FINRA filed a proposed rule change that would delay the effective date of amendments to FINRA Rule 4210 (margin) from December 15, 2017 to June 25, 2018.
The amendments establish margin requirements for various types of forward-settling agency transactions, including TBAs, specified pool and collateralized mortgage obligation transactions (see previous coverage). According to FINRA, the delay was proposed in order to allow market participants to prepare for implementation by (i) making necessary systems changes and (ii) updating and amending existing margining agreements.
The rule change was filed for immediate effectiveness.
Commentary / Nihal Patel
The FINRA-requested delay would give market participants a reasonable amount of time to make the relevant systems changes necessary to comply with the rule and to establish the necessary contractual arrangements with counterparties. (SIFMA and its membership had requested that firms be given additional time to make necessary IT changes in order to implement SEC and FINRA operational requirements (see coverage) relating to the TBA rule.)
Having been granted their request for additional time (pending SEC approval), firms should remain diligent in moving forward, given the amount of work to be done and the likelihood that resources will become limited as the compliance date gets closer.
(Disclosure: Cadwalader represents the Securities Industry and Financial Markets Association (SIFMA) in connection with this rulemaking.)
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