The securities industry is awaiting action from the Federal Reserve on a rule that could complicate the $40-billion-a-year structured-note business.

The proposal, first floated late last year, would among other things impose new requirements on big banks to issue more plain-vanilla, long-term debt that could readily be converted into equity in the event of a failure.

The proposal would cover systemically important banks, known as “GSIBs,” including the banks and wirehouses that issue structured notes.

The goal is to end taxpayer bailouts of too-big-to-fail institutions.

Notably, most structured products, which are unsecured debt obligations of the issuer, would not count as eligible long-term debt under the Fed’s current proposal.

A revised version of the proposal is expected late this year, according to industry sources.

What changes the Fed might make to the plan are unknown. But the revised rule “will look a lot like what they put out” in the original version, predicts Oliver Ireland, a partner at the Morrison & Foerster LLP law firm, who represents note issuers.

A Fed spokesman declined to comment.

What is clear is that the plan will impact the amount of structured products bank holding companies could issue.

“Several covered [bank holding companies] may need to limit the value of structured notes that they have outstanding,” the Fed warned in its preamble to the rule.