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Rules & Regulations

FINRA Governors Approve 4 Rule Proposals

October 9, 2018

FINRA's Board of Governors met in New York on September 26 and 27 and approved 4 rule proposals for comment of filing with the SEC.


EXPAND TIME FOR NON-PARTIES TO RESPOND IN ARBITRATION.    FINRA propose to: (i) extend the response time for non-parties to object to an order or subpoena from 10 calendar days of service to 15 calendar days of receipt of the order or subpoena; and (ii) exclude first-class mail as an option to serve documents on the non-party and as an option for the non-party to file the objection to the scope or propriety of the order or subpoena.


EXPAND TRACE TO INCLUDE FOREIGN SOVEREIGN DEBT.    FINRA will seek comment on amendments to expand TRACE rules to include transactions in U.S. dollar-denominated foreign sovereign debt securities. Issuance in these securities has accelerated in recent years and FINRA believes the proposal would provide important regulatory information on an increasingly active segment of the market. As proposed, trades in foreign sovereign debt securities would be subject to same-day reporting and would not be disseminated publicly.


AMEND MARGIN REQUIREMENTS FOR COVERED AGENCY TRANSACTIONS.    FINRA will revise the Covered Agency Transaction margin requirements by: (i) eliminating the 2% maintenance margin requirement; (ii) allowing firms to take a capital charge in lieu of collecting margin for mark-to-market losses, subject to specified limitations and conditions; and, (iii) streamlining rule language. The revisions respond to competitive impact concerns raised by small firms in connection with recent changes in these requirements.


AMEND FINRA’S MARGIN RULE TO CLARIFY TREATMENT OF “WHEN ISSUED” AND OTHER EXTENDED SETTLEMENT TRANSACTIONS.   FINRA will seek comment on amendments to margin requirements that would clarify and incorporate into the rule current interpretations regarding “when issued” and other extended settlement transactions, and would provide relief to facilitate the practical application of the rule to extended settlement transactions.