WASHINGTON, D.C. – The Financial Technology Association joined a broad coalition of financial services trade associations in submitting comments to the Financial Stability Oversight Council (FSOC) in support of its proposed interpretive guidance governing the designation of nonbank financial companies as systemically important financial institutions (SIFIs).
The coalition’s letter commends the Proposed Guidance for restoring key provisions of the 2019 interpretive guidance that were eliminated under the 2023 Guidance — including the requirement to conduct a cost-benefit analysis, the prioritization of an activities-based approach to assessing systemic risk, and the assessment of the likelihood of material financial distress prior to any designation decision.
FTA and its co-signatories have long maintained that SIFI designation should be a tool of last resort. Subjecting nonbank financial companies to Federal Reserve supervision without clear systemic risk justification can create competitive distortions, stifle innovation, and result in higher costs and fewer choices for consumers. The Proposed Guidance reflects a return to the transparent, analytically rigorous process that FSOC’s designation authority requires.
Read the full letter here.
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