Designation Scheme

A designation scheme is a regulatory framework that identifies certain entities, assets, or services as subject to specific rules and oversight due to their importance in the financial system or other critical sectors. Designation schemes are used to safeguard the stability and integrity of financial markets, ensure compliance with regulatory standards, and prevent systemic risks. Entities or services designated under such schemes may be subject to additional reporting requirements, oversight, or capital requirements. Designation schemes are often implemented by regulatory authorities like central banks, financial supervisory bodies, or international organizations to monitor systemically important institutions or critical financial infrastructure.

Example

The Financial Stability Board (FSB) designates certain financial institutions as globally systemically important banks (G-SIBs), subjecting them to heightened regulatory scrutiny.