WASHINGTON -- Thrifts hedging with derivatives may be allowed to reflect the reduced risk in their capital positions, thanks to a rule proposed Tuesday by the Office of Thrift Supervision.

The proposed rule would make it easier for thrifts engaged in bilateral netting agreements to meet their capital requirements.

The current risk-based capital rule allowing limited netting would be broadened to allow all legally enforceable interest rate and exchange rate contracts between two parties to be netted.

The OTS proposal parallels rule changes proposed in May by the Federal Reserve and the Office of the Comptroller of the Currency.

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