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Rule 412. Customer Account Transfer Contracts
This rule is no longer applicable effective November 11, 2008.
(a) When a customer whose securities account is carried by a member organization (the "carrying organization") wants to transfer securities account assets, in whole or in specifically designated part, to another member organization (the "receiving organization") and gives authorized notice of that fact to the receiving organization, both member organizations must expedite and coordinate activities with respect to the transfer. For purposes of this Rule, "authorized notice" pursuant to a transfer instruction could be the customer's actual signature, or an electronic signature in a format recognized as valid under federal law to conduct interstate commerce.
(1) Upon receipt from the customer of an authorized broker-to-broker transfer instruction form ("TIF") to receive such customer's securities account assets in whole or in specifically designated part, the receiving organization will immediately submit such instruction to the carrying organization. The carrying organization must, within one business day following receipt of such instruction, or receipt of a TIF received directly from the customer authorizing the transfer of assets in specifically designated part: (i) validate the transfer instruction (with an attachment reflecting all positions and money balances to be transferred as shown on its books) to the receiving organization or (ii) take exception to the transfer instruction for reasons other than securities positions or money balance discrepancies and advise the receiving organization of the exception taken. The time frame(s) set forth in this paragraph will change, as determined from time-to-time in any publication, relating to the ACATS facility, by the National Securities Clearing Corporation (NSCC).
(2) The carrying organization and the receiving organization must promptly resolve any exceptions taken to the transfer instruction.
(3) Within three business days following the validation of a transfer instruction, the carrying organization must complete the transfer of the customer's securities account assets to the receiving organization. The carrying organization and the receiving organization must establish fail to receive and fail to deliver contracts at then current market values upon their respective books of account against the long/short positions (including options) that have not been delivered/received and the receiving/carrying organization must debit/credit the related money amount. The customer's securities account assets shall thereupon be deemed transferred. The time frame(s) set forth in this paragraph will change, as determined from time-to-time in any publication, relating to the ACATS facility, by the NSCC.
(c) Any fail contracts resulting from this securities account asset transfer procedure must be closed out within ten (10) business days after their establishment.
(d) Any discrepancies relating to positions or money balances that exist or occur after transfer of a customer's securities account assets must be resolved promptly. When a member organization receives a claim notice relating to a securities account asset transfer, the member organization must resolve the claim within five (5) business days from receipt of such notice or take exception to the claiming organization by setting forth specific reasons for denying the claim.
(1) When both the carrying organization and the receiving organization are participants in a registered clearing agency having automated customer securities account asset transfer capabilities, the securities account asset transfer procedure, including the establishing and closing out of fail contracts, must be accomplished in accordance with the provisions of this rule and pursuant to the rules of and through such registered clearing agency with the exception of specifically designated assets transferred pursuant to the submittal of a customer's authorized alternate instructions to the carrying organization.
(2) When such registered clearing agency has the capability to transfer mutual fund positions or to employ functionalities including Partial Transfer Receive (PTR), Partial Transfer Delivery (PTD), Fail Reversal, Mutual Fund Fail Cleanup, or Reclaim Processing, such capability must be utilized with the exception of specifically designated assets transferred pursuant to the submittal of a customer's authorized alternate instructions to the carrying organization.
(3) When securities account assets are transferred in whole and such registered clearing agency has the capability to transfer residual credit positions (both cash and securities) which have accrued to an account after the account has been transferred (residual credit processing), such capability must be utilized for transferring residual credit positions from the carrying organization to the receiving organization.
(4) Each member organization (including organizations that do not utilize automated customer securities account transfer facilities) is required, for a minimum period of six (6) months after the transfer of securities account assets in whole is completed, to transfer credit balances (both cash and securities) that occur in such transferred account assets within (10) ten business days after the credit balances accrue to the account.
(f) The Exchange may exempt from the provisions of this rule, either unconditionally or on specified terms and conditions, (i) any member organization or class of member organization or (ii) any type of account, security or financial instrument
• • • Supplementary Material: --------------
.10 For purposes of this rule, the term "securities account" shall be deemed to include any and all of the account's money market fund positions or the redemption value thereof.
.20 For purposes of this rule, the term "registered clearing agency" shall be deemed to be a clearing agency as defined in the Securities Exchange Act of 1934 registered in accordance with that Act
.30 Transfer instructions and reports required by this rule shall be in such form as may be prescribed by the Exchange.
October 21, 1971.
September 2, 1994; effective December 2, 1994.
November 25, 1998.
September 2, 1994; effective March 3, 1995.
June 28, 1978.
November 26, 1985, effective February 24, 1986.
September 2, 1994; effective December 2, 1994 and March 3, 1995.
March 12, 2004; effective September 13, 2004;
February 10, 2005 (NYSE-2004-63),
amended by SR-FINRA-2007-005 eff. Oct. 22, 2007.
Deleted by SR-FINRA-2008-036 eff. Nov. 11, 2008.
Selected Notices: 07-50, 08-64.