
[Federal Register Volume 77, Number 172 (Wednesday, September 5, 2012)]
[Notices]
[Pages 54636-54640]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21761]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67751; File No. SR-FINRA-2012-024]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Granting 
Accelerated Approval of Proposed Rule Change, as Modified by Amendment 
No. 1, Relating to FINRA Rule 4210 (Margin Requirements)

August 29, 2012.

I. Introduction

    On May 23, 2012, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend FINRA Rule 4210 (Margin Requirements). 
The proposed rule was published for comment in the Federal Register on 
June 6, 2012.\3\ The Commission received one comment on the proposed 
rule change.\4\ On July 13, 2012, FINRA extended the time period for 
Commission action until September 4, 2012.\5\ FINRA filed Amendment No. 
1 to the proposed rule change and responded to the comment letter on 
August 13, 2012.\6\ The Commission is publishing this notice and order 
to solicit comment on Amendment No. 1 and to approve the proposed rule 
change, as modified by Amendment No. 1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 67088 (May 31, 2012), 77 
FR 33527 (``Notice'').
    \4\ Letter to Elizabeth M. Murphy, Secretary, Commission from 
David Aman, Esq., Cleary Gottlieb Steen & Hamilton LLP, dated June 
27, 2012 (``Aman Letter'').
    \5\ See http://www.finra.org/web/groups/industry/@ip/@reg/@rulfil/documents/rulefilings/p135885.pdf.
    \6\ Amendment No. 1 and response to Aman Letter, dated Aug. 13, 
2012 (``Amendment No. 1''). The text of Amendment No. 1 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. See section 
III. below (describing Amendment No. 1).
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II. Description of the Proposal

    FINRA has proposed to amend FINRA Rule 4210 (Margin Requirements) 
to: (1) Revise the definitions and margin treatment of option spread 
strategies; (2) clarify the maintenance margin requirement for non-
margin eligible equity securities; (3) clarify the maintenance margin 
requirements for non-equity securities; (4) eliminate the current 
exemption from the free-riding prohibition for designated accounts; (5) 
conform the definition of ``exempt account''; and (6) eliminate the 
requirement to stress test portfolio margin accounts in the aggregate. 
In addition, the proposed rule change would amend FINRA Rule 4210 to 
make non-substantive technical and stylistic changes.

Option Spread Strategies

    Basic option spreads can be paired in such ways that they offset 
each other in terms of risk. The total risk of the combined spreads is 
less than the sum of the risk of both spread positions if viewed as 
stand-alone strategies. FINRA Rule 4210(f)(2) currently recognizes 
several specific option spread strategies.\7\ These strategies consist 
of either a ``long'' and a ``short'' option contract or two ``long'' 
and two ``short'' option contracts. The ``long'' and ``short'' option 
contracts have the same underlying security or instrument and the 
``long'' option contracts must expire on or after the expiration of the 
``short'' option contracts.
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    \7\ See FINRA Rule 4210(f)(2)(A) that currently recognizes the 
following spread strategies: box spread, butterfly spread, calendar 
(or time) spread, ``long'' calendar butterfly spread, ``long'' 
calendar condor spread, ``long'' condor spread, ``short'' calendar 
iron butterfly spread, ``short'' calendar iron condor spread, 
``short'' iron butterfly spread and ``short'' iron condor spread.
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    While the strategies recognized under FINRA Rule 4210 are the most 
common types of option spread strategies used by investors, there are 
other combinations of calls and/or puts that are similar in terms of 
their risk profile. Accordingly, FINRA proposed a broader definition of 
a spread in FINRA Rule 4210(f)(2)(A)(xxxii) to mean a ``long'' and 
``short'' position in different call option series, different put 
option series, or a combination of call and put option series, that 
collectively have a limited risk/reward profile, and meet the following 
conditions: (1) All options must have the same underlying security or 
instrument; (2) all ``long'' and ``short'' option contracts must be 
either all American-style or all European-style; \8\ (3) all ``long'' 
and ``short'' option contracts must be either all listed or all over-
the-counter (``OTC''); \9\ (4) the aggregate underlying contract value 
of ``long'' versus ``short'' contracts within option type(s) must be 
equal; and (5) the ``short'' option(s) must expire on or before the 
expiration date of the ``long'' option(s).
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    \8\ American-style options can be exercised or assigned at any 
time during the life of the contract. European-style options can 
only be exercised or assigned at the time of expiration.
    \9\ See FINRA Rule 4210(f)(2)(A)(xxvi) (renumbered as 
4210(f)(2)(A)(xxiv)) that defines a listed option as an option 
contract that is traded on a national securities exchange and is 
issued and guaranteed by a registered clearing agency. See also 
FINRA Rule 4210(f)(2)(A)(xxxii) (renumbered as 4210(f)(2)(A)(xxvii)) 
that defines an OTC option as an over-the-counter option contract 
that is not traded on a national securities exchange and is issued 
and guaranteed by the carrying broker-dealer.
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    The proposed revised margin requirements set forth in FINRA Rule 
4210(f)(2)(H) would require that the ``long'' option contracts within 
such spreads must be paid for in full. The margin required for the 
``short'' option contracts within such spreads would be the lesser of: 
(1) The margin required pursuant to FINRA Rule 4210(f)(2)(E); or (2) 
the maximum potential loss. The maximum potential loss would be 
determined by computing the intrinsic value of the options at price 
points for the underlying security or instrument that are set to 
correspond to every exercise price present in the spread. The intrinsic 
values are netted at each price point, and the maximum potential loss 
is the greatest loss, if any. The proceeds of the ``short'' options may 
be applied towards the cost of the ``long'' options and/or any margin 
requirement. FINRA Rule 4210(f)(2)(H)(iv) would also make clear that 
OTC option contracts that comprise a spread must be issued and

