On September 19, 2017, the Financial Industry Regulatory Authority, Inc. (FINRA) filed with the Securities and Exchange Commission (SEC) a proposed rule change to delay until June 2018 the implementation date of certain amendments to FINRA Rule 4210. When the amendments to Rule 4210 are implemented, they will require the collateralization of many forward transactions involving mortgage-backed securities (MBS). The proposed rule change effectively pushes back the date for compliance with Rule 4210’s collateralization requirements from December 15, 2017, to June 25, 2018.
Before FINRA’s decision to delay the implementation of Rule 4210’s margining requirements, the impending effectiveness of those requirements led market participants to rush to update their documentation for their MBS forward transactions. In its proposed rule change, FINRA stated that industry participants had requested additional time to
FINRA Delays Required Collateralization of TBAs and Other MBS Forwards
IN BRIEF
- FINRA stated that industry participants had requested additional time to amend their contractual documentation and to make required systems changes as necessary.
- FINRA noted that it had received questions regarding the implementation of Rule 4210’s collateralization requirements.
- Rule 4210 will in each case place the obligation to collect margin solely on the FINRA member.
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