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DTCC Subsidiaries Receive ‘Systemically Important’ Designation

The designation Systemically Important Financial Market Utility (SIFMU) differs from the Systemically Important Financial Institution (SIFI) designation.

The “market utility” in SIFMU covers organizations that are the “plumbing of the financial system for their role in clearing and settling transactions between financial institutions,” according to the Financial Stability Oversight Council (FSOC) that assigns these designations.

The “financial institution” in SIFI covers institutions that Congress determines are bank holding companies, both U.S. and foreign banks, with U.S. holdings of more than $50 billion or more in assets. The types of firms cited by FSOC as likely candidates for a SIFI designation include major financial companies with a significant presence in the market such as specialty lenders, insurance companies, broker/dealers, asset management companies, hedge funds, financial guarantors, futures commission merchants, savings and loan holding companies and other financial institutions.

As for nonbank financial companies, Congress charged FSOC with defining the factors that would be used to determine a SIFI designation