NEW YORK ( TheDeal) -- The Federal Reserve Board this week established a rule that to enable financial regulators to determine which non-bank financial firms are critical to the financial system, and which will be required to submit to additional government oversight. The rule approved Wednesday defines when a company is "predominantly engaged in financial activities." Non-bank financial firms that meet the definition will be subjected to consolidated supervision by the Federal Reserve if the Financial Stability Oversight Council designates them as "systemically important financial institutions." A firm will be considered significant if it has $50 billion or more in total consolidated assets or has operations or risk exposures that the FSOC believes will harm the U.S. financial system if the institution fails. Banks and bank holding companies already face substantial oversight from federal regulators and there is less controversy surrounding the designation of banks and their holding companies as SIFIs. Establishing which nonbank companies are eligible to be deemed SIFIs removes a key hurdle to the FSOC making its designations. The Dodd-Frank Wall Street reform law enacted in 2010 established that the FSOC can designate a nonbank firm for supervision by the Federal Reserve only if it is "predominantly engaged in financial activities." Under the rule announced Wednesday, a company is considered to be predominantly engaged in financial activities if 85% or more of the company's revenues or assets are related to activities that are defined as "financial in nature" under the Bank Holding Company Act. The rule largely adopts the approach of an April 2012 proposal but includes some minor changes. Most noteworthy, the Fed decided that engaging in physically settled derivatives transactions generally will not be considered a financial activity. The change was meant to protect companies that use derivatives to hedge against supply price changes such as farmers and manufacturers. Operations that attempt to profit from derivatives trading would still be classified as financial in nature. The list of other activities that will be considered financial in nature include lending, investing for others, insuring against loss or harm, providing financial or investment advisory services, selling interests in pools of assets, underwriting, and servicing loans. The Fed's full list of activities takes up 12 pages.