FINRA proposed the adoption of a Supplemental Liquidity Schedule ("SLS"), pursuant to FINRA Rule 4524 ("Supplemental FOCUS Information") for "members with the largest customer and counterparty exposures." The Schedule would supplement FOCUS Report filings.
FINRA stated that the requirement to file the SLS would apply only to (i) carrying members with at least $25 million in free credit balances, as outlined under SEA Rule 15c3-3(a)(8), and (ii) any member with at least $1 billion in aggregate outstanding repurchase agreements, securities loan contracts and bank loans, as reported on their most recent FOCUS Report. Under these thresholds, FINRA approximated, the SLS requirement would apply to approximately 85 to 100 of its members with the greatest customer and counterparty exposures.
FINRA stated that the members subject to the requirement would have to (i) complete their SLS on the last business day of each month (the "SLS date") and (ii) file it within 24 business days following the end of the month. Firms would not have to file the SLS for any period in which they fail to meet the $25 million or $1 billion thresholds.
Members subject to the SLS requirement would need to provide information in their filings concerning, among other things, their:
reverse repurchase and purchase agreements;
securities both borrowed and loaned;
noncash reverse repurchase and securities borrowed transactions;
noncash repurchase and securities loaned transactions;
total available collateral within their custody;
margin and non-purpose loans;
collateral securing margin loans;
deposits in clearing organizations; and
cash and securities in connection with derivative transactions that were not cleared by a central clearing counterparty.
Comments on the proposal must be submitted within 21 days following its publication in the Federal Register.
FINRA requested comments on proposed notification requirements intended to "improve FINRA's ability to monitor for events that signal an adverse change" in liquidity risk.
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