The Federal Reserve has issued a proposal to implement the financial sector concentration limit in Section 622 of the Dodd-Frank Act. The concentration limit generally prohibits a financial company from merging or consolidating with, acquiring all or substantially all of the assets of, or otherwise acquiring control of another company if the “liabilities” of the resulting financial company, calculated using methodologies in the proposal, exceed 10% of aggregate financial sector liabilities. We have prepared a visual memorandum (available here) that uses diagrams, formulas, tables and examples to illustrate key aspects of the Federal Reserve’s concentration limit proposal.… Read More
We have prepared two visual summaries of the Federal Reserve’s Dodd-Frank enhanced prudential standards final rule. One visual summary focuses on requirements that apply to U.S. bank holding companies (BHCs) and the other focuses on requirements that apply to foreign banks, including the U.S. intermediate holding company (IHC) requirement.
Financial Stability Board Proposes Methodologies for Identifying Non-Bank Non-Insurance Global Systemically Important Financial Institutions
Today, the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) proposed a set of assessment methodologies for identifying non-bank non-insurance global systemically important financial institutions (NBNI G-SIFIs). The proposal includes a high-level framework for identifying G-SIFIs and implementation approaches that will apply across all NBNI financial entities. It also includes NBNI financial sector-specific methodologies for (1) finance companies, (2) market intermediaries (e.g., securities broker-dealers), and (3) investment funds.
Complement Existing Methodologies for Identifying G-SIFIs: According to the FSB and IOSCO, the proposed assessment methodologies for identifying NBNI G-SIFIs complement the existing methodologies for identifying global systemically important banks (G-SIBs) and global systemically important insurers (G-SIIs). … Read More
Financial Stability Board Identifies Global Systemically Important Insurers (G-SIIs) and Policy Measures that Will Apply to G-SIIs
Today, the Financial Stability Board (FSB), in consultation with the International Association of Insurance Supervisors (IAIS) and national authorities, identified an initial list of nine global systemically important insurers (G-SIIs). These G-SIIs were identified using the IAIS assessment methodology. Going forward, the list of G-SIIs will be updated each year in November, starting in 2014.
Policy Measures Applicable to G-SIIs: Today, the IAIS also published a set of policy measures that will apply to G-SIIs and are consistent with the policy framework published by the FSB in November 2011. … Read More
Federal Reserve Issues Final Rule for Determining When a Company is “Predominantly Engaged in Financial Activities” for Purposes of Title I of the Dodd-Frank Act
Today, the Federal Reserve issued a final rule for determining when a company is “predominantly engaged in financial activities” for purposes of Title I of the Dodd-Frank Act. The rule will be used by the Financial Stability Oversight Council (FSOC) when it considers the potential designation of a nonbank financial company as systemically important. Under Title I of the Dodd-Frank Act, a nonbank financial company can be designated as systemically important by the FSOC only if it is “predominantly engaged in financial activities.”
A nonbank financial company that is designated as systemically important by the FSOC will be subject to consolidated supervision by the Federal Reserve and a host of new Dodd-Frank enhanced prudential standards including capital, liquidity, stress testing, single counterparty credit limits, enhanced risk management standards, resolution planning requirements and an early remediation framework.… Read More