[[Page 54637]]

guaranteed by the same carrying broker-dealer and the carrying broker-
dealer must also be a FINRA member. If the OTC option contracts are not 
issued and guaranteed by the same carrying broker-dealer, or if the 
carrying broker-dealer is not a FINRA member, then the ``short'' option 
contracts must be margined separately pursuant to FINRA Rule 
4210(f)(2)(E)(iii) or (E)(iv). In addition, FINRA proposes to amend 
FINRA Rule 4210(f)(2)(N) to similarly conform the margin requirements 
for spreads that are permitted in a cash account.
    FINRA proposed to eliminate the definitions for the option spread 
strategies currently recognized within the rule, along with the 
specific margin requirements associated with each spread, with the 
exception of a ``long'' box spread consisting of European-style 
options.\10\ FINRA Rule 4210(f)(2)(H)(v)g.\11\ currently allows a 
margin requirement equal to 50% of the aggregate difference in the 
exercise prices. This is the only spread strategy that allows loan 
value, and FINRA believes that retaining this provision is appropriate.
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    \10\ See FINRA Rule 4210(f)(2)(A)(vi). A box spread means an 
aggregation of positions in a ``long'' call and ``short'' put with 
the same exercise price (``buy side'') coupled with a ``long'' put 
and ``short'' call with the same exercise price (``sell side'') 
structured as: (1) A ``long'' box spread in which the sell side 
exercise price exceeds the buy side exercise price; or (2) a 
``short'' box spread in which the buy side exercise price exceeds 
the sell side exercise price, all of which have the same contract 
size, underlying component or index and time of expiration, and are 
based on the same aggregate current underlying value.
    \11\ FINRA Rule 4210(f)(2)(H)(v)g. would be renumbered as FINRA 
Rule 4210(f)(2)(H)(v)e.
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Non-Margin Eligible Equity Securities

