The FRB has finalized rules on how to begin the process of establishing securities holding companies (SHCs). These are new entities authorized by the Dodd-Frank Act1 that may be owned by certain nonbanking companies that control at least one registered securities broker-dealer that are also subjected by foreign law to comprehensive consolidated supervision. The final rule details how SHCs will register with the Board and be subject to FRB supervision. The rule also outlines the requirements that firms must satisfy to become an SHC. Although the Dodd-Frank Act and, thus, the final rule, make the SHC a narrower charter than advocates had sought, it still provides strategic options that, despite the scope of rules now applicable to bank holding companies, warrant review by qualifying firms.
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