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ARTICLE · 08 SEPTEMBER 2023

Rule 4210 Amendments Approved With May '24 Effective Date

Perkins Coie LLP
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The U.S. Securities and Exchange Commission (SEC) approved FINRA's proposed amendments (Amendments) to Rule 4210 on July 27, 2023.

United StatesFinance and Banking
Todd Zerega
Todd Zerega

The U.S. Securities and Exchange Commission (SEC) approved FINRA's proposed amendments (Amendments) to Rule 4210 on July 27, 2023.

In summary, the Amendments amend Rule 4210 in the following respects:

  • Eliminate the 2% maintenance margin for nonexempt accounts.
  • Permit dealers to take a capital charge in lieu collecting margin from accounts for net mark-to-market losses provided that the dealer's net capital deductions for all accounts combined cannot exceed $25 million.
  • Make certain clarifying and conforming changes to Rule 4210.

Our Take

The elimination of the 2% maintenance margin (roughly equivalent to initial margin) will streamline the Master Securities Forward Transaction Agreement (MSFTA) negotiation process as asset managers do not need to go through the headache of classifying each of their accounts as "exempt" or "nonexempt" and monitoring such classifications. Additionally, these designations, along with the 2% maintenance margin, no

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