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  • 11100. SCOPE OF UNIFORM PRACTICE CODE

    (a) All over-the-counter secondary market transactions in securities (including restricted securities, as defined in Rule 144(a)(3) under the Securities Act) between members, including the rights and liabilities of the members participating in the transaction, and those operational procedures that affect the day-to-day business of members shall be subject to the provisions of this Code except:

    (1) transactions in securities between members which are compared, cleared or settled through the facilities of a registered clearing agency, except to the extent that the rules of the clearing agency provide that rules of other organizations shall apply.

    (2) transactions in securities exempted under Section 3(a)(12) of the Exchange Act.

    (3) transactions in municipal securities as defined in Section 3(a)(29) of the Exchange Act.

    (4) transactions in redeemable securities issued by companies registered under the Investment Company Act; provided however that the Code shall apply to secondary market transactions between members in any security issued by a registered investment company classified as a "unit investment trust" under Section 4 of the Investment Company Act. Redemption of securities directly by the trustee of the unit investment trust are not transactions between members for purposes of this subparagraph.

    (5) transactions in Direct Participation Program securities as defined in Rule 2310, except as otherwise provided in this Code.

    (b) The scope of coverage contained in paragraph (a) of this Rule may be expanded or limited in any Rule of this Code if specifically provided therein.

    (c) In trades between members, failure to deliver the securities sold, or failure to pay for securities as delivered, on or after the settlement date, does not effect a cancellation of the contract. The remedy for the buyer or seller is provided for by Rules 11810 and 11820 respectively unless the parties mutually consent to cancel the trade. In every such case of nondelivery of securities, the party in default shall be liable for any damages which may accrue thereby. All claims for such damages shall be made promptly.

    (d) The CUSIP number must be used on the Uniform Transfer Instruction Form, Uniform Delivery Ticket and the Uniform Comparison or Confirmation.

    Amended by SR-FINRA-2010-060 eff. Dec. 15, 2010.
    Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
    Amended by SR-NASD-97-06 eff. Apr. 9, 1997.
    Amended by SR-NASD-95-53 eff. Jan. 29, 1996.
    Amended eff. Jan. 1, 1973; Jan. 13, 1977; Apr. 7, 1978; Nov. 9, 1982; Mar. 18, 1983; Jan. 1, 1985.

    Selected Notices: 83-69, 84-46, 84-68, 84-73, 91-63, 96-14, 10-49.

    • 11110. Committees

      A committee designated by the Board of Governors, the Uniform Practice Code Committee (the "Committee"), shall have the power to issue interpretations or rulings with respect to the applicability of this Code to situations in which there is no substantial disagreement as to the facts involved in order to make custom, practice, usage, and trading technique in the investment banking and securities business uniform, to simplify and facilitate day-to-day business of members and to remove causes for business disputes and misunderstandings which arise from uncertainty and lack of uniformity, including rulings in connection with "when, as and if issued" trading and "when, as and if distributed" trading, whether a security tendered is a good delivery in settlement of such contracts and clearly erroneous transactions.
      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
      Amended eff. July 8, 1968; Aug. 13, 1990.

      Selected Notice: 10-49.

      • 11111. Refusal to Abide by Rulings of the Committee

        It shall be considered conduct inconsistent with just and equitable principles of trade for any member to refuse to take any action that is necessary to effectuate a final decision of a FINRA officer or the UPC Committee under the UPC Code (FINRA Rule 11000 Series) or other FINRA rules that permit review of FINRA decisions by the UPC Committee.
        Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.

        Selected Notice: 10-49.

      • 11112. Review by Panels of the UPC Committee

        For purposes of the UPC Code (FINRA Rule 11000 Series) and other FINRA rules that permit review of FINRA decisions by the UPC Committee, a decision of the UPC Committee may be rendered by a panel of that Committee. The panel shall consist of three or more members of the UPC Committee, provided that no more than 50 percent of the members of any panel are directly engaged in market making activity or employed by a member whose revenues from market making activity exceed ten percent of its total revenues.
        Adopted by SR-FINRA-2010-030 eff. Dec. 15, 2010.

