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FINRA Rule 4210


The Securities and Exchange Commission approved proposed amendments to FINRA Rule 4210 to establish margin requirements for certain covered agency transactions, including:

  • to-be-announced (TBA) transactions,
  • specified pool transactions, and
  • certain forward transactions involving collateralized mortgage obligations.

The margin requirements imposed under Rule 4210 will take effect beginning on December 15, 2017.

Historically, organizations were not required to post margin on TBA transactions. The amended rule requires broker-dealers to collect maintenance and variation margin, and establish risk limits for covered agency transactions. Maintenance margin requirements are equal to two percent of the contract value of the counterparty’s net long or net short position, plus any net mark-to-market loss.

For many organizations, the exchanging of the mark to market collateral in support of these covered agency transactions is common practice; however, we anticipate that more institutions will need to adapt their process to comply with this upcoming regulation. Northern Trust offers a collateral management outsourcing service to assist will assist in the operational burden. Within this service, we will:

  • Manage collateral in accordance with your legal agreements
  • Calculate exposures and initiate collateral calls
  • Verify collateral demands from counterparties
  • Move your collateral accordingly
  • Record and reconcile all collateral positions
  • Corporate actions monitoring and substitutions
  • Access to Northern Trust’s Global Investments cash funds for collateral reinvestment
  • Bi- and tri-party safekeeping for parties involved in the contract

The full text of this amended rule that includes additional details can be found on the FINRA’s website. For more information, please contact your relationship manager.

Robert Angel

Robert Angel

Head of Regulatory Services, Product Solutions Group, EMEA
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Robert Angel

Robert Angel

Head of Regulatory Services, Product Solutions Group, EMEA
Robert joined Northern Trust in September 2013 as head of Regulatory Services, Product Solutions Group, EMEA. The Regulatory Services team acts as a consolidated point of contact on our portfolio of regulatory projects, with responsibility for regulatory client communication, and the services and products that Northern Trust can offer our clients in the regulatory space.
Prior to joining Northern Trust, Robert spent over 16 years at Merrill Lynch (now Bank of America Merrill Lynch) in Prime Brokerage and during this time ran the hedge fund client service, client consulting, product development and client on-boarding teams.



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