The Financial Stability Oversight Council (“FSOC”) recently issued a final rule and interpretive guidance regarding the standards and procedures that it will apply for the designation of nonbank financial companies that are systemically important for U.S. financial stability (“SIFIs”). Companies that are designated as SIFIs will be supervised by the Federal Reserve Board (“FRB”) and will be subject to enhanced prudential standards imposed by the FRB.

Companies that may be considered for designation by the FSOC should now be preparing their response to a possible inquiry from the FSOC, including the steps that they may take now to diminish the likelihood of their being selected or increase their chances of successfully appealing a designation. The first step, however, is to consider thoroughly the impact that a SIFI designation might have on their business and operations.