The Dodd-Frank Act authorized the Council to issue rules regarding the FSOC's Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies, Authority to Designate Financial Market Utilities as Systematically Important, and Implementation of the Freedom of Information Act. The Council provided notice and sought public comment on each of these rulemakings before issuing the final rules described below. As Chairperson of the Council, the Treasury Secretary is also required to coordinate two other major rulemakings under the Dodd-Frank Act, the joint rulemaking on credit risk retention for asset-backed securities and the issuance of final regulations implementing the Volcker Rule.
Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies
Section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act authorizes the Council to determine that a nonbank financial company shall be supervised by the Board of Governors of the Federal Reserve System and shall be subject to prudential standards, in accordance with Title I of the Dodd-Frank Act, if the Council determines that material financial distress at the nonbank financial company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the nonbank financial company, could pose a threat to the financial stability of the United States. This final rule and the interpretive guidance included as an appendix describe the manner in which the Council intends to apply the statutory standards and considerations, and the processes and procedures that the Council intends to follow, in making determinations under section 113 of the Dodd-Frank Act. More information about the nonbank financial company designation process is available here.
Final Rule on Authority to Designate Financial Market Utilities as Systemically Important
Section 804 of the Dodd-Frank Act gives the Council the authority to designate as systemically important a Financial Market Utility (FMU) if the Council determines that its failure or a disruption to its operations could create or increase the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the U.S. financial system. An FMU designated by the Council as systemically important would become subject to the requirements of Title VIII of the Dodd-Frank Act, including risk management standards and additional examinations.