Broker-dealers: new FAQs on TBAs

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On September 15, the Financial Industry Regulatory Authority (FINRA) published a set of Frequently Asked Questions (FAQs) on FINRA rule 4210. The Rule requires broker-dealers to collect margin on the majority of To-Be-Announced (TBA) transactions due to the counterparty credit risk exposure broker-dealers face as a result of transactions’ long settlement durations; this applies unless the transaction is centrally cleared through a registered agency.

In the FAQs, FINRA provided clarity around several areas of the Rule, including its treatment of net capital deductions, customer protection, and margin. Most notably, the FAQs extended the Rule’s compliance date for these requirements, the second of two compliance phases, from December 15, 2017 to June 25, 2018. This is welcome news to the industry as these requirements will require large system updates and new customer documentation. 

This Regulatory Brief provides an analysis of key concepts included in the FAQs and what we view as the primary implementation challenges.

Regulatory brief

A publication of PwC's financial services regulatory practice


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Julien Courbe
Financial Services Advisory Leader, PwC US
Tel: +1 (646) 471 4771

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