The Financial Stability Oversight Council (FSOC) is proposing an activities-based approach for identifying potential market-wide risks and to amend the process for designating nonbank financial companies systemically important.  Comptroller of the Currency Joseph Otting issued a statement supporting the measure this week.

"I support the proposal to revise the nonbanks interpretive guidance, which is consistent with the recommendations in the November 2017 U.S. Treasury Report," he said. "The proposal ensures FSOC continues to serve its primary function in a transparent, efficient, and effective manner."

The proposal shifts the FSOC’s focus away from the designation of individual companies as systemically important to an activities-based approach for identifying potential market-wide risks to financial stability. This approach would rely on the expertise of the primary regulators to address the identified risks. Should the FSOC consider designating a nonbank financial company as systemically important, the proposal includes positive changes to the process. Such changes include the addition of a determination of the likelihood of the company experiencing material financial distress and an analysis of benefits and costs.