    FINRA proposed to clarify the maintenance margin requirement for 
non-margin eligible equity securities. FINRA Rule 4210(c)(1) prescribes 
a maintenance margin requirement of 25% of the current market value of 
all securities (except for security futures contracts) held ``long'' in 
an account. FINRA believes that non-margin eligible equity securities 
should be subject to more stringent margin requirements in light of the 
nature of such securities. Accordingly, FINRA proposed to amend FINRA 
Rule 4210(c)(1) regarding securities held ``long'' to clarify that the 
maintenance margin requirement of 25% of the current market value would 
apply only to margin securities as defined in Regulation T.\12\ 
Consequently, non-margin eligible equity securities would be excluded 
from such margin treatment and the maintenance margin requirement for 
non-margin eligible equity securities would be 100% of the current 
market value.\13\ This maintenance margin requirement of 100% for non-
margin eligible equity securities is consistent with the requirement 
outlined in Regulatory Notice 11-16. However, FINRA noted that two 
provisions of Regulatory Notice 11-16 would be superseded. Firms may no 
longer extend maintenance loan value on non-margin eligible equity 
securities either to satisfy maintenance margin deficiencies or when 
used to collateralize non-purpose loans, except as otherwise provided 
by FINRA in writing. To this end, FINRA would allow a firm to extend 
credit on a non-margin eligible security \14\ only to the extent: (1) 
The security is collateralizing a non-purpose loan debit; and (2) such 
security can be liquidated in a period not exceeding 20 business days, 
based on a rolling 20 business day median trading volume. The 
maintenance loan value for the non-margin eligible security would be 
calculated based on the applicable maintenance margin requirements for 
a margin eligible security. If the security fails to meet the trading 
volume requirement, then the security would no longer be entitled to 
maintenance loan value, and a 100% maintenance margin requirement would 
be applied together with a deduction to net capital pursuant to Rule 
15c3-1 and, if applicable, FINRA Rule 4110(a). Notwithstanding the 
foregoing, FINRA would allow that in the case of offshore mutual funds, 
a firm may extend maintenance loan value, based on a 25% maintenance 
margin requirement, to collateralize a non-purpose loan, provided that 
the fund has an affiliation with a U.S.-based fund registered with the 
SEC under the Investment Company Act of 1940, and the fund shares can 
be liquidated or redeemed daily.
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    \12\ See Federal Reserve Regulation T (``Regulation T'') section 
200.2 for the definition of margin security.
    \13\ See Regulatory Notice 11-16 (April 2011) and Regulatory 
Notice 11-30 (June 2011) (Regulatory Notice 11-30 delayed the 
effective date of Regulatory Notice 11-16 until October 3, 2011).
    \14\ The exception to permit firms to extend maintenance loan 
value would apply to both equity and non-equity non-margin eligible 
securities.
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    Similar to the treatment above, FINRA also proposed to amend Rule 
4210(f)(8)(B)(iii) to clarify that the special maintenance margin 
requirement for day traders, based on the cost of all day trades made 
during the day, would be 25% for margin eligible equity securities, and 
100% for non-margin eligible equity securities.\15\
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    \15\ The special maintenance margin requirement for non-margin 
eligible equity securities for day traders is consistent with the 
margin requirements outlined in Regulatory Notice 11-16.
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    In addition, FINRA proposed to adopt new paragraph (g)(7)(E) of 
FINRA Rule 4210 regarding the margin requirements for non-margin 
eligible equity securities held in a portfolio margin account. 
Consistent with the margin treatment above, the provision would clarify 
that non-margin eligible equity securities held ``long'' in a portfolio 
margin account would have a maintenance margin requirement equal to 
100% of the current market value at all times.\16\ Paragraph (g)(7)(E) 
would also provide that non-margin eligible equity securities held 
``short'' in a portfolio margin account would have a maintenance margin 
requirement equal to 50% of the current market value at all times.\17\ 
FINRA believes that setting this specific requirement is necessary to 
help ensure that customers do not attempt to circumvent the initial 
margin requirements of Regulation T and place all short sales in a 
portfolio margin account to obtain lower margin requirements.\18\
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    \16\ The maintenance margin requirement for non-margin eligible 
equity securities held ``long'' in a portfolio margin account is 
consistent with the margin requirements outlined in Regulatory 
Notice 11-16.
    \17\ The maintenance margin requirement for ``short'' non-margin 
eligible equity securities held in a portfolio margin account would 
supersede the maintenance margin requirement for such securities 
specified in Regulatory Notice 11-16.
    \18\ See Rule 4210(g)(7).
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    FINRA also proposed to amend paragraph (g)(7)(D) of FINRA Rule 4210 
to clarify that although non-margin eligible equity securities are not 
eligible for portfolio margin treatment, they may be carried in a 
portfolio margin account, provided that the member uses strategy-based 
margin requirements unless such securities are subject to other 
provisions of paragraph (g). For example, non-margin eligible equity 
securities may be carried in a portfolio margin account, but the 
amendment would clarify that they would be subject to the margin 
treatment set forth in FINRA Rule 4210(g)(7)(E), rather than FINRA Rule 
4210(c).

