Notice2023-19948
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Implementation Date of Certain Amendments to FINRA Rule 4210 Approved Pursuant to SR-FINRA-2015-036
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 15, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 178 (Friday, September 15, 2023)</title>
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[Federal Register Volume 88, Number 178 (Friday, September 15, 2023)]
[Notices]
[Pages 63633-63636]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-19948]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98349; File No. SR-FINRA-2023-011]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Implementation Date of Certain
Amendments to FINRA Rule 4210 Approved Pursuant to SR-FINRA-2015-036
September 11, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 29, 2023, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by FINRA. FINRA has designated
the proposed rule change as constituting a ``non-controversial'' rule
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which
renders the proposal effective upon receipt of this filing by the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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[[Page 63634]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to extend, to May 22, 2024, the implementation
date of the amendments to FINRA Rule 4210 (Margin Requirements)
pursuant to SR-FINRA2015-036, other than the amendments pursuant to SR-
FINRA-2015-036 that were implemented on December 15, 2016. The proposed
rule change would not make any changes to the text of FINRA rules.
The text of the proposed rule change is available on FINRA's
website at <a href="http://www.finra.org">http://www.finra.org</a>, at the principal office of FINRA and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On October 6, 2015, FINRA filed with the Commission proposed rule
change SR-FINRA-2015-036, which proposed to amend FINRA Rule 4210 to
establish margin requirements for (1) To Be Announced (``TBA'')
transactions, inclusive of adjustable rate mortgage (``ARM'')
transactions; (2) Specified Pool Transactions; and (3) transactions in
Collateralized Mortgage Obligations (``CMOs''), issued in conformity
with a program of an agency or Government-Sponsored Enterprise
(``GSE''), with forward settlement dates, as defined more fully in the
filing (collectively, ``Covered Agency Transactions''). The Commission
approved SR-FINRA-2015-036 on June 15, 2016 (the ``Approval Date'').\4\
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\4\ See Securities Exchange Act Release No. 78081 (June 15,
2016), 81 FR 40364 (June 21, 2016) (Notice of Filing of Amendment
No. 3 and Order Granting Accelerated Approval to a Proposed Rule
Change to Amend FINRA Rule 4210 (Margin Requirements) to Establish
Margin Requirements for the TBA Market, as Modified by Amendment
Nos. 1, 2, and 3; File No. SR-FINRA-2015-036).
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Pursuant to Partial Amendment No. 3 to SR-FINRA-2015-036, FINRA
announced in Regulatory Notice 16-31 that the rule change would become
effective on December 15, 2017, 18 months from the Approval Date,
except that the risk limit determination requirements as set forth in
paragraphs (e)(2)(F), (e)(2)(G) and (e)(2)(H) of Rule 4210 and in new
Supplementary Material .05, each as respectively amended or established
by SR-FINRA-2015-036 (collectively, the ``risk limit determination
requirements''), would become effective on December 15, 2016, six
months from the Approval Date.\5\
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\5\ See Partial Amendment No. 3 to SR-FINRA-2015-036 and
Regulatory Notice 16-31 (August 2016), both available at:
<a href="http://www.finra.org">www.finra.org</a>.
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Industry participants sought clarification regarding the
implementation of the requirements pursuant to SR-FINRA-2015-036.
Industry participants also requested additional time to make system
changes necessary to comply with the requirements, including time to
test the system changes, and requested additional time to update or
amend margining agreements and related documentation. In response,
FINRA made available a set of Frequently Asked Questions & Guidance \6\
and, pursuant to SR-FINRA-2017-029,\7\ extended the implementation date
of the requirements of SR-FINRA-2015-036 to June 25, 2018, except for
the risk limit determination requirements, which, as announced in
Regulatory Notice 16-31, became effective on December 15, 2016.
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\6\ See Responses to Frequently Asked Questions Regarding
Covered Agency Transactions Under FINRA Rule 4210, at: <<a href="https://www.finra.org/rules-guidance/guidance/faqs/responses-frequently-asked-questions-regarding-covered-agency-transactions-under-finra-rule">https://www.finra.org/rules-guidance/guidance/faqs/responses-frequently-asked-questions-regarding-covered-agency-transactions-under-finra-rule</a>>. Further, staff of the SEC's Division of Trading and Markets
made available a set of Frequently Asked Questions regarding
Exchange Act Rule 15c3-1 and Rule 15c3-3 in connection with Covered
Agency Transactions under FINRA Rule 4210, also available at:
<<a href="https://www.finra.org/rules-guidance/guidance/faqs/responses-frequently-asked-questions-regarding-covered-agency-transactions-under-finra-rule">https://www.finra.org/rules-guidance/guidance/faqs/responses-frequently-asked-questions-regarding-covered-agency-transactions-under-finra-rule</a>>.
\7\ See Securities Exchange Act Release No. 81722 (September 26,
2017), 82 FR 45915 (October 2, 2017) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Delay the Implementation
Date of Certain Amendments to FINRA Rule 4210 Approved Pursuant to
SR-FINRA-2015-036; File No. SR-FINRA-2017-029); see also Regulatory
Notice 17-28 (September 2017).
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Industry participants requested that FINRA reconsider the potential
impact of certain requirements pursuant to SR-FINRA-2015-036 on smaller
and mid-sized firms. Industry participants also requested that FINRA
extend the implementation date pending such reconsideration. In
response to these concerns, FINRA further extended the implementation
date of the requirements of SR-FINRA-2015-036, other than the risk
limit determination requirements, most recently to October 25, 2023
(the ``October 25, 2023 implementation date''),\8\ and, informed by
extensive dialogue, both with industry participants and other
regulators, including the staff of the SEC and the Federal Reserve
System, FINRA proposed amendments to the requirements of SR-FINRA-2015-
036 (the ``Proposed Amendments'').\9\
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\8\ See Securities Exchange Act Release No. 97062 (March 7,
2023), 88 FR 15473 (March 13, 2023) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Extend the Implementation
Date of Certain Amendments to FINRA Rule 4210 Approved Pursuant to
SR-FINRA-2015-036; File No. SR-FINRA-2023-002).
