SEC Approves Amendments to FINRA Margin Requirements

The SEC approved amendments to FINRA Rule 4210 (Margin Requirements) related to option spread strategies, maintenance margin requirements for non-margin eligible equity securities, "free-riding," "exempt accounts," and stress testing in portfolio margin accounts. The amendments related to option spread strategies became effective on October 26, 2012. All other amendments to FINRA Rule 4210 described in this Notice will become effective on January 23, 2013.

The principal amendments are as follows:

• the margin requirements on certain option positions are more closely tied to maximum potential loss;
• non-margin eligible equity securities cannot be used to satisfy even a maintenance margin requirement on a purpose loan;
• limits are imposed on the use of non-margin eligible equity securities to satisfy margin deposits on non-purpose loans;
• no stress testing is required on portfolio margin accounts in the aggregate (but individual accounts must be stress tested); and
• definitional changes were made to the "free-riding" provision of the FINRA Rule and to the definition of "exempt account."

View notice in full here (links externally to FINRA website).Link here to the Margin Chapter of Lofchie's Guide to Broker-Dealer Regulation.