Finra Clearing Agreement Rule

17 Note that, under its conditions, the rule does not apply to members exempted from rule SUP 17a-13. If you are using a pre-approved transport agreement form in accordance with FINRA Rule 4311(b)(2), please indicate the form and date of approval of this form by FINRA: given the annual compliance deadline of 1 July, FINRA`s Member Regulatory Unit has a centralized 4311(h)(2) notification process. Clearing companies may submit to FINRA the necessary notifications and the list of reports requested or transmitted by the home member company from that date, in accordance with the rule: Notwithstanding the above, the day on which a clearing firm informs the clearing firm of its voluntary termination of a netting agreement, which results in a penalty of dismissal (i.e.B. the termination clause has not expired), the importing company must levy a net capital tax corresponding to the amount of the termination penalty or the amount of the set-off deposit. The importing company must also decide, in accordance with generally accepted accounting principles, whether it should assume liability to reflect the effect of the termination penalty. An initiating entity that introduces liability for the full amount of the termination penalty may reduce the above-mentioned net capital requirement by the amount of that provision. The amount of such an accumulated liability must be included in the total debt by establishing enterprises using the basic method to calculate their net capital requirement in accordance with rule SUP 15c3-1. In addition, each clearing house must hold its FINRA coordinator by 2 On 1 January 2009, written documents certifying that their netting agreements have been revised accordingly for all their importing companies or 2) list the names of importing broker-brokers whose netting agreements have not been revised. In the absence of the additional language set out above in its netting agreement, an initiating entity whose netting contract includes a termination penalty must treat its set-off deposit as an unauthorized asset as of January 5, 2009 until the early termination penalty is no longer applicable. These termination clauses have raised questions about the clearing company`s rights to the compensation contribution of an importing company subject to early repayment compensation where the importing company is subject to a protection order under the Securities Investor Protection Act of 1970. The question also arises as to how the importing enterprise should consider such clauses in relation to its net capital calculation. The SEC approved finra`s proposed rule amendment1 to adopt a set of financial liability rules and related operational rules for the consolidated regulatory framework (FINRA`s consolidated regulatory framework).2 FINRA Rules 4150, 4311, 4522 and 4523 are new consolidated rules on financial accountability as well as certain operational and contractual requirements for members. The new rules are based in part on and replace the nyse and NASD rules.3 FINRA staff members were asked about the definition of “termination of the agreement.” For example, an investment company may participate in the clearing that it will terminate its netting agreement on date X (cancellation date), in which case it must receive its deposit within 30 days of that date.

The companies said that, in some cases, the process of transferring all customers from the IPO company to the new clearing house might not be completed or even started within 30 days of the cancellation date. In that case, the clearing house may withhold the clearing deposit until the transfer of the accounts to the new clearing house is completed….