Document ID: SEC-2017-1619-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2017-10-02T04:00Z

[Federal Register Volume 82, Number 189 (Monday, October 2, 2017)]
[Notices]
[Pages 45915-45917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21001]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81722; File No. SR-FINRA-2017-029]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Delay the Implementation Date of Certain 
Amendments to FINRA Rule 4210 Approved Pursuant to SR-FINRA-2015-036

September 26, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 19, 2017, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to delay, until June 25, 2018, the 
implementation date of the amendments to FINRA Rule 4210 (Margin 
Requirements) pursuant to SR-FINRA-2015-036, other than the amendments 
pursuant to SR-FINRA-2015-036 that were implemented on December 15, 
2016. The proposed rule change would not make any changes to FINRA 
rules.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On October 6, 2015, FINRA filed with the Commission proposed rule 
change SR-FINRA-2015-036, which proposed to amend FINRA Rule 4210 to 
establish margin requirements for (1) To Be Announced (``TBA'') 
transactions, inclusive of adjustable rate mortgage (``ARM'') 
transactions; (2) Specified Pool Transactions; and (3) transactions in 
Collateralized Mortgage Obligations (``CMOs''), issued in conformity 
with a program of an agency or Government-Sponsored Enterprise 
(``GSE''), with forward settlement dates, as defined more fully in the 
filing (collectively, ``Covered Agency Transactions''). The Commission 
approved SR-FINRA-2015-036 on June 15, 2016 (the ``Approval Date'').\4\
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    \4\ See Securities Exchange Act Release No. 78081 (June 15, 
2016), 81 FR 40364 (June 21, 2016) (Notice of Filing of Amendment 
No. 3 and Order Granting Accelerated Approval to a Proposed Rule 
Change to Amend FINRA Rule 4210 (Margin Requirements) to Establish 
Margin Requirements for the TBA Market, as Modified by Amendment 
Nos. 1, 2, and 3; File No. SR-FINRA-2015-036).
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    FINRA proposed in Amendment No. 3 to SR-FINRA-2015-036 to implement 
the rule change 18 months from the Approval Date, except that the risk 
limit determination requirements as set forth in paragraphs (e)(2)(F), 
(e)(2)(G) and (e)(2)(H) of Rule 4210 and in new Supplementary Material 
.05, each as respectively amended or established by SR-FINRA-2015-036 
(collectively, the ``risk limit determination requirements''), would be 
implemented six months from the Approval Date.\5\ As FINRA announced in 
Regulatory Notice 16-31 (the ``Notice''), the amendments relating to 
the risk limit determination requirements became effective on December 
15, 2016.\6\ FINRA announced in the Notice that December 15, 2017 would 
be the effective date for all other amendments pursuant to SR-FINRA-

[[Page 45916]]

2015-036 (the ``December 15, 2017 implementation date'').
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    \5\ See Partial Amendment No. 3 to SR-FINRA-2015-036, available 
at: www.finra.org; see also Regulatory Notice 16-31 (August 2016) 
(announcing December 15, 2016 as the effective date for the 
amendments relating to the risk limit determination requirements 
pursuant to SR-FINRA-2015-036 and announcing December 15, 2017 as 
the effective date for all other amendments pursuant to the rule 
change).
    \6\ See Regulatory Notice 16-31.
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    FINRA has received questions regarding implementation of the 
requirements of SR-FINRA-2015-036. In response, FINRA has engaged in 
extensive discussions with industry participants and other regulators, 
including staff of the SEC, and has made available a set of Frequently 
Asked Questions & Guidance to facilitate members' efforts to comply 
with the rule change.\7\ In addition, industry participants have 
requested additional time to make systems changes necessary to comply 
with the requirements of SR-FINRA-2015-036, including time to test the 
systems changes, and have requested time to update or amend margining 
agreements and related documentation. Given the systems changes 
necessary, and industry participants' request for additional time to 
update or amend margining agreements and related documentation, FINRA 
believes it is appropriate to extend the December 15, 2017 
implementation date to June 25, 2018. FINRA notes that the risk limit 
determination requirements pursuant to SR-FINRA-2015-036 became 
effective on December 15, 2016 and, as such, the implementation of such 
requirements is not affected by the proposed rule change.
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    \7\ Available at: www.finra.org/industry/guidance. Further, 
staff of the SEC's Division of Trading and Markets have made 
available a set of Frequently Asked Questions regarding Exchange Act 
Rule 15c3-1 and Rule 15c3-3 in connection with Covered Agency 
Transactions under FINRA Rule 4210, also available at: 
www.finra.org/industry/guidance.
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    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the Commission waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing. The operative date will be the date 
of filing of the proposed rule change.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change provides 
industry participants additional time to complete the systems changes 
necessary to comply with SR-FINRA-2015-036, and provides them 
additional time to update or amend margining agreements and related 
documentation. FINRA believes that providing such additional time is 
consistent with the Act in that it thereby facilitates implementation 
of SR-FINRA-2015-036, which, by establishing margin requirements for 
Covered Agency Transactions, will help among other things to reduce the 
risk of loss due to counterparty failure in one of the largest fixed 
income markets and thereby help protect investors and the public 
interest by ensuring orderly and stable markets.
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    \8\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. FINRA believes that providing 
additional time for industry participants to make and test the systems 
changes necessary to comply with SR-FINRA-2015-036, and providing 
additional time to update or amend margining agreements and related 
documentation, will benefit all interested parties.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires FINRA to give the Commission written notice of FINRA's 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. FINRA 
has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. FINRA has asked the 
Commission to waive the 30-day operative delay so that the proposal may 
become operative upon filing. FINRA has stated that the purpose of the 
proposed rule change is to provide industry participants additional 
time to make systems changes necessary to comply with the requirements 
of SR-FINRA-2015-036, including time to test the systems changes, and 
time to update or amend margining agreements and related documentation. 
The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest and 
will help to facilitate the implementation of the margin requirements 
for Covered Agency Transactions. Therefore, the Commission hereby 
waives the 30-day operative delay requirement and designates the 
proposed rule change as operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2017-029 on the subject line.

Paper Comments

     Send paper comments in triplicate to, Secretary, 
Securities and Exchange Commission, 100 F Street NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-FINRA-2017-029. This 
file number should be included on the

[[Page 45917]]

subject line if email is used. To help the Commission process and 
review your comments more efficiently, please use only one method. The 
Commission will post all comments on the Commission's Internet Web site 
(http://www.sec.gov/rules/sro.shtml). Copies of the submission, all 
subsequent amendments, all written statements with respect to the 
proposed rule change that are filed with the Commission, and all 
written communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal office of FINRA. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
SR-FINRA-2017-029 and should be submitted on or before October 23, 
2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21001 Filed 9-29-17; 8:45 am]
BILLING CODE 8011-01-P