An institutional client has provided a guarantee for another client's account, allowing the Dealer Member to reduce the margin requirement for the guaranteed account. During the Dealer Member's annual audit, the guarantor fails to respond to the audit confirmation request regarding the guarantee agreement. What is the immediate regulatory consequence under Rule 5824?

Question

Accepted Answer

Rule 5824(3) states that margin relief is not permitted where a guarantee agreement is not confirmed by the guarantor in response to an annual audit confirmation request.

Discussion