Swaps Definitions Regulation - Stable Value Contracts - Comment Letter - Royal Bank of Canada - September 26, 2011

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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

Stable Value Contracts
September 26, 2011
From the comment letter:

  • "SVCs are individually tailored, negotiated agreements that are not a “traded” product. There is no secondary market for SVCs, nor could one be created.
  • SVCs are not fungible and not suitable for clearing. SVCs do not involve the counterparty credit risk associated with swaps, and rely on each party to the SVC to perform its specific obligations under the agreement.
  • SVCs do not rely on an underlying reference asset and, unlike swaps, are not priced based on a reference asset, index or similar financial instruments in the manner of most swap transactions.
  • SVCs cannot be used for speculation or arbitrage. Neither party to an SVC can automatically or unilaterally compel the SVC issuer to make payments based on the difference between the market value and book value of the high quality, diversified fixed income portfolio (the “Covered Assets”)."


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