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Finra Rule: UNIFORM PRACTICE CODE(9)
USINFO | 2013-12-18 16:10
(g) Stamped Bonds
(1) If a plan of reorganization which has been declared operative, or an amendment or supplement to an indenture provides that the bonds covered thereby shall be stamped to reflect the adoption of such plan or the amendment or supplement to the indenture, bonds so stamped shall be a good delivery and bonds not so stamped shall not be a good delivery.
(2) The fact that a bond has been stamped "Tax Paid" by any authority vested with the power to tax, if the stamp does not indicate ownership, shall not prevent such bond from being a good delivery.
(h) Certificates of Deposit
Certificates of deposit issued by committees or depositaries other than those specified at time of trade shall not be a good delivery.
11620. Computation of Interest
(a) Interest To Be Added to the Dollar Price
In the settlement of contracts in interest-paying securities other than for "cash," there shall be added to the dollar price interest at the rate specified in the security, which shall be computed up to but not including the third business day following the date of the transaction. In transactions for "cash," interest shall be added to the dollar price at the rate specified in the security up to but not including the date of transaction.
(b) Basis of Interest
Interest shall be computed on the basis of a 360-day year, i.e., every calendar month shall be considered to be 1/12 of 360 days; every period from a date in one month to the same date in the following month shall be considered to be 30 days.
Note: The number of elapsed days should be computed in accordance with the examples given in the following table:From 1st to 30th of the same month to be figured as 29 days;From 1st to 31st of the same month to be figured as 30 days;From 1st to 1st of the following month to be figured as 30 days;From 1st to 28th of February to be figured as 27 days;From the 23rd of February to the 3rd of March is to be figured as 10 days;From the 15th of May to the 6th of June is to be figured as 21 days.
Where interest is payable on 30th or 31st of the month:From 30th or 31st to 1st of the following month to be figured as 1 day;From 30th or 31st to 30th of the following month to be figured as 30 days;From 30th or 31st to 31st of the following month to be figured as 30 days;From 30th or 31st to 1st of second following month to be figured as 1 month, 1 day.
(c) Securities Traded "and interest"
When delivery of a security traded "and interest" is made between the record date fixed for the purpose of determining the holder entitled to receive interest and the interest payment date, a deduction equivalent to the full amount of the interest to be paid shall be made on settlement.
(d) Securities Traded "flat"
When delivery of a security traded "flat" is made after the record date fixed for the purpose of determining the holder entitled to receive interest, in the settlement of a contract made prior to the date on which the security was traded "ex-interest," a due-bill check for the full amount of the interest to be paid shall accompany the delivery.
(e) Income Bonds
Income bonds shall be dealt in "flat" even though such bonds are paying interest, except that where a certain fixed rate is guaranteed in the indenture and provision is made for additional contingent payment, they shall be dealt in "and interest" at the fixed rate guaranteed in the indenture (so long as interest payments at such fixed rate are not in default and no announcement of intention to default has been made).
(f) Fractions of a Cent
In all transactions involving the payment of interest, fractions of a cent equalling or exceeding five mills shall be regarded as one cent; fractions of a cent less than five mills shall be disregarded.
11630. Due-Bills and Due-Bill Checks
(a) Definition of Due-Bills
The term "due-bill" as used in this Rule means an instrument employed for the purpose of evidencing the transfer of title to any security or rights pertaining to any security contracted for or evidencing the obligation of a seller to deliver such to a subsequent purchaser. A due-bill shall not be transferable or assignable by the purchaser.
(b) Definition of Due-Bill Checks
The term "due-bill checks" as used in this Rule means a due-bill in the form of a check payable on the date of payment of a cash dividend, interest on registered bonds or interest on unit investment trust securities, which prior to such date shall be considered as a due-bill, as defined in paragraph (a) of this Rule, for the amount of such dividend or interest.
(c) Due-bills for Stock Dividends and Rights
A security sold before it trades "ex-dividend" (for stock and scrip dividends) or "ex-rights" and delivered too late for transfer on or before the record date, shall be accompanied by a due-bill for the distribution to be made. When a due-bill accompanying a delivery evidences the obligation of the seller to deliver stock, the purchaser shall prorate the value of the contract, and shall make payment of the balance upon redemption of the due-bill. The requirement to pro-rate the value of the contract as described above shall not apply to stock dividends less than ten percent (10%) or to "spinoffs" or rights.
(d) Due-bill Checks for Cash Distribution and Interest
Due-bill checks for a cash distribution, interest on registered bonds or interest on unit investment trust securities shall accompany securities delivered too late for transfer on or before the record date.
(e) Redemption of Due-Bills
Due-bills for any security or rights pertaining to any security shall be redeemable on the date on which the security or rights are issued by the corporation or as soon thereafter as the signer or guarantor of the due-bill can obtain transfer of the security or rights into denominations necessary to effect the redemption of the due-bills.
(f) Default Upon Redemption of Due-Bills
A due-bill for any security or rights pertaining to any security issued pursuant to paragraph (c) of this Rule and presented for redemption pursuant to the terms of paragraph (e) of this Rule, and not honored by the seller may, at the option of the buyer, be treated as a "fail to receive" from the seller, and the distribution evidenced by such due-bill may be bought-in for the account and risk of the seller pursuant to the terms of Rule 11810. However, buy-ins executed in accordance with this paragraph (f) must be executed after the payable date of such securities as determined by the issuing corporation.
Supplementary Material:
01 Sample Due-Bills Form.
(a) Due-Bill for Stock Dividend or Stock Distribution
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For value received, the undersigned hereby assigns, transfers and sets over to ______ the stock distribution of ______ ( ) shares of _________ stock of _________ to be issued on ______ to the registered holder of ____ ( ) shares of _________________ stock of ________ represented by certificate number __________ , to which the undersigned is entitled as a stock dividend, and hereby irrevocably constitutes and appoints ________ attorney to transfer the shares representing said stock dividend on the books of said corporation, with full power of substitution in the premises. |
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| _____________(Date) | |
| ________(Official Signature) | |
(b) Due-Bill for Rights
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For value received, the undersigned hereby assigns, transfers, and sets over to ________ the warrant and/or fractional warrant to which the undersigned is entitled, evidencing the rights to subscribe for __________ _______ , which warrant and/or fractional warrant is to be issued to the holder of record at the close of business _______ of ________ ( ) shares of ______ stock of _________ represented by certificate No. _________________ |
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| ___________(Date) | |
| ___________(Official Signature) | |
(c) Due-Bill for Interest on When Issued Contract
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This is to certify that, upon issuance of ________ in accordance with the plan approved by ___ , the undersigned will pay to _______ $ __________ representing (contingent)(income) interest for ___________ on $ _____ principal amount of said bonds sold to it when, as, and if issued on _____ 20 _____ This due-bill shall become null and void if the contract for sale of said bonds can not be completed in accordance with the plan approved by ___ , on ____ |
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| _________(Date) | |
| _________(Official Signature) | |
