FINRA Revises Proposal to Establish Margin Requirements for TBAs

The SEC published an order instituting proceedings to determine whether to approve a proposal by FINRA that would establish margin requirements for "to-be-announced" transactions ("TBAs") and other forward-settling transactions in agency securities on TBA transactions. The SEC order reflects FINRA's "partial amendment" to the original proposal, as well as responses to comments received by the SEC on the original proposal.

The original proposal was amended to:

  • allow a member to elect not to apply the margin requirements in paragraph (c)(2)(H) of FINRA Rule 4210 to multifamily and project loan securities, subject to specified conditions;

  • modify the compliance date (i) for the risk limit determination requirement, to six months following SEC approval, and (ii) for all other aspects of the rule change, to 18 months following SEC approval.

Comments on the SEC order must be submitted no later than 21 days after its publication in the Federal Register, after which rebuttal comments may be submitted no later than 45 days after its publication.

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