Schwab Began Hedging Interest-Rate Risk With About $3.9 Billion in Derivatives

(Bloomberg) — Charles Schwab Corp. started hedging interest rate-related risk this year, according to a regulatory filing on Monday.

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The company began hedging using derivatives, valued at $3.9 billion by the end of March, the filing said.

After the Federal Reserve embarked on its most aggressive interest rate tightening cycle in decades last year, Westlake, Texas-based Schwab has been caught in the ensuing tumult.

The conflict that engulfed US regional banks in March also affected Schwab, which runs both brokerage and bank businesses. The firm confronted swelling paper losses on securities it owns and watched deposits drain as customers moved cash into accounts that earn higher interest. Schwab’s executives have said those withdrawals will abate.

Shares of Schwab plummeted almost 39% since March.

Read more: At Charles Schwab, Being a Big Bank Has Become a Big Problem