Industry groups are applauding the Financial Stability Oversight Council’s revised guidance, issued Wednesday, which sets up an “activities-based approach” when designating asset management firms as systemically important financial institutions, or SIFIs.
Along with the activities-based approach, FSOC’s revised interpretive guidance also includes measures to help ensure that nonbank financial companies are designated SIFIs “only as a last resort,” Paul Schott Stevens, president and CEO of the Investment Company Institute, said Wednesday in a statement.
ICI “welcomes the Council’s action,” Stevens said. “If the FSOC does pursue designation of an individual company, it will do so under a process that is more transparent, accountable and rigorous.”
The revised guidance replaces FSOC’s 2012 guidance and “also makes the most of the Council’s coordinating power, as it promises to better use the expertise and different perspectives of financial regulators,” Stevens said.
FSOC stated that its new guidance “substantially transforms the Council’s previous procedures” when it comes to designating nonbank financial institutions, such as asset managers, as SIFIs.
FSOC has 10 voting members, including the Treasury Secretary as well as the chairman of the Securities and Exchange Commission.