Non-Equity Securities \19\
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    \19\ See section III. below (describing Amendment No. 1).
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    In the Notice, FINRA proposed to further amend FINRA Rule 4210 to 
clarify the appropriate maintenance margin requirement for non-equity 
securities in a margin account. Paragraph (c)(4) stipulates a 
maintenance margin requirement for each bond held ``short'' in a margin 
account. Paragraph (e)(2)(C) stipulates the maintenance margin 
requirements on any positions in specified non-equity

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securities \20\ that are inconsistent with the requirements in 
paragraph (c)(4). FINRA received several inquiries as to the 
appropriate maintenance margin requirement for any ``short'' non-equity 
security. Accordingly, in the Notice, FINRA proposed to amend FINRA 
Rule 4210 to clarify that the margin requirements in paragraph (c)(4) 
would apply to non-margin eligible, non-equity securities held 
``short'' \21\ while the margin requirements in paragraph (e)(2)(C) 
would apply to the specified margin-eligible non-equity securities held 
``short'' or ``long.'' \22\ FINRA also proposed to add a reference to 
``short'' or ``long'' to each of paragraphs (e)(2)(B), (F) and (G) to 
further clarify that such provisions apply to securities held short or 
long.
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    \20\ Paragraph (e)(2)(C) provides the maintenance margin 
requirements for (1) investment grade debt securities and (2) all 
other listed non-equity securities and all other margin eligible 
non-equity securities as defined in FINRA Rule 4210(a)(16).
    \21\ Non-margin eligible non-equity securities held ``long'' 
would be excluded from such margin treatment, and the maintenance 
margin requirement for such securities would be 100% of the current 
market value.
    \22\ See also FINRA Rule 4210(e)(2)(A), which establishes the 
maintenance margin requirements for long or short positions on 
obligations issued or guaranteed by the United States or obligations 
that are highly rated foreign sovereign debt securities.
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``Free-Riding''

    ``Free-riding'' is the purchase of a security and the selling of 
the same security in the cash account, using the proceeds of the sale 
to satisfy the purchase. Such activity is prohibited under section 
220.8(a)(1)(ii) of Regulation T. FINRA Rule 4210(f)(9) addresses free-
riding in the cash account and currently exempts broker-dealers and 
``designated accounts.'' \23\ While the term ``designated account'' 
generally includes banks, savings associations, insurance companies, 
investment companies, states or political subdivisions, and ERISA 
pension or profit sharing plans, FINRA believes that it is appropriate 
to treat such accounts as any other customer regarding this activity. 
Accordingly, FINRA proposed to eliminate this exemption for designated 
accounts consistent with Regulation T.
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    \23\ See FINRA Rule 4210(a)(4) for the definition of 
``designated account.''
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``Exempt Account''