        Selected Notice: 10-49.

    • 11120. Definitions

      (a) Code or UPC Code
      The term "Code" or "UPC Code" as used in the FINRA Rule 11000 Series shall mean the FINRA Rule 11000 Series.
      (b) Committee
      The term "Committee" as used in this Code, unless the context otherwise requires, shall mean the Uniform Practice Code (UPC) Committee delegated the authority to administer this Code by the Board of Governors.
      (c) Delivery Date
      The term "delivery date" as used in this Code shall be used interchangeably with "settlement date" and shall mean the date designated for the delivery of securities.
      (d) Ex-Date
      The term "ex-date" as used in this Code shall mean the date on and after which the security is traded without a specific dividend or distribution.
      (e) Immediate Return Receipt
      The term "immediate return receipt" as used in this Code, shall mean the acknowledgement by the receiving member of a written notice and which shall be issued, upon receipt, via the media in which such notice is received.
      (f) Record Date
      The term "record date" as used in this Code means the date fixed by the trustee, registrar, paying agent or issuer for the purpose of determining the holders of equity securities, bonds, similar evidences of indebtedness or unit investment trust securities entitled to receive dividends, interest or principal payments or any other distributions.
      (g) Trade Date
      In a transaction between time zones where the bid or offer is accepted in a later time zone than that of the originator, the correct trade date shall be the day on which the dealer in the later time zone accepts the trade.
      (h) Written Notices
      The term "written notice," as used in this Code, shall include a notice delivered by hand, letter, facsimile transmission, electronic mail or other comparable media.

      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
      Amended by SR-NASD-2005-089 eff. Oct. 1, 2005.
      Amended by SR-NASD-91-13 eff. Nov. 1, 1991.
      Amended eff. Mar. 1, 1970; Mar. 18, 1983; Aug. 13, 1990.

      Selected Notice: 10-49.

      • 11121. Trade Date

        Ruling of the Committee:

        A dealer in an Eastern city leaves a bid or offering with a dealer in a Western city good until the close of the latter's business day. The Western dealer accepts the bid or offering on that day but, due to the difference in time between the two localities, its notice of acceptance is received by the Eastern dealer on the following day.
        In the opinion of the Committee the correct trade date for a transaction of this type is the day on which the Western dealer accepts the bid or offer, even though the acceptance may not reach the Eastern dealer until the following day.
        Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
        Amended eff. Aug. 13, 1990.

        Selected Notice: 10-49.

    • 11130. When, As and If Issued/Distributed Contracts

      (a) Confirmations or Comparisons
      (1) Each party to the transaction shall send a written "when, as and if issued" or "when as and if distributed" confirmation or comparison in the same form as set forth in the Sample Form appearing in Supplementary Material .01 of this Rule and pursuant to the requirements of Rules 11210(a), 11220, and 11860.
      (2) Each confirmation or comparison covering a contract in a "when, as and if issued" or "when, as and if distributed" security shall, at a minimum, contain:
      (A) an adequate description of the security and the plan, if any, under which the security is proposed to be issued or distributed;
      (B) designation of FINRA as the authority which shall rule upon the performance of the contract; and
      (C) provision for marking the contract to the market.
      (3) The Committee will furnish, upon written request, an adequate description of any particular issue of securities and of the plan under which the securities are proposed to be issued for the purpose of inclusion in all contracts or confirmations covering transactions on a "when, as and if issued" or "when, as and if distributed" basis in the particular securities.
      (b) Accrued Interest
      (1) Unless the parties agree otherwise, "when, as and if issued" or "when, as and if distributed" transactions between members in fixed obligations of new or reorganized companies shall be "and accrued interest" to date of settlement. Interest shall be computed on the basis of the expired portion of the coupon current at the time of settlement, and all due and past due coupons shall be detached.
      (2) "When, as and if issued" or "when, as and if distributed" transactions between members in income or contingent interest securities of such companies shall be traded "flat" and shall carry all payments that may be made or declared in connection with such new securities from the effective date of the plan; except that, if any payment is made or declared directly or indirectly in connection with such securities, prior to the settlement date, transactions made on and after the "ex" date for such payment shall carry only payments made or declared in connection with such securities from such "ex" date.
      (3) Securities of such companies which bear a fixed rate of interest, plus contingent additional payment, are to be traded "and accrued interest" at the rate of the fixed interest, and traded "flat" in respect to the contingent payments.
      (c) Marks to the Market
      In case of "when, as and if issued" or "when, as and if distributed" contracts, the time of issuance or distribution of the securities is indefinite and may be long delayed. Therefore, such contracts should be marked to the market pursuant to the provisions of Rule 11730.
      (d) Contracts on Margin
      All "when, as and if issued" or "when, as and if distributed" contracts shall be in compliance with Sections 220.4 and 220.5 of Regulation T of the Board of Governors of the Federal Reserve System.
      (e) Request for Deposits
      A member may require a customer to deposit cash or collateral to secure a "when, as and if issued" or "when, as and if distributed" contract even though Section 220.8(b)(1) of Regulation T of the Board of Governors of the Federal Reserve System may not require such deposit.
      (f) Segregation of Funds

