FINRA enhanced the functionality of its Regulatory Extension ("REX") system, which allows firms to electronically submit requests for extensions of time pursuant to FINRA Rule 4210. The REX system permits online submission forms via the FINRA Firm Gateway, or the submission of batch files by logging directly into the REX system.
Beginning on June 25, 2018, firms' electronic requests for extensions of time (including requests in connection with the margin requirements for Covered Agency Transactions) will have new data requirements. Regulatory Notice 18-07 contains the specific new data elements and validation identifiers required for the upcoming REX system updates, and includes a REX Customer Test Environment ("CTE") that FINRA will make available to assist firms in testing their systems to ensure their readiness for the updated system.
In order to prepare firms for the REX system update, FINRA is implementing two test phases. Phase 1 will allow firms to preview their online forms for extension requests beginning on February 20, 2018. Phase 2 will allow firms to submit extension of time requests related to Rule 4210, via both the FINRA CTE Gateway online request form and the batch process, from March 16 through June 15, 2018. Firms will also be able to query the REX test environment for information on all extension of time requests granted, denied or rejected. During both testing phases, firms will be required to use their current FINRA Gateway user ID and password to log into the CTE.
Commentary / Nihal Patel
All firms that engage in margin transactions (including Covered Agency Transactions) should have their margin department personnel closely review the notice. In particular, firms should consider (1) whether the enumerated reason codes adequately capture common reasons for which an extension is needed and (2) whether the information required to be submitted as part of an extension request can be reasonably provided. Firms should also note that certain of the extensions require FINRA approval while others do not.
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