    Certain non-equity securities such as exempted securities, mortgage 
related securities, highly rated foreign sovereign debt securities, and 
investment grade debt securities may be subject to reduced maintenance 
margin requirements (or require no margin be deposited) for an ``exempt 
account,'' as defined in FINRA Rule 4210(a)(13).\24\ FINRA Rule 
4210(f)(2)(E)(iv) regarding reduced maintenance margin requirements for 
OTC put and call options on certain U.S. Government and U.S. Government 
Agency debt securities retained an earlier definition of ``exempt 
account'' that was not updated in 2003 when the New York Stock Exchange 
and National Association of Securities Dealers amended the definition 
of ``exempt account'' by raising the dollar threshold in paragraph 
(a)(13) for all other purposes in their respective margin rules.\25\ 
The definition of ``exempt account'' currently referenced in paragraph 
(f)(2)(E)(iv) was retained as a result of comment letters received by 
the SEC in 2003, expressing concern that customers who no longer 
qualified as ``exempt accounts'' in the amended paragraph (a)(13) 
definition would be subject to higher maintenance margin requirements 
for the securities addressed in paragraph (f)(2)(E)(iv). Therefore, 
such definition was maintained only for the provision in paragraph 
(f)(2)(E)(iv) to allow existing customers to continue to avail 
themselves of the reduced margin requirements. However, the SEC noted 
that exempt accounts that met the requirements for exempt account 
status would be ``grandfathered'' on the existing credit transactions 
but that the new requirements (the current paragraph (a)(13) ``exempt 
account'' requirements) would apply to any new credit transactions or 
roll-overs of existing transactions.\26\ In light of the application of 
the 2003 exempt account definition to new and roll-over transactions 
and the significant passage of time, FINRA believes that maintaining 
these separate definitions is no longer necessary and proposes to 
delete the definition of ``exempt account'' contained in paragraph 
(f)(2)(E)(iv) and require an exempt account to satisfy the definition 
of ``exempt account'' in paragraph (a)(13) to qualify for the reduced 
margin on such options.
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    \24\ See FINRA Rule 4210(e)(2)(F), (G) and (H).
    \25\ See Securities Exchange Act Release No. 48407 (August 25, 
2003), 68 FR 52259 (September 2, 2003) (Order Approving File No. SR-
NASD-00-08) (``NASD Order''); Securities Exchange Act Release No. 
48365 (August 19, 2003), 68 FR 51314 (August 26, 2003) (Order 
Approving File No. SR-NYSE-98-14); and Securities Exchange Act 
Release No. 48133 (July 7, 2003), 68 FR 41672 (July 14, 2003) 
(Notice of Filing of File No. SR-NYSE-98-14) (``NYSE Notice of 
Filing'').
    \26\ See note 20, page 52261 of the NASD Order and page 41676 of 
NYSE Notice of Filing.
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Portfolio Margin

    FINRA proposed to eliminate the monitoring requirement contained in 
FINRA Rule 4210(g)(1)(D) that stress testing of accounts must be done 
in the aggregate for portfolio margin accounts. The rule would continue 
to require firms to stress test portfolio margin accounts on an 
individual account basis. FINRA has been reviewing the portfolio margin 
program and believes that the stress testing on an individual account 
basis is sufficient from a risk perspective.

Technical Changes

    Finally, the proposed rule change would amend FINRA Rule 4210 to 
make non-substantive technical and stylistic changes to encourage 
consistency throughout the rule and enhance readability.
    FINRA stated that it would announce the effective date of the 
proposed rule change in a Regulatory Notice to be published no later 
than 60 days following Commission approval. The effective date would be 
no later than 90 days following publication of the Regulatory Notice 
announcing Commission approval.

III. Summary of Comment Received, FINRA's Response and Description of 
Amendment No. 1

    As stated above, the Commission received one comment letter in 
response to the proposed rule change generally supporting the proposal, 
particularly the modernization of the treatment of option spread 
strategies.\27\ The commenter stated, however, that the consequences of 
the proposed changes to the margin requirements for ``non-margin 
eligible, non-equity securities'' have not been fully considered and 
recommended that FINRA investigate the extent to which FINRA members 
presently extend credit against these securities and withdraw or modify 
this element of the proposed amendments. The commenter stated that the 
securities that would become unmarginable would include any non-
investment grade debt securities that are not registered under Section 
5 of the Securities Act of 1933. The commenter explained that since the 
high-yield debt market is to a great extent an institutional market, 
where it is usual for debt to trade under Rule 144A, the proposal would 
cut off credit to a substantial part of the high yield debt market, and 
could have significant adverse effects on FINRA members, investors and 
issuers.
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    \27\ Aman Letter, supra note 4.
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    The commenter also recommended technical changes to the proposal, 
including: (1) That the 100% maintenance margin requirement on non-
margin eligible equity securities be

