The Financial Stability Oversight Council agreed Wednesday to bring more transparency to its process for determining whether non-bank financial institutions are systemically important to the country’s financial stability.
FSOC members voted to approve three types of changes:
- engage earlier with companies under review and give them more opportunities for engaging with council members and staff;
- make more information available to the public about its designation process; and
- allow for more engagement with designated companies during its annual re-evaluations.
Jacob Lew, council chairman and Treasury secretary, said in a statement that the changes “represent an important step for the council,” which he said is a young organization that “must continue to be flexible and adjust its processes as needed to fulfill its mandate.”
Kenneth E. Bentsen Jr., president and CEO of the Securities Industry and Financial Markets Association, welcomed the changes, which he said “will help ensure that potential designees have a right to address and provide context for specific activities that the regulators believe give rise to contagion risk and may use as a basis for SIFI designation.”
FSOC members also agreed to give more time for public comment on possible risks posed by asset managers’ products and services when it comes to liquidity and redemptions, leverage, operational functions and resolution. Comments originally due this month are now due March 25.