On July 2, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 20-22 (the Notice) announcing updates to its interpretations regarding (1) FINRA Rule 4210(e)(8), which specifies margin requirements for control and restricted securities, and (2) FINRA Rule 4210(f)(5), which specifies conditions for the consolidation of two or more accounts carried for the same customer.
With respect to FINRA Rule 4210(e)(8), the revised interpretation clarifies the exemption for securities that are “then saleable” pursuant to the terms and conditions of Securities Act Rule 144(b)(1) or Rule 145(d)(2) from the margin requirements generally applicable to control and restricted securities subject to Securities Act Rule 144 or 145(c).
FINRA Rule 4210(f)(5) allows member firms to consolidate two or more accounts carried for a customer if the customer has consented that the money and securities in each account may be used to carry or pay any deficit in all such accounts. The revised interpretation clarifies that though Regulation T only permits firms to maintain multiple margin accounts for a single customer under three specific circumstances, firms may maintain multiple sub-accounts of a customer’s margin account as provided in the interpretations.
The Notice and revised interpretations are available here.