society of Certified Public Accountants, they explained how their bank uses the financial instruments to reduce risk.

Properly used, they said, the interest rate swaps and other financial contracts help Chase and other banks to smooth out the fluctuations in income that result from repricing mismatches between their assets and liabilities.

Legislators' fears that derivatives could be the next S&L crisis are misplaced, said Mary B. Molloy, a vice president in Chase's treasury department. In fact, derivatives can be used to hedge against the kind of interest-rate mismatch that got thrifts in trouble in the early 1980s.

It is not the use of derivatives that puts banks at risk, said Ms. Molloy. In banking, she argued, "you have a risk by doing nothing."

Ms. Molloy said although the bank chooses to take a certain degree of interest rate risk, it can limit its exposure to a little more than 2% of earnings. The bank reports the percentage of earnings at risk in its annual report, she said.

Diane L. Daley, a vice president in market risk management, sells derivatives to clients in addition to supplying the products to the bank's own treasury department.

She said the bank's wide client base enables it to offset the risks in its own positions most of the time. She added that it calculates the risk that the value of its positions could change, and keeps top management and the board of directors apprised.

The two said greater disclosure of off-balance-sheet activity, such as already is provided by Chase and other major players, may well be beneficial. But they warned that overregulation and standardization could make it harder to manage banking risks.

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