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Financial Services Law Insights and Observations

FINRA adopts securities-based swap amendments

Securities Agency Rule-Making & Guidance FINRA Swaps


On January 20, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 22-03, adopting amendments to certain FINRA rules and clarifying their application to security-based swaps (SBS). According to FINRA, Rule 0180 replaces expiring temporary Rule 0180 and generally applies FINRA rules to members’ activities and positions with respect to SBS, with limited exceptions. FINRA also amended its financial responsibility and operational rules to conform to the SEC’s SBS-related capital, margin, and segregation requirements. The amendments are effective February 6. In addition, FINRA adopted a SBS-specific margin rule, Rule 4240 (Security-Based Swap Margin Requirements), which replaces the expiring interim pilot program establishing margin requirements for credit default swaps. The new margin rule, along with related amendments to Rules 4210 (Margin Requirements) and 4220 (Daily Record of Required Margin), are effective April 6.