FINRA further delays implementation of amendments to FINRA Rule 4210

Eversheds Sutherland (US) LLP

Eversheds Sutherland (US) LLP

The Financial Industry Regulatory Authority, Inc. (FINRA) filed a proposed rule change with the Securities and Exchange Commission (SEC) on January 29, 2019, to once more delay, until March 25, 2020, the implementation of amendments to FINRA Rule 4210 (Amended FINRA Rule 4210). Amended FINRA Rule 4210 will require the margining of: (1) To-be-announced transactions, including 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 a government-sponsored enterprise, with forward settlement dates (collectively, the Covered Agency Transactions).

Amended FINRA Rule 4210 was scheduled to take effect on March 25, 2019, after previous delays due to requests by market participants that (i) they receive additional time to change systems and amend margining documentation to comply with Amended FINRA Rule 4210, and that (ii) FINRA reconsider the potential impact of Amended FINRA Rule 4210 on smaller and medium-sized broker-dealers.

FINRA filed its latest proposed rule change to delay the implementation of Amended FINRA Rule 4210 because it needs additional time to consider potential amendments to Amended FINRA Rule 4210 to prevent unnecessary disruption in the Covered Agency Transaction market. The proposed rule change would not make any changes to the text of Amended FINRA Rule 4210.
FINRA filed the proposed rule change for immediate effectiveness and requested that the SEC waive the requirement that a proposed rule change not become operative for 30 days after its filing. The text of the proposed rule change is available on FINRA’s website at Comments on the proposed rule change should be submitted on or before the date which is 21 days from its publication in the Federal Register.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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