FINRA Rule 4210 TBA Changes Delayed Again

Morgan Lewis - All Things FinReg
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Morgan Lewis - All Things FinReg

FINRA recently filed a proposed rule change with the US Securities and Exchange Commission (SEC) on November 12, 2021 that would seek to once again delay the effective date of changes to FINRA Rule 4210 that were previously implemented on December 15, 2016. The amendments were supposed to become effective on January 26, 2022 and the proposed changes would move the effective date to April 26, 2022.

The proposed delay applies to amendments made to FINRA Rule 4210 that establish margin requirements for (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.

FINRA proposed the change through a provision of the Securities Exchange Act of 1934 that permits rule changes to become operative after 30 days of filing (or sooner if designated by the SEC) if the proposal does not significantly affect the protection of investors or the public interest or impose any significant burden on competition. The continued implementation delay perhaps signals that FINRA is taking industry concerns regarding the changes to Rule 4210 seriously. See our previous blog post for a more thorough discussion regarding the reasons for the continued delay. 

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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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