Considering the time and expense it takes to comply with many of the Federal Reserve rules, it seems odd that any company would volunteer to be regulated. But some want to sign up. In particular, some foreign companies that own a securities broker or dealer are required to register in the U.S. to do business here. These companies are known as securities holding companies and may be required by their foreign regulators to be supervised in the U.S. on a consolidated basis.
Historically, these companies registered with the SEC, but the Dodd-Frank Act moved this responsibility to the Federal Reserve. This change will effectively consolidate the regulation of holding companies under the Federal Reserve, which is the U.S. regulator that is best equipped to regulate these entities because it already regulates bank holding companies. For this reason alone, the move makes sense.
To implement the move, the Federal Reserve recently put out proposed rules for comment. The proposed rules lay out the procedures for electing to be regulated and other requirements, including the filing of the election, the provision of additional information, and a 45 day waiting period that may be shortened in the Federal Reserve’s discretion. Comments on the proposed rules must be received by October 11, 2011.