SIFI Designation Process

SIFI Designation

SIFI Designation Process

SIFI DESIGNATION FOR NON-BANK FINANCIAL COMPANIES

The Financial Stability Oversight Council (FSOC) approves the non-bank financial institutions viewed as Significantly Important Financial institutions (SIFIs). SIFI Designation requires all eight regulators: OCC, FDIC, CFPB, FHFA, FRB, NCUA, CFTC & SEC, one independent member with insurance expertise, and five non-voting members to approve designation as a SIFI.  The current additions are primarily Insurance Companies.  

THREE-STAGE EVALUATION

Determining an institution is split into a three-stage evaluation process that applies specific thresholds based on ten criteria. The ten criteria have been incorporated into six categories:

  1. Size
  2. Interconnectedness
  3. Leverage
  4. Substitutability
  5. Liquidity Risk & Maturity Mismatch
  6. Existing Regulatory Scrutiny
  1. Following Stages 1 & 2, the institution is sent a notice of consideration and allowed to submit materials detailing its view of the designation “not less” than 30 days thereafter.
  2. After this precisely dated process, during which the FSOC can be moving forward requesting documents for Stage 3, a decision is made.
  3. While change is rarely embraced, mandates are accepted begrudgingly. Even more so when the examined institution doesn’t feel the authoritative body has viewed all available alternatives.

STAGE ONE

Stage 1 of designating a non-bank as a SIFI

 STAGE TWO

Stage 2 of designating a non-bank as a SIFI

STAGE THREE

Stage 3 of designating a non-bank as a SIFI

Learn More

Read The Difference Between Banks and Insurance Companies & SII: Significantly Important Insurers for greater detail.  

Difference Between Banks & Insurance Companies
China Overtakes US as World’s Largest Economy