BDA Submits Letter to SEC on FINRA Rule 4210 TBA Amendments

BDA has submitted its comment letter to SEC on FINRA Rule 4210, to establish margin requirements for the TBA Market.

The BDA’s letter can be read here.

BDA’s comment letter highlights that the burden of this rule will fall on small-to-medium sized dealers transacting with medium-to-large sized counterparties and focuses on the following areas of the proposed rule:

  • Raising the minimum transfer amount from $250,000 to $1,000,000
  • Raising the $2.5 million ‘gross open position’ limit to $10 million
  • Harmonizing the timing of margin and capital and liquidation with current FINRA rules
  • Amending the mortgage bankers exception language
  • Clarifying that dealers would not have to collect maintenance margin with non-exempt accounts that do not have a mark-to-market deficiency
  • Requesting a two-year period prior to the effective date
  • Requests an exemption for Fannie Mae DUS securities

The notice of proposed rule change can be found here.