\9\ See Securities Exchange Act Release No. 91937 (May 19,
2021), 86 FR 28161 (May 25, 2021) (Notice of Filing of a Proposed
Rule Change to Amend the Requirements for Covered Agency
Transactions Under FINRA Rule 4210 (Margin Requirements) as Approved
Pursuant to SR-FINRA-2015-036; File No. SR-FINRA-2021-010). See also
Partial Amendment No. 1 to SR-FINRA-2021-010, and Letter from Adam
Arkel, Associate General Counsel, Office of General Counsel, FINRA,
to Vanessa Countryman, Secretary, SEC, dated September 16, 2021,
both available at: <<a href="http://www.finra.org">www.finra.org</a>>.
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The SEC approved the Proposed Amendments on July 27, 2023.\10\ As
FINRA stated in Partial Amendment No. 1 to SR-FINRA-2021-010, and
consistent with the SEC Approval Order,\11\ FINRA has issued Regulatory
Notice 23-14 \12\ announcing May 22, 2024, as the implementation date
of the Proposed Amendments (the ``Amendments Implementation Date'').
FINRA believes it is appropriate, in the interest of regulatory
clarity, to adjust the implementation date of the requirements pursuant
to SR-FINRA-2015-036 in alignment with the Amendments Implementation
Date. To that end, FINRA is proposing to extend the October 25, 2023
implementation date to May 22, 2024. FINRA notes that the risk limit
determination requirements pursuant to SR-FINRA-2015-036 became
effective on December
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15, 2016, and, as such, are not affected by the proposed rule
change.\13\
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\10\ See Securities Exchange Act Release No. 98003 (July 27,
2023), 88 FR 50205 (August 1, 2023) (Order Setting Aside Action by
Delegated Authority and Granting Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, to Amend the Requirements for
Covered Agency Transactions under FINRA Rule 4210 (Margin
Requirements) as Approved Pursuant to SR-FINRA-2015-036; File No.
SR-FINRA-2021-010) (the ``SEC Approval Order''); see also Securities
Exchange Act Release No. 94013 (January 20, 2022), 87 FR 4076
(January 26, 2022) (Order Granting Approval of a Proposed Rule
Change, as Modified by Amendment No. 1, to Amend the Requirements
for Covered Agency Transactions under FINRA Rule 4210 (Margin
Requirements) as Approved Pursuant to SR-FINRA-2015-036; File No.
SR-FINRA-2021-010).
\11\ FINRA stated, and the SEC noted, that the amendments would
become effective between nine and ten months following the SEC's
approval. See Partial Amendment No. 1; see also SEC Approval Order,
supra note 10, 88 FR 50205, 50229.
\12\ Regulatory Notice 23-14 (August 2023), available at:
<<a href="http://www.finra.org">www.finra.org</a>>.
\13\ The Proposed Amendments make certain revisions to the risk
limit determination requirements as originally approved pursuant to
SR-FINRA-2015-036. As announced in Regulatory Notice 23-14, these
revisions will become effective on May 22, 2024, as with all the
other amendments approved pursuant to the SEC Approval Order.
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FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the Commission waive the
requirement that the proposed rule change not become operative for 30
days after the date of the filing. The operative date will be the date
of filing of the proposed rule change.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\14\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change serves
the interest of regulatory clarity in the Covered Agency Transaction
market by aligning the implementation of the requirements pursuant to
SR-FINRA-2015-036, other than the risk limit determination
requirements, with the Amendments Implementation Date. FINRA believes
that this will thereby protect investors and the public interest by
helping to promote stability in the Covered Agency Transaction market.
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\14\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. FINRA believes that aligning
the implementation date of the requirements pursuant to SR-FINRA-2015-
036, other than the risk limit determination requirements, with the
Amendments Implementation Date will help to provide clarity to industry
participants and to promote stability in the Covered Agency Transaction
market, thereby benefiting all parties.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-(f)(6)(iii),\18\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has requested
that the Commission waive the 30-day operative delay so that the
proposal may become operative upon filing. FINRA has stated it believes
that immediate operation of the proposed rule change is appropriate
because alignment of the implementation date of the requirements
pursuant to SR-FINRA-2015-036, other than the risk limit determination
requirements, with the Amendments Implementation Date will help to
promote stability in the Covered Agency Transaction market.
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires a self-regulatory organization to give the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. FINRA has satisfied this requirement.
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because the proposal to align the implementation date of the amendments
to Rule 4210 pursuant to SR-FINRA-2015-036, other than the risk limit
determination requirements, with the Amendments Implementation Date
does not raise any new or novel issues and will reduce any potential
uncertainty in the Covered Agency Transaction market. Therefore, the
Commission hereby waives the 30-day operative delay requirement and
designates the proposed rule change as operative upon filing.\19\
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\19\ For purposes of waiving the 30-day operative delay, the
Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f98b8c959cd49a9694949c978d8ab98a9c9ad79e968f"><span class="__cf_email__" data-cfemail="addfd8c1c880cec2c0c0c8c3d9deeddec8ce83cac2db">[email protected]</span></a>. Please include
File Number SR-FINRA-2023-011 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2023-011. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of FINRA. Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available
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publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-FINRA-2023-011 and
should be submitted on or before October 6, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-19948 Filed 9-14-23; 8:45 am]
BILLING CODE 8011-01-P
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