FINRA proposed an extension of the implementation period for FINRA Rule 4240, which establishes an interim pilot program concerning margin requirements for certain transactions in credit default swaps ("CDS") that are security-based swaps.

Currently, the pilot program is set to expire on July 18, 2017. The proposal would extend the pilot program to July 18, 2018.

Commentary / Nihal Patel

While the extension was wholly expected – the "pilot" has been in place since 2009 – FINRA also said that it is "considering proposing additional amendments to the [pilot program]." This is an interesting side note in light of the fact that the SEC has yet to adopt (or re-propose?) its own requirements that would apply to CDS entered into by broker-dealers that are also security-based swap dealers.

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