Who is affected and how:

• Nonbank financial companies (e.g., asset managers, insurers, hedge funds, other large nonbank firms): These firms gain a required consultation process and a formal opportunity to present mitigation plans before FSOC may vote to designate them as systemically important. That can delay or reduce the chance of designation if alternative measures are feasible and accepted.

• Primary federal financial regulators (the company’s prudential regulator): Regulators will be formally consulted and their assessments must be considered, increasing their role and influence in the pre-designation process.

• Financial Stability Oversight Council (FSOC): FSOC must document an initial determination that alternatives are impracticable or insufficient, adding procedural steps and legal/administrative recordkeeping to the designation process. This raises the bar for designations and may slow the Council’s ability to move quickly.

• Broader financial system and market participants: Potentially mixed effects — by requiring more consultation and consideration of alternatives, the change could reduce regulatory surprise and encourage remediation plans, but it could also slow the imposition of stricter safeguards on firms that pose systemic risk, with implications for systemic risk mitigation timing.

Net effect: The amendment is primarily procedural, increasing due process and interagency/company consultation before designation. It does not change the substantive tools available to regulators, nor does it create new funding obligations. It may make designations less rapid or more contested, and it strengthens the role of primary regulators and company remediation in the risk-mitigation sequence.