FSOC Approves Changes to Nonbank SIFI Designations Process

During an executive session of the Financial Stability Oversight Council ("Council"), Treasury Secretary Jack Lew along with other Council members voted unanimously to approve recommendations from staff to improve the SIFI designations process. Members also agreed to extend the comment period for those who wish to submit comments in response to the Council's December 2014 notice seeking public comment on asset management products and activities. The original deadline of Feb. 23 has been extended to March 25, 2015.

Under the revised procedures for SIFI designations, which are effective immediately, the Council agreed to strengthen the following:
  • Engagement with companies under evaluation. A company and its primary financial regulatory agency will be notified within 30 days when the Council begins an "active review" of a nonbank financial company during Stage 2. The Council staff will also provide the company upon request a list of the "primary public sources of information" being used during Stage 2 analysis. If the Council decides to not advance a company from Stage 2 to Stage 3, the company will be notified in writing.
  • Transparency to the broader public. The Council will acknowledge publicly whether a particular firm is under review, if the firm has already disclosed the information. The Council will also provide "sufficient" information to help the public understand its analysis so long as the information does not contain any confidential materials.
  • Engagement during the Council's annual review of designations. The Council will revisit its designations annually and give designated companies "ample opportunity" to present additional information. The company will have an opportunity to meet with staff to discuss the review process and be allowed to provide an update on any changes and developments related to the market and the company's structure and regulations.

Attached is a copy of the Supplemental Guidance on designations for your review.

The updated FAQ on the designations process can be found here. We have also attached the previous version of the FAQs from 2014 for your reference. The official press release on today's decision can be found here. Meeting readout can be found here.