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July 18, 2011 at 08:00 PM
The Financial Stability Oversight Council (FSOC) has released the final version of a regulation that could affect whether organizations that sell support services to insurers will be designated as systemically important.
FSOC, an agency created by the Dodd-Frank Wall Street Financial Reform and Consumer Protection Act of 2010, is supposed to help other federal financial services regulatory agencies determine when financial services companies and other organizations are big enough, interconnected enough or otherwise important enough to merit extra regulatory scrutiny.
Section 804 of the Dodd-Frank Act gives FSOC – an agency sometimes referred to as “F-Sock” – authority to impose the “systemically important” designation on a financial market utility (FMU) if it appears that the failure or disruption of the utility could create liquidity or credit problems for financial institutions.
FSOC has included insurance companies in the definition of “financial institutions” it plans to use when deciding whether an FMU is systemically important.
The Depository Trust & Clearing Corp. (DTCC), New York – a member-owned organizations that helps insurers and their distributors process annuity transactions – has asked to be exempted from the designation program but has acknowledged in a comment letter submitted to the U.S. Securities and Exchange Commission that it is a market utility.
