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SIFI Designation and Its Potential Impact on Nonbank Financial Companies


The enhanced monitoring of systemic risk and supervision of systemically important financial institutions (SIFIs) is one of the key objectives of the Dodd-Frank Wall Street Reform and Consumer Protection Act1 (Dodd-Frank or the Act). Consequently, now the Financial Stability Oversight Council (FSOC or Council) has finalized the criteria2 it will use to determine which companies are nonbank SIFIs. To determine which companies are to be subjected to heightened supervision, the FSOC developed an analytical framework in accordance with factors enumerated in Dodd-Frank. The final rule, along with supporting guidance, lays out a three-stage screening process that will initially be applied to a pool of prospective nonbank SIFIs based on quantitative and qualitative criteria. Once these SIFIs are designated, they will be placed under enhanced prudential supervision by the Federal Reserve Board of Governors (“Federal Reserve” or “Board of Governors”).

While the industry has not yet felt the impact of the FSOC’s recent rule making, companies should start planning for how a SIFI designation could affect strategic decisions, such as mergers, acquisitions, and divestitures, as well as day-to-day operations. This paper focuses on some of the key implications of a SIFI designation for nonbank financial companies. It will set out the regulatory background, regulatory framework for SIFI determinations, and some ways to prepare for a potential SIFI designation.

1 Dodd-Frank Wall Street Reform and Consumer Protection Act, January 2010.

2 FSOC Final Rule: Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies..

As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.


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