Matrix Applications Blog

FINRA Rule 4210

Posted by Colleen Judge on Oct 14, 2020 10:20:39 AM

The Financial Industry Regulation Authority (FINRA) filed for a rule change with the Securities and Exchange Commission (SEC). Recognized as “FINRA Rule 4210,” this will require the implementation of mandatory margin requirements for:

  1. Specified Pool Transactions 
  2. Covered Agency Transactions  
  3. TBA Transactions 

According to FINRA, this upcoming Rule “describes the margin requirements that determine the amount of collateral customers are expected to maintain in their margin accounts, including both strategy-based margin accounts and portfolio margin accounts.” It further explains the margin requirements for equity securities, fixed income securities, options, warrants and security futures. The objectives of FINRA Rule 4210 include:

  1. Address systematic risk concerns
  2. Establish monitoring of uncollected margin
  3. Promote a coherent margin requirements framework
  4. Reduce counter-party default risk exposure via collateralization process implementation   

FINRA Rule 4210 is postponed until March 25, 2021. But is your firm prepared to meet these requirements? Being proactive before this upcoming implementation date is essential. 

 

Matrix Applications has a solution for you. MarginCalculator is our simple, web-based platform for daily margining and solves the complex problem of margining forward-settling trades under FINRA Rule 4210, particularly TBAs, specified pools, ARMs and CMOs. This utility calculates exposure reflecting market fluctuations versus margin collateral and cash posted to mitigate such exposures. Moreover, it aggregates counterparty exposure, trade totals, margin balances and other metrics to help financial institutions comply with FINRA Rule 4210. MarginCalculator makes it very easy to handle the 3 big C’s: 

  1. Compute
  2. Control
  3. Comply

Our dedicated team at Matrix Applications, along with MarginCalculator, will help your firm work smarter. The company’s effective on-site and remote training offerings, along with informative documentation, makes this compliance process simple. We know software just as well as the financial markets. And we are here to help.

 

You can find us in FINRA’s Compliance Vendor Directory (CVD), a trusted source offering firms an effective way to find vendors that provide compliance-related services. 

 

Contact us for more information about MarginCalculator and our other offerings.

Topics: FINRA

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