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Bailey McCann, Opalesque New York: The Financial Stability Oversight Council (FSOC), has issued its final rule and guidance on how it will determine which nonbank financial companies pose a threat to the financial system what firms will be designated as "systemically important financial institutions" (SIFIs). The rules will impact both funds and fund managers if they meet the asset thresholds to be considered a SIFI even while not being a bank. If a fund or manager meets this distinction, they will be subject to new and more rigorus regulations under the Dodd-Frank Act.

According to the terms of the rule, commonly-managed funds that have $50bn or more of total consolidated assets would qualify as a SIFI, especially if the funds follow similar investment strategies.

Individual investment advisers and/or their funds can be considered a SIFI if they have $50bn in total consolidated assets and they meet one of the following requirements: $30bn in gross notional credit default swaps; $3.5bn in derivative liabilities; $20bn in total debt outstanding; a leverage ratio of 15-1; or a short-term debt ratio of at least 10%.

According to a client alert from New York-based law firm, Shulte Roth & Zabel obtained by Opalesque, lawyers note that the way FSOC will calculate when the threshold is met is key. "While it can be safely assumed th......................

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