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Up to Jul 31 2011Aug 1 2011 onwards

Rule 382. Carrying Agreements

Past version: effective up to Jul 31 2011.
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SR-FINRA-2010-061 has been approved by the SEC. Effective August 1, 2011, this rule will no longer be applicable. Please consult the appropriate FINRA rule.

(a) All agreements between a member or member organization and another NYSE member or member organization or any foreign or domestic non-member organization, relating to the carrying of customer accounts on an omnibus or fully disclosed basis, or any change in any such agreements, shall be submitted to and approved by the Exchange prior to becoming effective. The carrying member organization shall be responsible for submission of the agreement to the Exchange; except, that where a member or member organization introduces accounts to a non-member organization, the member or member organization shall be responsible for the submission of the agreement.
(b) Each agreement in which accounts are to be carried on a fully disclosed basis shall specifically identify and allocate the respective functions and responsibilities of the introducing and carrying organizations, which agreement shall, at a minimum, address each of the following functions:
(1) opening, approving and monitoring of accounts
(2) extension of credit
(3) maintenance of books and records
(4) receipt and delivery of funds and securities
(5) safeguarding of funds and securities
(6) confirmations and statements
(7) acceptance of orders and execution of transactions.
(c) Each customer whose account is introduced on a fully disclosed basis shall be notified in writing upon the opening of his account of the existence of the agreement and of the relationship between the introducing and carrying organization.
(d) In order for the introducing organization to carry out its functions and responsibilities pursuant to the agreement, each carrying organization must furnish promptly any written customer complaint received by the carrying organization regarding the introducing organization or its associated persons relating to functions and responsibilities allocated to the introducing organization pursuant to the agreement, directly to: (1) the introducing organization; and (2) the introducing organization's Designated Examining Authority (or, if none, to its appropriate regulatory agency or authority). The carrying agreement must specifically direct and authorize the carrying organization to do so.

The carrying organization must also notify the customer, in writing, that it has received the complaint, and that the complaint has been furnished to the introducing organization and to the introducing organization's Designated Examining Authority (or, if none, to its appropriate regulatory agency or authority).
(e)
(1) The carrying organization, at the commencement of the agreement and annually thereafter, must furnish to each of its introducing organizations a list of all reports (i.e., exception and other types of reports) which it offers to the introducing organization to assist the introducing organization to supervise and monitor its customer accounts in order for the introducing organization to carry out its functions and responsibilities pursuant to the agreement. The introducing organization must notify promptly the carrying organization, in writing, of those specific reports offered by the carrying organization that it requires to supervise and monitor its customer accounts.
(2) Copies of the specific reports requested by and/or supplied to the introducing organization must be retained and preserved by the carrying organization as part of its books and records pursuant to Rule 440.
(3) Annually, within 30 days of July 1 of each year, the carrying organization must give written notice to the introducing organization's chief executive and compliance officers, indicating as of the date of such notice, the list of reports offered to the introducing organization pursuant to paragraph (e)(1) of this rule, and specify those reports that were actually requested by and/or supplied to the introducing organization as of such date. A copy of this written notice must at the same time be provided to the introducing organization's Designated Examining Authority (or if none, to its appropriate regulatory agency or authority).
(f) The agreement may permit the introducing organization to issue negotiable instruments directly to its customers, using instruments for which the carrying organization is the maker or drawer, provided that the introducing organization represents to the carrying organization in writing that it maintains, and shall enforce, supervisory procedures with respect to the issuance of such instruments that are satisfactory to the carrying organization.

(See also Rules 342, 401, and 416)

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

.10 Carrying organizations may satisfy the requirements of paragraph (e)(2) above by furnishing, upon request, of the introducing organization's Designated Examining Authority (or if none, to its appropriated regulatory agency or authority), (1) a recreated copy of the report originally produced; or (2) the format of the report and the applicable data elements contained in the original report.
.20 The Exchange, at its discretion and upon a showing of good cause, may exclude certain carrying organizations from the requirements of paragraphs (d) and (e) above, in instances where the introducing organization is affiliated entity of the carrying organization.
Adopted.
December 19, 1968.

Amendments.
April 3, 1975; effective May 1, 1975.
February 19, 1982.
June 2, 1999.
March 30, 2001.

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