      (1) Deposits against "when, as and if issued" or "when, as and if distributed" transactions should be segregated on the books of the member in order to present a true picture of the member's position and its commitment in transactions of this kind. It may be appropriate to segregate such deposits from the member's general cash balances by depositing them in a bank other than those containing the general deposits, loans or other obligations of the member. Whether or not such physical segregation is made, no member should permit any part of deposits against "when, as and if issued" or "when, as and if distributed" contracts to be used for any purpose whatsoever other than to secure such contracts.
      (2) As a minimum, every member doing business in "when, as and if issued " or "when, as and if distributed" securities shall ensure that the sum of the cash balances and any deposits with banks, clearing houses, or other brokers against "when, as and if issued" or "when, as and if distributed" contracts always exceeds the aggregates of all free credits and deposits against "when, as and if issued" or "when, as and if distributed" contracts by an amount fully ample to conduct its business without employing any part of such deposits.
      (g) Settlement of Contracts

      (1) A date for the settlement of "when, as and if issued" and "when, as and if distributed" contracts shall be determined by the Committee when a sufficient percentage of the issue is outstanding.
      (2) In connection with a transaction in a security "when, as and if issued," delivery shall be made at the office of the purchaser on the date declared by the Committee; except that if no delivery date shall be declared by the Committee:

      (A) delivery may be made by the seller on the business day following the day upon which the seller has delivered at the office of the purchaser written notice of intention to deliver, and
      (B) open market "when, as and if issued" contracts in securities currently being publicly offered through a syndicate or selling group shall be settled on the date such syndicate or selling group contracts are settled; provided, however, delivery of securities in accordance with this subparagraph shall be made during the normal delivery hours in the community where the buyer is located.
      (3) In connection with a transaction in a security "when, as and if distributed," delivery shall be made at the office of the purchaser on the date declared by the Committee; except that if no delivery date shall be declared by the Committee, delivery may be made by the seller on the business day following the day upon which the seller has delivered at the office of the purchaser written notice of intention to deliver.
      (h) Cancellation of Contracts

      (1) Pursuant to Rule 11110, the Committee may cancel or terminate "when, as and if issued" and "when, as and if distributed" contracts as necessary to resolve conflicts over the settlement of such contracts.
      (2) Contracts will be canceled if the securities are not to be issued or distributed.
      (3) Contracts will generally be canceled if the securities which are to be issued or distributed are not substantially the same as those contemplated in the contract. Material changes which will generally result in cancellation include, but are not limited to, changes to the redemption schedule, dividend payments, interest rates, maturity, yield, and exercise price.
      (4) Notwithstanding paragraph (h)(3) of this Rule, contracts will not generally be canceled as a result of changes that do not constitute material changes to the terms of the security called for under the contract. Changes which will not generally result in cancellation include, but are not limited to:

      (A) changes in the dollar value of securities to be issued or distributed;
      (B) restructuring of financing arrangements previously announced by the issuer of the securities; or
      (C) settlement of any legal action or the occurrence of any other event which has or will have a material effect on the financial condition of the issuer of the securities.

