Swaps Definitions Regulation - Stable Value Contracts

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Dodd-Frank Timeline, Acceptance of Public Submissions Regarding the Study of Stable Value Contracts
Request Date Comment Period Reopened Comment Deadline
August 25, 2011 October 2, 2012 November 1, 2012

On August 19, 2011, the CFTC and SEC issued a joint appeal for public comment to assist the agencies in a determination of whether stable value contracts should fall under the definition of swaps and, if so, whether the contracts should be exempted from regulation by the agencies. The request appeared in the Federal Register on August 25, 2011. The original deadline for public comment was September 26, 2011. On October 2, 2012, the comment period was reopened by the two commissions for 30 days. The extended deadline was November 1, 2012. Comment letters are filed HERE.


A stable value fund is an investment vehicle designed to provide investors with fixed income returns, with embedded protections from interest rate volatility. Stable value funds are considered a low-risk investment, and are popular with 401(k) and 403(b) retirement plans, and 529 tuition savings plans. [1] The funds are generally structured with fixed income securities plus a volatility or principal protection contract, usually held by an insurance company. The embedded protection may be in the form of a guaranteed interest contract (GIC) or a separate account contract with principal protection guaranteed, for a fee, by the insurer. These types of contracts came under scrutiny after the collapse of AIG,which had underwritten several billions of dollars of GICs for stable value funds.[2]

Title VII of the Dodd-Frank Act, which calls for comprehensive regulation of the swaps (CFTC) and security-based swaps (SEC) market. One of the mandates requires the two agencies to jointly conduct a study to determine whether stable value contracts fall within the definition of a swap and, if so, whether exempting such contracts from the swap definition is appropriate and in the public interest. [3]

The commissions did not complete the stable value contract study, as they were waiting until the completion of swap entity and product definition rules Subsequent to the CFTC/SEC Joint Final Rule on Swap Product Definitions, which were approved in July 2012, the commissions decided to reopen the comment period for stable value contracts. No timetable has been set for the release of the study.


  1. What Do You Need to Know about Stable Value Funds In Today’s Challenging Financial Environment?. Stable Value Investment Association. Retrieved on August 23, 2011.
  2. A Question for A.I.G.: Where Did the Cash Go?. New York Times. Retrieved on August 23, 2011.
  3. CFTC and SEC Seek Public Input for Joint Study on Stable Value Contracts. CFTC. Retrieved on August 23, 2011.

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