PwC explains New Margin Rule for Broker-Dealers in To-Be-Announced Transactions
On August 15, the Financial Industry Regulatory Authority (FINRA) issued a regulatory notice adopting a requirement that U.S. registered broker-dealers collect margin on To-Be-Announced (TBA) transactions (FINRA Rule 4210).[1] FINRA’s action follows the Securities and Exchange Commission’s approval of FINRA’s earlier proposal[2] which was amended several times.
TBA transactions serve as a significant funding and hedging vehicle for consumer mortgage originations and provide liquidity in the secondary market for mortgage loans. These products have over $184 billion in average daily trading volume, second only to U.S. Treasuries, and have historically not been subject to margin requirements. The Rule … Read more