FINRA Clearance and Settlement Requirements
Chapters in this video
- 0:00 Riley reports a trade in 10 seconds, then forgets to clear it
- 1:28 Trade reporting versus clearance: two separate obligations
- 2:40 The three reporting tracks: ORF, Nasdaq TRF, and FINRA / NYSE TRF
- 4:15 NSCC and CNS: how the sausage gets made
- 6:00 T+1 settlement cycle: the clock is strictly trade date plus one
- 7:07 When clearance fails: the supervisory nightmare cascade
- 8:37 Rapid-fire exam recap
What this video covers
- Why trade reporting and clearance are two entirely separate regulatory obligations, and how a firm can comply with one while violating the other
- Which of the three FINRA reporting facilities applies to a given security: the Over-the-Counter Reporting Facility (ORF), the Nasdaq Trade Reporting Facility (Nasdaq TRF), or the FINRA / NYSE Trade Reporting Facility (FINRA / NYSE TRF)
- What the National Securities Clearing Corporation (NSCC) does in trade comparison, continuous net settlement (CNS), and the path to DTC settlement
- Why the U.S. equity settlement cycle is strictly T+1, and how to recognize T+2 or T+3 as deliberate exam bait
- How a clearance failure cascades into customer protection buy-ins, margin extension procedures, books and records violations, and net capital impairment
- Why an open fail to receive or fail to deliver eats into required net capital and creates supervisory urgency for the principal
Read the full lesson, free
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