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Comment Period Ends on Proposed FINRA Rules Amendments Related to Conversaion T+2 Settlement Cycle

April 4, 2016

Financial Industry Regulatory Authority (“FINRA”)  issued Regulatory Notice  16-09, in which FINRA is seeking comments on proposed amendments to FINRA rules relating to the settlement cycle.  FINRA proposes to adopt necessary rule changes in a manner and timeline that is consistent with the SEC and other self-regulatory organizations SROs in an effort to provide the regulatory certainty necessary for an efficient transition.

SEA Rule 15c6-1 currently establishes “regular way” settlement as occurring no later than T+3 for all securities, except for government securities and municipal securities, commercial paper, bankers’ acceptances, or commercial bills.  In anticipation of the SEC’s changes to SEA Rule 15c6-1 to facilitate settlement no later than T+2 and to ensure that FINRA acts in concert and conformity with the impending rule changes by other SROs, FINRA is proposing definitional changes to its rules pertaining to securities settlement by, among other things, amending the definition of “regular way” settlement as occurring on T+2.  The proposed technical changes would implement the anticipated rule changes of the SEC and the other SROs. Accordingly, FINRA believes that the proposed rule changes will not impose any burdens on the industry in addition to those necessary to implement the industry-wide initiative.

To this end, FINRA has preliminarily identified the following rules that establish or reference a T+3 settlement cycle that would need to be amended to reflect a T+2 settlement cycle:

  • NASD Rule 2830 (Investment Company Securities);
  • FINRA Rule 11140 (Transactions in Securities “Ex-Dividend,” “Ex-Rights” or “Ex-Warrants”);
  • FINRA Rule 11150 (Transactions in “Ex-Interest” in Bonds Which are Dealt in “Flat”);
  • FINRA Rule 11210 (Sent by Each Party); 0 FINRA Rule 11320 (Date of Delivery);
  • FINRA Rule 11620 (Computation of Interest); and 0 FINRA Rule 11860 (COD Orders)The comment period ends April 4, 2016.


April 4, 2016
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