SEC Approves FINRA Proposal to Expand Application of FOCUS Report's "Off-Balance Sheet" Schedule (Fed. Reg.)

The SEC approved FINRA's proposed rule change to expand the instructions to the Derivatives and Other Off-Balance Sheet Items Schedule ("OBS") pursuant to FINRA Rule 4524 ("Supplemental FOCUS Information"). The approved instructions also expand the application of the OBS to include certain non-carrying/non-clearing firms that have significant amounts of off-balance sheet obligations. The SEC's order of approval was published in the Federal Register.

FINRA noted the "considerable principal trading activities" of certain non-clearing firms in its examination of margining practices in "extended settlement" transactions (including to-be-announced transactions). FINRA stated its concern that firms must monitor their financial exposure appropriately and apply capital charges for those transactions.