Broadly, it is the Council's mandate from Dodd-Frank to designate systemically important nonbank financial firms for heightened supervision, in order to ensure that these institutions cannot escape tough oversight or threaten the stability of the broader financial sector. These systemically important hedge funds and other non-bank firms constitute the shadow banking system that the President's blueprint for reform and Volcker G-30 report identified as in need of systemic regulation. he FSOC has important new authorities to constrain excessive risk in the financial system. For instance, the FSOC has authority to designate a nonbank financial firm for tough new supervision and therefore avoid the regulatory gaps that existed before the recent crisis. Closing these gaps in supervision will help minimize the risk of a nonbank financial firm threatening the stability of the financial system.
The ANPR is an initial step in the process by which the Council intends to develop a robust and disciplined framework for the designation of nonbank financial companies for heightened supervision. The ANPR consists of fifteen questions to solicit public comment regarding the implementation of these provisions and will have a 30-day public comment period. The ANPR will inform development of a specific regulatory proposal expected to be published for comment near year-end, with Final Council action on the designation criteria and process is expected by March 31, 2011.