Proposed Amendments to FINRA Rule 4210 for TBA Transactions


The Asset Management Group of SIFMA (SIFMA AMG) provides comments to the Financial Industry Regulatory Authority (FINRA) on proposed amendments to FINRA Rule 4210 for To-Be-Announced (TBA) transactions.

SIFMA AMG generally supports the aim of the Proposed Amendments to mitigate the counterparty credit risk borne by participants in the TBA market and reduce the potential for systemic risk. However, they have the following comments on the Proposed Amendments:

  • the maintenance margin requirement should be eliminated; 
  • “liquidating action” should not be mandated by the Proposed Amendments; 
  • “commonly controlled accounts” should not include accounts by virtue of being managed by the same asset manager; 
  • the parties to Covered Agency Securities should be free to negotiate the settlement period for posting margin up to a three-day period after a margin call; 
  • certain technical changes should be made to the Proposed Amendments; and 
  • the compliance date for the Proposed Amendments should be 18 months following effectiveness.