October 23, 2019

October 23, 2019

Subscribe to Latest Legal News and Analysis

October 22, 2019

Subscribe to Latest Legal News and Analysis

October 21, 2019

Subscribe to Latest Legal News and Analysis

Postponement of Margin Rules for Covered Agency Transactions Under FINRA Rule 4210

The Financial Industry Regulatory Authority is filing a rule change (SR-FINRA-2019-005) with the Securities and Exchange Commission that postpones until March 25, 2020, the implementation of mandatory margin for Covered Agency Transactions under FINRA Rule 4210.

It was back in 2015 that FINRA initially proposed to amend FINRA Rule 4210 to establish margin requirements for (1) To Be Announced transactions, inclusive of adjustable rate mortgage transactions; (2) Specified Pool Transactions; and (3) transactions in Collateralized Mortgage Obligations, issued in conformity with a program of an agency or Government-Sponsored Enterprise, with forward settlement dates (collectively, Covered Agency Transactions). The effective date of these rules has already been postponed several times, and the stated purpose of this new postponement is to allow time for discussion of further changes to the rules:

“FINRA is considering, in consultation with industry participants and other regulators, potential amendments to the requirements of SR-FINRA-2015-036. FINRA believes that this is appropriate in the interest of avoiding unnecessary disruption to the Covered Agency Transaction market. Therefore, FINRA is proposing to extend the March 25, 2019 implementation date to March 25, 2020, while FINRA considers potential amendments. FINRA notes that the risk limit determination requirements pursuant to SR-FINRA-2015-036 became effective on December 15, 2016, and, as such, the implementation of such requirements is not affected by the proposed rule change.

“As noted in Item 2 of this filing, FINRA has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing. The operative date will be the date of filing of the proposed rule change.”

The text of the rule change is available here.

©2019 Katten Muchin Rosenman LLP


About this Author

Guy Dempsey Jr., Bank Regulations Legal Specialist, Katten Muchin

Guy C. Dempsey Jr. concentrates his practice on derivatives and structured products and on bank regulation. He advises clients on derivatives transactions of all types across all asset classes, as well as on the corporate governance, regulatory, collateral, compliance, insolvency and litigation issues associated with such products.

Much of Guy’s work involves helping bank and non-bank clients analyze the details and impact of the Dodd-Frank Act. He maintains deep knowledge of the banking laws and regulations relating to capital markets activities....