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ARTICLE · 10 MAY 2017

Effective Date For FINRA Rule 4210 Margin Amendments Approaches

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Beginning on December 15, 2017, amendments approved by the Securities and Exchange Commission ("SEC") last year to FINRA Rule 4210[1] will require U.S. registered broker-dealers...

United StatesFinance and Banking
Derivatives In Review
Derivatives In Review
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Authored by Nikiforos Mathews and Jonas Robison.

Beginning on December 15, 2017, amendments approved by the Securities and Exchange Commission ("SEC") last year to FINRA Rule 42101 will require U.S. registered broker-dealers to collect (but not post) daily variation margin and, in some cases, initial margin, from their customers on specified transactions.2

These new margin requirements apply to "Covered Agency Transactions," which include: (i) "to-be-announced" (or "TBA") transactions3 on mortgage-backed securities ("MBS") and specified pool transactions4 for which the settlement date is more than one business day after the trade date; and (ii) U.S. agency collateralized mortgage obligations for which the settlement date is more than three business days after the trade date.5 TBA transactions account for the vast majority of trading in the sizable agency MBS market.6

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