The Federal Reserve Board announced Wednesday its approval of a final rule that defines the terms "significant nonbank financial company" and "significant bank holding company," potentially clearing the way for the Financial Stability Oversight Council (FSOC) to designate an insurance company for consolidated supervision by the Fed.

The board also established the requirements for determining when a company is "predominantly engaged in financial activities."

The final rule cleaves closely to the proposal developed under Dodd-Frank Act parameters and factors that FSOC must consider when determining whether to designate a nonbank financial company for consolidated supervision. FSOC takes a close look at the extent and nature of the company's transactions as well as interconnectedness with other significant nonbank financial companies and significant bank holding companies.

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