The Financial Stability Oversight Council voted on Friday to move forward in naming certain non-bank firms as “systemically important financial institutions,” or SIFIs.
The FSOC, headed by Treasury Secretary Timothy Geithner, will notify the firms that will be pushed through the process, though the council will not publicly name the institutions until final determinations are made as to which will be named as SIFIs, Reuters reports.
Under the 2010 Dodd-Frank Act, the FSOC is responsible for naming non-bank firms, such as hedge funds and private equity funds, whose failure could pose significant risk to the U.S. financial system. Firms named by the council will be subject to tougher capital standards and oversight by regulators, though the standards are not yet clear.
Before an institution receives the final designation, two-thirds of the council is required to vote in favor of naming the institution as a SIFI, according to American Banker.
FSOC members will vote in November on recommendations compiled by the council staff. The recommendations will then enter a public comment period, which could last between 30 and 90 days. After the FSOC incorporates public comments into the recommendations, they are sent to the Securities and Exchange Commission, Financial Times reports.