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

      .01 Standard Forms of "When, As and If Issued" or "When, As and If Distributed" Contract.

      (a) For use by dealers and brokers in confirming transactions with other dealers and brokers

      "When, as and if Issued" or "When, as and if Distributed" Contract
      ___________________________________________________________________________
      (Firm Name)
        Date _________________________
       
      (Sold to)
      (Purchased From)
      Quantity Description of Security Price  


      If this contract was made on a national securities exchange, it shall be subject to and governed by the requirements of such exchange, its constitution, rules, practices and interpretations thereof, relating to contracts between members of such exchange, as the same may be amended or modified from time to time.
      If this contract was made elsewhere than on a national securities exchange, it shall be subject to and governed by the requirements of FINRA, its By-Laws, Rules, Uniform Practice Code and interpretations thereof as the same may be amended or modified from time to time.
      This contract shall be settled and payment therefor made at such time and place, in such manner, and by the delivery of such securities and/or other property as the exchange or association to whose requirements this contract is subject in its sole discretion may determine, or shall be canceled and thereafter shall be null and void if such exchange or association determines in its sole discretion that the securities which are to be issued or distributed are not substantially the same as those contemplated in the contract. During the pendency of this contract either party shall have the right to call for a mark to the market, and upon failure of the other party to comply therewith the party not in default may close this contract in accordance with the requirements of the exchange or association to whose requirements this contract is subject.
      (b) For use by a dealer (principal) and its customer covering transactions on a principal basis

      "When, as and if Issued" or "When, as and if Distributed" Contract
       
      TO __________________________________________________________________________


          I/we have sold to you/purchased from you __________________ , shares/par value _________________ at __________________. These securities shall be payable and deliverable "when, as and if issued" or "when, as and if distributed," or this contract shall be cancelable in accordance with the requirements of FINRA, its By-Laws, Rules, Uniform Practice Code, applicable rules and interpretations thereunder and amendments thereof.
       
          I/we shall have the right to demand deposits according to such requirements. On your failure to comply therewith, we may close the contract in accordance with such requirements.
       
        ______________________________________________
       

      (Firm Signature)

      Accepted:  
      ____________________________________________  
      (Signature of Customer)  
      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
      Amended by SR-NASD-91-66 eff. Nov. 2, 1992.
      Amended eff. Feb. 9, 1968; Mar. 1, 1970.

      Selected Notices: 92-51, 10-49.

    • 11140. Transactions in Securities "Ex-Dividend," "Ex-Rights" or "Ex-Warrants"

      (a) Designation of Ex-Date
      All transactions in securities, except "cash" transactions, shall be "ex-dividend," "ex-rights" or "ex-warrants": (1) on the day specifically designated by the Committee after definitive information concerning the declaration and payment of a dividend or the issuance of rights or warrants has been received at the office of the Committee; or (2) on the day specified as such by the appropriate national securities exchange which has received definitive information in accordance with the provisions of SEA Rule 10b-17 concerning the declaration and payment of a dividend or the issuance of rights or warrants.
      (b) Normal Ex-Dividend, Ex-Warrants Dates

      (1) In respect to cash dividends or distributions, or stock dividends, and the issuance or distribution of warrants, which are less than 25% of the value of the subject security, if the definitive information is received sufficiently in advance of the record date, the date designated as the "ex-dividend date" shall be the first business day preceding the record date if the record date falls on a business day, or the second business day preceding the record date if the record date falls on a day designated by the Committee as a non-delivery date.

      (2) In respect to cash dividends or distributions, stock dividends and/or splits, and the distribution of warrants, which are 25% or greater of the value of the subject security, the ex-dividend date shall be the first business day following the payable date.

      (3) In respect to stock dividends and/or splits relating to American Depository Receipts (ADRs) and foreign securities, the ex-dividend or ex-warrants date shall be designated by the Committee.

