FINRA proposed an amendment to FINRA Rule 4240 that would extend until July 18, 2017 an interim pilot program imposing margin requirements on member credit default swaps that are security-based swaps (SBS).
FINRA Rule 4240 also imposes CDS risk monitoring procedures and guidelines for its members. For purposes of the pilot program, CDS transactions include any product that is commonly known to the trade as a credit default swap and which is also a SBS.
FINRA proposes to extend the pilot program for another year to allow for the CFTC and SEC to finish developing rules that govern CDS under Title VII of the Dodd-Frank Act. The proposed rule change will be effective upon filing with the SEC, and will become operative on July 18, 2016. Public comment on the extension may be submitted for 21 days after publication in the Federal Register.