Late last month the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“SEC”) a proposed rule change to delay until June 2018 the implementation date of certain amendments to FINRA Rule 4210 (“Rule 4210”). When the amendments to Rule 4210 are implemented, they will require the collateralization of many forward transactions involving mortgage-backed securities (“MBS”). The proposed rule change effectively pushes back the date for compliance with Rule 4210’s collateralization requirements from December 15, 2017 to June 25, 2018.

Before FINRA’s decision to delay the implementation of Rule 4210’s margining requirements, the impending effectiveness of those requirements led market participants to rush to update their documentation for their MBS forward transactions. In its proposed rule change, FINRA stated that industry participants had requested additional time to amend their contractual documentation and to make required systems changes as necessary to come into compliance with amended Rule 4210. FINRA noted that it had received questions regarding the implementation of Rule 4210’s collateralization requirements, had engaged in extensive discussions with industry participants and other regulators, and had made available a set of Frequently Asked Questions to facilitate market participants’ compliance efforts.