FINRA submitted 2 rule filings with the SEC, both related to credit default swaps ("CDSs").  The first is a rule proposal to extend to 7/17/12 the implementation of FINRA Rule 4240, that governs an interim pilot program with respect to margin requirements for certain transactions in CDSs.  The extension would prevent FINRA Rule 4240 from lapsing by implementing the proposed rule change retroactively from 1/17/12.  Without the proposed rule change, FINRA Rule 4240 effectively has expired. As explained in the SEC July 2011 Approval Order, FINRA Rule 4240, coterminous with certain Commission actions, is intended to address concerns arising from counterparty credit risk posed by CDS, including, among other things, risks to the financial system arising from credit risk resulting from bilateral CDS transactions and from a concentration of credit risk to a central counterparty that clears and settles CDS. FINRA believes it appropriate to extend the Interim Pilot Program for a limited period - to 7/17/12 - in light of the continuing development of the CDS business within the framework of the Dodd-Frank Act.  In addition to this rule change, FINRA is proposing through a separate filing, to revise FINRA Rule 4240 principally to limit the rule's application at this time to certain transactions in CDSs that are security-based swaps. For further details, go to: [FINRA Rule Filing 12-14, 2/23/12]. ________________________________________ Under FINRA Rule Filing 12-15, submitted 2/23/12, FINRA proposes to amend FINRA Rule 4240, Margin Requirements for Credit Default Swaps, principally to limit the application of the rule - at this time - to certain transactions in CDSs that are security-based swaps.  As noted above, Rule 4240 also implements an interim pilot program with respect to margin requirements for certain transactions in credit default swaps. FINRA requests that the SEC allow the rule change to become effective upon approval by the SEC, and FINRA requests that the Commission provide expedited approval - i.e., prior to the 30th day after its publication in the Federal Register. As proposed, the definition of “CDS”, as set forth in paragraph (a) of Rule 4240, would be revised to provide that, for purposes of the rule, the term CDS includes any product that is commonly known to the trade as a credit default swap and is a security-based swap as defined pursuant to Section 3(a)(68) of the Act or the rules and guidance of the SEC and its staff. Consistent with this change, FINRA also is eliminating the grid set forth under paragraph (a) of FINRA Rule 4240.01 as to CDS contracts where the underlying obligation is a debt index rather than a single name bond, because such grid is for broad-based indexes. As revised, the rule provides that with respect to CDS contracts where the underlying obligation is a narrow-based debt index, rather than a single name bond, the margin requirement shall be based upon a margin methodology using the member’s internal models the use of which has been approved by FINRA. Further, in the interest of regulatory clarity and efficiency, and based upon FINRA’s experience in the administration of the rule, FINRA has revised the grid set forth under FINRA Rule 4240.01(a) as to CDS contracts where the underlying obligation is a single name debt security. Specifically, the revised grid sets forth more calibrated ranges with respect to the length of time to maturity of the relevant CDS contract and percentages with respect to the required margin. For further details, go to:   [FINRA Rule Filing 12-15, 2/23/12].