      (c) Late Information Re: Ex-Dividend, Ex-Warrants Dates
      If definitive information is not received sufficiently in advance of the record date to permit designation of an ex-dividend or ex-warrants date in accordance with paragraph (b)(1) of this Rule, the date designated shall be the first business day which, in the opinion of the Committee, shall be practical having regard to the circumstances pertaining.
      (d) Normal Ex-Rights Dates
      In respect to transferable rights subscription offerings, if definitive information is received sufficiently in advance of the effective date of the registration statement, the date designated as the ex-rights date shall be the first business day after the effective date of the registration statement.
      (e) Late Information Re: Ex-Rights
      If definitive information is not received sufficiently in advance of the effective date of the registration statement to permit designation of an ex-rights date in accordance with paragraph (d) of this Rule, the date designated shall be the first business day which in the opinion of the Committee shall be practical having regard to the circumstances pertaining.
      Amended by SR-FINRA-2016-047 eff. Sept. 5, 2017.
      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
      Amended by SR-NASD-94-56 eff. June 7, 1995.
      Amended by SR-NASD-91-13 eff. Nov. 1, 1991.
      Amended eff. Mar. 1, 1979; Mar. 18, 1983; Apr. 11, 1984.

      Selected Notices: 83-69, 84-44, 91-63, 10-49, 17-19.

    • 11150. Transactions "Ex-Interest" in Bonds Which Are Dealt in "Flat"

      (a) Normal Ex-Interest Dates
      All transactions, except "cash" transactions, in bonds or similar evidences of indebtedness which are traded "flat" shall be "ex-interest" as prescribed by the following provisions:
      (1) On the first business day preceding the record date if the record date falls on a business day.

      (2) On the second business day preceding the record date if the record date falls on a day other than a business day.

      (3) On the second business day preceding the date on which an interest payment is to be made if no record date has been fixed.

      (b) Late Information Re: Ex-Interest Dates
      If notice of payment of interest is not made public sufficiently in advance of the record date or the payment date, as the case may be, to permit the security to be dealt in "ex-interest" in accordance with paragraph (a) of this Rule such security shall be dealt in "ex-interest" on the first business day which, in the opinion of the Committee, shall be practical having regard to the circumstances pertaining.
      Amended by SR-FINRA-2016-047 eff. Sept. 5, 2017.
      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
      Amended by SR-NASD-94-56 eff. June 7, 1995.
      Amended by SR-NASD-91-13 eff. Nov. 1, 1991.
      Amended eff. Feb. 9, 1968; Mar. 18, 1983.

      Selected Notices: 83-69, 91-63, 10-49, 17-19.

    • 11160. "Ex" Liquidating Payments

      All transactions except "cash" transactions in stocks, bonds or similar evidences of indebtedness shall be "ex" liquidating payments or payments on account of principal in accordance with the formula set forth in Rules 11140 and 11150.
      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
      Amended by SR-NASD-91-13 eff. Nov. 1, 1991.

      Selected Notices: 91-63, 10-49.

    • 11170. Transactions in "Part-Redeemed" Bonds

      In transactions in bonds which have been redeemed or paid in part, such bonds shall be designated as "part-redeemed" bonds. The settlement price of contracts in "part-redeemed" bonds shall be determined by multiplying the contract price by the original principal amount thereof and contracts shall be made on the same basis.
      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.

      Selected Notice: 10-49.

    • 11190. Reconfirmation and Pricing Service Participants

      (a) Each member or its agent that is a participant in a registered clearing agency, for purposes of clearing over-the-counter securities transactions, shall participate in fail reconfirmation and pricing services when offered.
      (b)(1) A contract submitted to a reconfirmation and repricing service ("service") which has been DK'd ("Don't Know") by the contra-party or is otherwise deemed a DK under the rules of the service may be closed-out by the party who submitted the contract to the service without notice during normal trading hours promptly after the completion of the reconfirmation and pricing cycle of the service for the account and liability of the non-confirming member.
      (2) Notice of any execution pursuant to this paragraph (b), shall be made as promptly as possible on the day of execution, as provided in Rules 11810(g) and 11820(b).
      Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
      Amended by SR-NASD-96-54 eff. Feb. 19, 1997.
      Adopted by SR-NASD-90-1 eff. Dec. 17, 1990.

      Selected Notices: 89-4, 10-49.