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The BR Derivatives Report

Mandatory TBA Margining under FINRA Rule 4210 Starts May 22, 2024

On August 18, 2023, the Financial Industry Regulatory Authority (“FINRA”) issued Regulatory Notice 23-14 announcing that mandatory margining of certain delayed delivery agency mortgage-backed securities, including so-called TBAs (or “To Be Announced” securities), will go into effect on May 22, 2024.

This regulatory initiative began in 2012 as an industry standard promulgated by the New York Fed’s Treasury Market Practices Group.

Then, in 2016, FINRA proposed amendments to its Rule 4210, but deferred the implementation date of those amendments several times since their initial proposal. As summarized by FINRA:

“FINRA has amended the requirements relating to Covered Agency Transactions that FINRA originally adopted in 2016. Covered Agency Transactions include (1) To Be Announced transactions, inclusive of adjustable rate mortgage transactions, (2) Specified Pool Transactions and (3) transactions in Collateralized Mortgage Obligations, issued in conformity with a program of an agency or Government-Sponsored Enterprise, with forward settlement dates, as recapped more fully in [Regulatory Notice 23-14].”

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