The Financial Industry Regulatory Authority (FINRA) has issued a Regulatory Notice advising firms as to the treatment of senior unsecured debt securities issued pursuant to the Debt Guarantee Program component of the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program under Rules 15c3-1 (Net Capital) and 15c3-3 (Reserve Formula) of the Securities Exchange Act of 1934, as amended (Exchange Act). The guidance on net capital treatment discusses the haircuts to which proprietary positions in certain kinds of commercial paper and convertible and non-convertible debt securities shall be subject. The guidance on reserve formula treatment sets forth the conditions for certain kinds of commercial paper and non-convertible debt securities to be deemed a “qualified security” under Exchange Act Rule 15c3-3. The guidance is set forth in FINRA’s July 15 letter to the Securities Exchange Commission, which is included as Attachment A to the Notice.
Click here to read the FINRA Regulatory Notice