FINRA Delays Rule 4210 Margining of Covered Agency Transactions to June 2018
On September 19, the Financial Industry Regulatory Authority (FINRA) took action to delay until June 25, 2018, the implementation of margin requirements for Covered Agency Transactions under FINRA Rule 4210. As defined in the amendments to FINRA Rule 4210, adopted in 2016, Covered Agency Transactions include (1) To Be Announced (TBA) transactions, inclusive of adjustable rate mortgage (ARM) transactions; (2) Specified Pool Transactions; and (3) transactions in Collateralized Mortgage Obligations (CMOs) issued in conformity with a program of an agency or Government Sponsored Enterprise (GSE), with forward settlement dates.
These margin requirements were scheduled to go into effect on December 15. However, at the request of industry participants seeking additional time to make necessary systems changes and update margining agreements and related documentation (including Master Securities Forward Transaction Agreements), FINRA has agreed to postpone the margin requirement effective date until June 25, 2018 and filed a proposed rule change with the Securities and Exchange Commission (SEC) to that effect. The text of the proposed rule change is available here.
FINRA has also made available SEC FAQs regarding Exchange Act Rules 15c3-1 and 15c3-3 in the context of Covered Agency Transactions, as well as its own FAQs regarding Covered Agency Transactions under FINRA Rule 4210.