On March 6, 2019, the Financial Stability Oversight Council (“FSOC”) issued new proposed guidance (the “Proposal”) regarding the designation of nonbank financial companies as “systemically important financial institutions” (“SIFIs”). The Proposal makes substantial changes to FSOC’s existing designation approach by shifting its focus away from an “entity‑based” approach towards an “activities‑based” approach. Designation of an individual firm would only occur if FSOC determined that efforts to address the financial stability risks of that firm’s activities by the primary federal and state regulators have been insufficient.
In summary, the Proposal:
- Requires FSOC to focus