What is an equity wash and why is it required with stable value?

An equity wash is a contractual provision in stable value that requires any transfer a participant makes from stable value to a competing option (for example, a money market fund or a short-term bond fund) to first invest in another investment option not designated as a competing option for a period of time, usually 90 days. This provision is designed to reduce arbitrage, thereby protecting the participants and the stable value returns over the long term.