The SEC has issued a request for comment to determine whether stable value contracts should be regulated as swaps and, if so, whether such contracts should be exempt from regulation.  Otherwise, stable value contracts would come under the regulatory supervision of either the SEC or the CFTC.  The study is mandated by the Dodd-Frank Act.  Stable value contracts are used by many defined contribution plans. 

 

OUR TAKE: We believe that stable value contracts should continue to be regulated as insurance contracts under applicable state law.  However, we will be pleasantly surprised if the feds agree.