FINRA – Filed amendment to security-based swaps (SBS) proposal

August 9, 2021 – FINRA proposed rules to clarify how these are applied to security-based swaps (SBS). Would revise FINRA Rule 0180, FINRA Rule 4120, FINRA Rule 4210, FINRA Rule 4220, FINRA Rule 4240, and FINRA Rule 9610.

Amendment: New FINRA Rule 0180 would generally apply FINRA rules to members’ activities, positions regarding security-based swaps (SBS), while providing limited exceptions for activities and positions where FINRA believes such exceptions are appropriate. Rule proposal, as amended, would change financial responsibility, operational rules for brokers/dealers to conform to SEC amendments to capital, margin, and segregation rules. As well as to otherwise take into account members’ security-based swaps activities. FINRA amendment would adopt margin rule specifically for SBS, replace expiring interim pilot program establishing margin requirements for credit default swaps.

New Effective Dates: SEC proposed regulation, as amended, would extend effective date of proposed
amendments to FINRA Rules 0180, 4120, 9610 from October 6, 2021, to February 6, 2022. SEC proposed regulation, as amended, would extend effective dates of proposed amendments to FINRA Rules 4210, 4220, 4240 from October 6, 2021, to April 6, 2022. Rule 4240(d)(12) legacy swap definition would reflect the new April 6, 2022 effective date.

Consultation: Comments on the FINRA amendment are due 15 days after Federal Register publication, rebuttal comments due 21 days after; refer to File No. SR-FINRA-2021-008.

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