View Whole SectionText only Print Print Manager Link
Previous Next
  Versions
(2 versions)
 
Up to Apr 30 2014May 1 2014 onwards

Rule 296. Liquidation of Securities Loans and Borrowings

This rule is no longer applicable. NYSE Rule 296 has been superseded by FINRA Rule 4314. Please consult the appropriate FINRA Rule.

(a) Each member or member organization that is a party to an agreement with another member or member organization providing for the loan and borrowing of securities shall have the right to liquidate such transaction whenever the other party to such transaction
(1) applies for or consents to, or is the subject of an application for, the appointment of or the taking of possession by a receiver, custodian, trustee, or liquidator of itself or of all or a substantial part of its property,
(2) admits in writing its inability, or becomes generally unable, to pay its debts as such debts become due,
(3) makes a general assignment for the benefit of its creditors, or
(4) files, or has filed against it, a petition under Title 11 of the United States Code, or has filed against it an application for a protective decree under Section 5 of the Securities Investor Protection Act of 1970,
unless that right is stayed, avoided, or otherwise limited by an order authorized under the provisions of the Securities Investor Protection Act of 1970 or any statute administered by the Securities and Exchange Commission.
(b) No member or member organization shall lend or borrow any security to or from any non-member of the Exchange except pursuant to a written agreement, which may consist of the exchange of contract confirmations, that confers upon such member or member organization the contractual right to liquidate such transaction because of a condition of the kind specified in (a) above.

• • • Supplementary Material: --------------

.10 As used herein, an agreement for the loan and borrowing of securities shall mean a securities contract or other agreement, including related terms, for the transfer of securities against the transfer of funds, securities, or other collateral, with a simultaneous agreement by the transferee to transfer to the transferor against the transfer of funds, securities, or other collateral, upon notice, at a date certain, or upon demand, the same or substituted securities.
.20 Each member or member organization subject to the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934 that borrows securities from a customer (as defined in said rule) shall comply with the provisions thereof relating to the requirements for a written agreement between the borrowing member or member organization and the lending customer.
Adopted:
March 20, 1985.

Previous Next