The Chilean pension regulator is tightening its scrutiny Interest rate derivatives of interest held abroad by the country’s pension funds after the use of these instruments skyrocketed.
The regulator sends so many Data requests to pension fund administrators, who often haven’t responded to one letter before the next one arrives, people familiar with the situation said. This comes at a time when authorities are developing new regulations that could Limit usage of derivatives.
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The authorities are now asking for funds to submit an application Evaluation of their positions to financial counterparties – banks operating both inside and outside Chile. The AFP is already making its own assessments, according to people who wished to remain anonymous because they were not authorized to comment publicly.
The superintendent did not respond to a request for comment Bloomberg.
The AFPs of Chile, which jointly manage some $235 billion in assets, have resorted to interest rate derivatives to boost their returns, with their notional positions increasing to more than $500,000 milliona 100-fold increase in just three years. The managers bet on lower long-term interest rates in the U.S. through so-called receiver contracts and then hedged the risk by taking the opposite position on short-term interest rates. The recipients allowed it cumulative returns So far this year, 8.7% in the lowest-risk AFP fund – known as Fund E and which concentrates fixed income investments – its best performance since at least 2017.
The possibility of new restrictions To reduce AFPs’ risk, there is concern that they will have to close some of their positions, which will impact returns. Last month, the superintendent refused to reveal details about it new regulation or when it would be subject to public consultation.
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Positions in derivatives have even attracted the attention of the US Central Bankwhich noted in its financial stability report for the second half of 2025 that they had “increased their risk” of exposure to a rise in long-term yields.
“If a scenario of severe stress – which includes abrupt and unusually large increases in long-term interest rates in the US – pension funds could face an increase in margin calls, which could create liquidity demands and cause problems financial burdens additionally,” the central bank said in response to questions from Bloomberg News.
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