Short Answer

Yes, for all intents and purposes.

Explanation

The administrative process related to the deferral of Rule 4210 has become a perennial source of confusion, given the perennial deferral of margining on to-be-announced securities (or what can be described as the delayed delivery of margin on TBAs (pun intended), not that anybody is complaining about these deferrals).

So, we have distilled this administrative process down to a few bullet points:

  • FINRA Files a Proposal – FINRA files a proposal with the SEC to amend its rules by extending the implementation date of the amendments to FINRA Rule 4210 that will require margin to be exchanged on TBAs.
    • In the proposal, FINRA requests that the proposal be effective immediately, since applicable laws would otherwise delay the effectiveness of the rule change by 30-days (a “30-day operative delay” in the vocabulary of the administrative process).
  • SEC Publishes a Notice of Immediate Effectiveness – The SEC considers the proposed rule change and request by FINRA to waive the 30-day operative delay.
    • If the SEC determines that the request is “consistent with the protection of investors and the public interest,” then it publishes a “Notice of Filing and Immediate Effectiveness of a Proposed Rule Change” in the Federal Register.
    • At any time within 60 days of the filing of the proposed rule change, the SEC may take action to temporarily suspend the rule change, if the SEC determines that such a suspension is “necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the [Securities Exchange Act of 1934].
      • A suspension of the rule change related to the deferral of TBA margining would be highly unusual and would result in the initiation of formal proceedings to determine whether the proposed rule should be approved or disapproved.

As applied to the current iteration of the deferral of margin on TBAs, the timeline looks like this:

  • December 22, 2020 – FINRA filed its notice of the proposed rule change to defer the implementation of TBA margining until October 26, 2021, and requested that this proposed rule change and related deferral of TBA margin go into effect immediately.
  • January 11, 2021 – The SEC published a “Notice of Filing and Immediate Effectiveness of a Proposed Rule Change” in the Federal Register.

And, this is where the technical meets the practical.  Technically, the SEC has 60 days from December 22, 2021 (i.e., the date of the filing of the proposed rule change by FINRA) to temporarily suspend the rule change and initiate formal proceedings to determine whether the proposed rule change should be approved or disapproved.  Practically, it is highly unlikely that the SEC would do that in this instance.

The answer to the question presented in the title of this post is…

Yes, for all intents and purposes. 

The FINRA notice and the related SEC publication can be accessed here.

Good day.  Good explanation (we tried). DR2.