The Dodd-Frank Wall Street Reform and Consumer Protection Act, which President Barack Obama signed into law July 21, is likely to change the way many parts of the U.S. capital markets operate and may also have global implications, according to a new report from Standard & Poor’s Ratings Service, New York.

“We believe that on the whole, Dodd-Frank creates an improved framework for identifying and mitigating systemic risk in the U.S. financial system. In particular, we view the creation of the Financial Stability Oversight Council as a significant step in this direction,” said Craig Parmelee, a credit analyst with Standard & Poor’s, a unit of the McGraw-Hill Companies (NYSE:MHP), New York.

Although S&P maintains some reservations about Dodd-Frank, it believes that banks, finance companies, commercial lenders, insurers, municipalities and other institutions are likely to see some impact from the new law, depending on sector and size.

“Although we do not expect Dodd-Frank to eliminate systemic risk completely, we believe that taken as a whole it’s a positive step toward providing regulators with the tools and authority to identify serious problems early and to take action,” S&P said.

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