Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies
Summary
SIFMA AMG 1 provided comments on the Financial Stability Oversight Council’s (FSOC) proposed interpretative guidance 2 amending FSOC’s process for the designation of certain nonbank financial companies (NBFCs) as systemically important financial institutions (SIFIs). 3
Excerpt
SIFMA AMG has consistently engaged on this topic over the years, including multiple comment letters submitted to FSOC and others.4 We support FSOC’s continuing efforts to develop the most effective and efficient mechanism to identify and address potential risks to U.S. financial stability, including with respect to NBFCs and the products and services they offer.
Executive Summary
We firmly believe the Proposal is exceptionally well designed to provide clear and effective guidance both to market participants and to their regulating agencies as to appropriately calibrated areas for focus, effective communication of concerns with opportunities for remediation, and recognition that risk is best addressed through regulations tailored to NBFC structure, products and services.
A summary of our views is as follows:
- We appreciate the return to the “activities-based approach” in the 2019 Guidance (including the merger of both the designation process and analytical methodologies) as the most effective means for FSOC to identify and address potential risks to U.S. financial stability.
- We support the updated analytic methodologies recognizing ever-developing market structures and practices and the value of fostering innovation in appropriately assessing new risks as they emerge.
- FSOC should re-evaluate the proposed addition of asset valuation to the list of vulnerabilities for assessment.
- FSOC is right to require a robust cost-benefit analysis prior to making a determination.
- It is critically important for FSOC to engage with the applicable primary regulatory agency as to potential risks and the agency’s plans to address the potential risk.
- FSOC is correct to raise its target for areas of systemic risk by focusing on threats “sufficient to inflict severe damage” to the US economy.
- SIFMA AMG brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management firms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds.
- Fin. Stability Oversight Council, Authority to Require Supervision and Regulation of Certain Nonbank Financial
Companies, 91 Fed. Reg. 15551 (Mar. 30, 2026). - 12 U.S.C. § 5323.