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 first 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.
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.
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.
| Amended by SR-FINRA-2023-017 eff. May 28, 2024. 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 eff. Jan. 2, 1968; Feb. 9, 1968; Feb. 21, 1969; Mar. 18, 1983. Selected Notices: 83-69, 95-36, 10-49, 17-19, 24-04. |