On September 19, 2017, the Financial Industry Regulatory Authority (“FINRA”) published a proposed rule change (available here) to delay implementation of certain margin requirements in respect of what are referred to as “Covered Agency Transactions,” including To Be Announced (“TBA”) transactions and other specified delayed delivery transactions involving mortgage-backed securities.

The delay will move the implementation date of the margin requirements from December 15, 2017 until June 25, 2018.  

The stated purpose of the delay is to give market participants additional time to complete systems changes that are needed in order to comply with the new margin requirements, and to update or amend trading documentation related to the trading of these delayed delivery transactions.

As a procedural matter, FINRA will file the proposed rule change with the SEC in such a manner, so as to make the delay effective immediately upon the filing of the proposal with the Securities and Exchange Commission.  (As of the time that this posting was prepared, no such filing had occurred; although, the filing is a procedural, rather than a substantive, matter.)

FINRA has also published updated FAQ’s in respect of Covered Agency Transactions (available here) and Rules 15c3-1 and 15c3-3 under the Securities and Exchange Act of 1934 (available here).  These FAQs will be the subject of subsequent blog postings.

In the meantime, the real delay in delayed delivery MBS these days seems to be…the implementation of margin requirements (not that we are complaining).

Good day.  Good delay! DR2