| WASHINGTON, April 3
WASHINGTON, April 3 The U.S. Federal Reserve
said on Wednesday that it had approved a final rule to clarify
the process the new U.S. risk council will follow when it begins
designating nonbank financial firms for heightened oversight.
A group of regulators known as the Financial Stability
Oversight Council is responsible for determining which nonbank
firms are so critical that their failure could threaten the
The rule sets requirements for determining when a company is
"predominantly engaged in financial activities," part of the
process laid out by the 2010 Dodd-Frank financial oversight law.
The final rule largely mirrors an earlier proposal, with the
change that engaging in physically settled derivatives
transactions will not count as a financial activity, the Fed
Regulators have not yet designated nonbank firms as
systemically important, although three firms are said to be in
the final stages of consideration.
Mary Miller, Treasury undersecretary for domestic finance,
said at a conference in March that she hoped the council would
vote on designations in "the next few months."
Business groups argued last year that the risk council could
face lawsuits if it tried to designate firms without finishing
the "predominantly engaged" rule.
A person familiar with the matter, however, said the Fed's
adoption of the rule will not affect ongoing talks over
designating certain firms.
In addition, the FSOC has previously disagreed with the
business groups' position, saying the rulemaking was not
"essential" to the FSOC's designation process.
The stability council is set to meet in a closed-door
session on Thursday. The new rule takes effect on May 6.