Alert August 23, 2011

SEC and CFTC Seek Public Comment on Joint Study of Stable Value Contracts

The SEC and CFTC are seeking public comment to assist them in conducting a joint study mandated by the Dodd-Frank Act to determine whether stable value contracts (“SVCs”) fall within the definition of the term “swap.”  The Dodd-Frank Act requires the Commissions in making that determination to jointly consult with the DOL, the Treasury, and the state entities that regulate the issuers of SVCs.  If the Commissions determine that SVCs fall within the definition of swap, they must jointly determine if an exemption for SVCs from the definition of swap is appropriate and in the public interest.  Until the effective date of any regulations enacted pursuant to the Commissions’ mandate, and notwithstanding any other provision of the Dodd-Frank Act’s regulatory requirements governing swaps and security-based swaps, those regulatory requirements will not apply to SVCs.  Public comment must be received no later than 30 days after publication of the Commissions’ formal request for comment in the Federal Register.