June 2, 2021

Vanessa A. Countryman
Secretary
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549-1090

Re: Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to Security-Based Swaps (SR-FINRA-2021-008)

Dear Ms. Countryman:

The Securities and Financial Markets Association (“SIFMA”)1 appreciates this opportunity to provide the Securities and Exchange Commission (the “Commission” or “SEC”) with comments in response to the above-captioned release2 (the “Proposal”) by the Financial Industry Regulatory Authority, Inc. (“FINRA”) to clarify the application of its rules to security-based swaps (“SBS”) following the Commission’s completion of its rulemaking regarding SBS dealers (“SBSDs”) and major SBS participants (“MSBSPs”) (collectively, “SBS Entities”).

Overall, SIFMA supports many aspects of the Proposal. We have concerns in two main areas, however. First, to avoid unnecessary market disruption and unfair disadvantages for broker-dealers that plan to register as SBSDs, the compliance date for the proposed
application of FINRA rules to SBS should align better with the timing for SBSD registration, which may not take place until November 1, 2021, as opposed to the October 6, 2021 compliance date that FINRA has proposed. Second, to avoid undermining (without appropriate justification) the Commission’s carefully calibrated margin and capital regime for SBS, FINRA should better align its proposed SBS margin rule with the Commission’s margin rule for SBSDs, SEC Rule 18a-3, particularly for FINRA members already subject to heightened capital requirements as alternative net capital (“ANC”) firms. Our comments below address these topics, as well as certain more technical matters.