Fed approves financial company definition

The new rule clarifies that standard to mean a company with at least 85 percent of its revenues or assets, and those of its subsidiaries, related to activities that are financial in nature.

Activities that are "financial in nature" are defined by the 1996 Bank Holding Company Act, which covers lending, exchanging, investing or safeguarding assets, providing a device to do so, or arranging transactions for a third party.

The new rule also defines a "significant" financial or bank holding company as one with $50 billion or more in total consolidated assets or one designated by the FSOC as important, as directed by the Dodd-Frank law.

The rule will become effective May 6.