Client Alert
| December 9, 2009
NCOIL Adopts Model Law Regulating Credit Default Swaps as Insurance
Insurance legislators have taken a first step towards state regulation of credit default swaps (“CDSs”) as insurance. On November 22, 2009, the National Conference of Insurance Legislators (“NCOIL”), an organization of state legislators whose main area of public policy concern is insurance legislation and regulation, adopted the Credit Default Insurance Model Legislation (the “Model Law”). Its adoption is set against the backdrop of various federal proposals to regulate CDSs. Market participants are concerned that state regulation of CDSs would create multiple, inconsistent regimes that would be overly burdensome to comply with, and prefer uniform federal legislation. It is now up to each state to decide whether or not to adopt the Model Law.
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