US FSOC Proposes Qualified Financial Contract Rules and Creates a New Challenge for Large Financial Companies that are not SIFIs

March 25, 2015

The Financial Stability Oversight Council (Council) proposed regulations (Rule) on January 7, 2015, which create a new challenge for all nonbank financial companies with assets of $50 billion or more. While the four companies that have actually been designated as systemically important financial institutions (SIFIs) by the Council have assets well in excess of $50 billion, the Rule suggests that financial companies with as little as $50 billion in assets could be placed in a Dodd-Frank Act (Act) Title II receivership under the FDIC, avoiding a federal bankruptcy court process. Under the Rule, such qualifying nonbank financial companies would have to comply with an extensive recordkeeping regime with respect to their qualified financial contracts (QFCs).

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