Notice To Members 87-23

Effectiveness of Amendment to Section 66 of the NASD Uniform Practice Code Regarding Prompt Settlement of Syndicate Accounts

Published Date:

TO: All NASD Members and Other Interested Persons

ATTN: Syndicate Department

The NASD has adopted an amendment to Section 66 of its Uniform Practice Code that reduces the period required for final settlement of syndicate accounts from 120 days to 90 days. The text of the amendment, which will become effective May 1, 1987, is attached.

On October 1, 1985, the NASD adopted Section 66 to its Uniform Practice Code requiring syndicate managers to settle syndicate accounts within 120 days of the date securities are delivered by the issuer to, or for the account of, syndicate members. At that time, the NASD stated its intention to review members' experience under the 120-day requirement after one year with a view to reducing the settlement period to 90 days. The NASD Board of Governors and its Corporate Financing Committee have reviewed members' experience since adoption of Section 66 and have determined that a reduction in the period required to settle syndicate accounts is appropriate. The Board, therefore, has adopted an amendment to Section 66 reducing the period required for final settlement of syndicate accounts from 120 days to 90 days. Notice to Members 87-10, dated February 25, 1987, announced the Board's adoption of the reduced time period and gave the membership advance notice of the reduction in the settlement period.

The amendment to Section 66 will become effective May 1, 1987. Therefore, syndicate accounts are required to be settled within 90 days with respect to all corporate securities offerings effective on or after May 1, 1987.

All comments or questions pertaining to the amendment to Section 66 may be directed to the NASD Corporate Financing Department at (202) 728-8258.

Sincerely,

Frank J: Wilsor
Executive Vice President
Legal and Compliance

Attachment

AMENDMENT TO SECTION 66 OF THE NASD UNIFORM PRACTICE CODE*

Section 66

Settlement of Syndicate Accounts

(a) Definitions:
(1) "selling syndicate" means any syndicate formed in connection with a public offering to distribute all or part of an issue of corporate securities by sales made directly to the public by or through participants in such syndicate.
(2) "syndicate account" means an account formed by members of the selling syndicate for the purpose of purchasing and distributing the corporate securities of a public offering.
(3) "syndicate manager" means the member of the selling syndicate that is responsible for maintenance of syndicate account records.
(4) "syndicate settlement date" means the date upon which corporate securities of a public offering are delivered by the issuer to or for the account of the syndicate members.
(b) Final settlement of syndicate accounts shall be effected by the syndicate manager within [120] 90 days following the syndicate settlement date.

* New language underlined; deleted language bracketed.