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set forth in a new subsection to FINRA Rule 4210; (2) that the margin 
requirements for certain non-equity securities be moved from FINRA Rule 
4210(e) to FINRA Rule 4210(c); and (3) that FINRA define ``non-margin 
eligible, non-equity security.''
    In response to the comment regarding the 100% maintenance margin 
requirement for non-margin eligible, non-equity securities, FINRA 
proposes to further analyze the impact of this proposed change on 
member firms and the market. Accordingly, Amendment No. 1 would 
eliminate the requirements applicable to non-margin eligible, non-
equity securities from the proposed rule. To effectuate this change, 
FINRA proposes to delete the exclusion of non-equity securities from 
FINRA Rule 4210(c)(1) as originally proposed in the Notice. In 
addition, FINRA proposes to delete in FINRA Rule 4210(c)(4) the 
reference to non-margin eligible, non-equity securities as originally 
proposed in the Notice. The margin requirement for non-equities held 
``long'' in an account would be margined as provided in FINRA Rule 
4210(c)(1) unless they otherwise meet an exception for the type of non-
equity security provided in FINRA Rule 4210(e).
    In response to the technical comments in the Aman Letter, FINRA 
agrees that amending the proposed rule further to clarify the 100% 
maintenance margin requirement for non-margin eligible equity 
securities held ``long'' would be beneficial. In Amendment No. 1, FINRA 
proposes to add a new subparagraph (6) to FINRA Rule 4210(c) to 
effectuate this clarification. Also in response to technical comments, 
with regard to the margin requirements for non-equity securities and 
the exceptions provided in FINRA Rule 4210(e), FINRA proposes in 
Amendment No. 1 to modify Rule 4210(c) by prefacing that the margin 
provisions are as stated except as set forth in Rule 4210(e) as well as 
Rule 4210(f) (the margin requirements for options and warrants) and 
Rule 4210(g) (portfolio margin requirements).
    In response to the comment that FINRA define ``non-margin eligible, 
non-equity securities,'' Amendment No. 1 would delete that term in 
FINRA Rule 4210(c)(4) in light of the elimination of the proposal to 
amend the margin requirements for such securities. Finally, and 
unrelated to any specific comment, Amendment No. 1 would make certain 
clarifying changes to Rule 4210(c) to eliminate the reference to 
``plus'' as the maintenance margin provisions are not additive.

IV. Discussion and Commission's Findings

    After careful review of the proposed rule change, the comment 
received, and Amendment No. 1, the Commission finds that the proposed 
rule change, as modified by Amendment No. 1, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities association.\28\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 15A(b)(6) of the Act, which requires, among other things, that 
FINRA rules 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.\29\ More 
specifically, the Commission believes that the proposed rule change 
modernizes the treatment of option spread strategies while maintaining 
margin requirements that are commensurate with the risk of those 
strategies. Further, because it is consistent with changes being 
approved to Chicago Board Options Exchange, Incorporated, Rule 
12.3,\30\ the proposed rule change will provide for a more uniform 
application of margin requirements for similar products. The Commission 
believes that FINRA has adequately responded to the concerns raised in 
the Aman Letter by deleting the 100% maintenance margin requirement for 
non-margin eligible, non-equity securities until such time as FINRA has 
had additional opportunity to more fully evaluate the effects of such a 
change. In addition, the Commission believes that FINRA has adequately 
responded to the technical comments by making the changes described in 
Amendment No. 1.
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    \28\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \29\ 15 U.S.C. 78o-3(b)(6).
    \30\ See Securities Exchange Act Release No. 67752 (Aug. 29, 
2012) (SR-CBOE-2012-043) (order approving changes to CBOE Rule 12.3 
relating to spread margin rules).
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V. Accelerated Approval

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\31\ for approving the proposed rule change, as modified by 
Amendment No. 1, prior to the 30th day after publication of Amendment 
No. 1 in the Federal Register. In response to certain concerns raised 
in the Aman Letter, FINRA proposed in Amendment No. 1 to eliminate the 
increase in the margin requirement applicable to long positions in non-
margin eligible, non-equity securities to 100%. In Amendment No. 1, 
FINRA also proposed other technical changes responsive to the comments 
made in the Aman Letter. Accordingly, the Commission finds that good 
cause exists to approve the proposal, as modified by Amendment No. 1, 
on an accelerated basis.
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    \31\ 15 U.S.C. 78s(b)(2).
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VI. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether Amendment No. 1 
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-2012-024 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2012-024. This 
file number should be included on the 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

[[Page 54640]]

submissions should refer to File Number SR-FINRA-2012-024 and should be 
submitted on or before September 26, 2012.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\32\ that the proposed rule change (SR-FINRA-2012-024), as modified 
by Amendment No. 1, be and hereby is, approved on an accelerated basis.
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    \32\ 15 U.S.C. 78s(b)(2).


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21761 Filed 9-4-12; 8:45 am]
BILLING CODE 8011-01-P


