Employee benefit plans want the right to waive a proposed rule that would require swap counterparties to give benefit plans extra scrutiny and advice.
The American Benefits Council, Washington, discusses that point in a comment letter sent to the U.S. Securities and Exchange Commission (SEC).
The SEC and the U.S. Commodity Futures Trading Commission (CFTC) have been working on regulations implementing the business conduct standards provisions in the swap section of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
A swap is an arrangement that a party can use to trade one income stream for another income stream.
Members of Congress added the Dodd-Frank Act swap provisions because of fears that unregulated and poorly contributed swap operations had helped trigger the 2007 credit market freeze and the subsequence financial crisis.
Some Dodd-Frank Act drafters also feared that the sponsors of retirement plans governed by the Employee Retirement Income Security Act (ERISA) may have used swaps in risky ways without understanding the implications. To address that risk, the drafters added a provision requiring swap dealers to analyze ERISA plan sponsors and investment managers and make sure plans that use swaps know what they are doing.