Key takeaways:

• The attached Client Update describes two important steps that federal regulators have taken toward finalizing the framework for designating systemically important financial institutions ("SIFIs"). Firms that are designated as SIFIs will be subject to enhanced supervision and regulation under the Dodd-Frank Act, and the recently announced regulatory steps suggest that we are closer to the date when the first firms will be designated.
• Earlier this month, the Federal Reserve issued a new proposal for the term "predominantly engaged in financial activities." Firms that engage in such activities would be within the pool of firms that will be eligible for SIFI designation. The Federal Reserve's proposal, which is open for public comment, seeks to interpret this key term broadly to encompass a wide range of activities, including investment activity.
• A day after the Federal Reserve released its proposal, the interagency Financial Stability Oversight Council issued its final rules and guidance on SIFI designation. The final rules and guidance provide an important road map for the designation process.