MARGIN

General

(NEW) Margin Interpretation Updates

FINRA Rule 4210 (Margin Requirements) specifies the margin requirements applicable to securities held in margin accounts, including both strategy-based margin accounts and portfolio margin accounts. FINRA maintains interpretations regarding FINRA Rule 4210, available on the Interpretations of FINRA’s Margin Rule webpage, in a portable digital format (PDF) document where the interpretations immediately follow the section of the rule to which they relate. This Notice clarifies and updates the interpretations as discussed below.

FINRA Regulatory Notice 21-13 (March 24, 2021): FINRA Announces Updates to the Interpretations of FINRA’s Margin Rule for Day Trading

 

Updates to Interpretations of FINRA’s Margin Rule Regarding Control and Restricted Securities and Consolidation of Accounts

FINRA Rule 4210 (Margin Requirements) prescribes requirements governing the extension of credit by members. The FINRA Rule 4210 interpretations provide further guidance regarding application of the rule. This Notice announced immediately effective clarifications of interpretations of (1) FINRA Rule 4210(e)(8), which specifies margin requirements for control and restricted securities, and (2) FINRA Rule 4210(f)(5), which specifies conditions for the consolidation of two or more accounts carried for the same customer.

FINRA Regulatory Notice 20-22 (July 02, 2020): Updates to Interpretations of FINRA’s Margin Rule Regarding Control and Restricted Securities and Consolidation of Accounts

  

Covered Agency Transactions

FINRA amended FINRA Rule 4210 to establish margin requirements for Covered Agency Transactions. 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 discussed more fully in Regulatory Notice 16-31. To assist members in complying with the rule change, FINRA announced in Regulatory notice 17-28 a set of frequently asked questions and guidance. In addition, FINRA extended, to March 25, 2020, the effective date of the requirements that otherwise would have become effective on March 25, 2019. Members should note that the risk limit determination requirements became effective on December 15, 2016 and are not affected by Regulatory Notice 19-05.

FINRA Regulatory Notice 19-05 (February 12, 2019): FINRA Extends Effective Date of Margin Requirements for Covered Agency Transactions

• FINRA Regulatory Notice 17-28 (September, 2017):  FINRA Makes Available Frequently Asked Questions and Guidance and Extends Effective Date of Margin Requirements for Covered Agency Transactions

• Responses to Frequently Asked Questions Regarding Covered Agency Transactions Under FINRA Rule 4210 (Updated November 1, 2019) 

FINRA Regulatory Notice 16-31 (August 2016):  SEC Approves Amendments to FINRA Rule 4210 (Margin Requirements) to Establish Margin Requirements for Covered Agency Transactions

 

FINRA Topic Page:  Margin Accounts and Requirements