UPC Scope and Clearing Infrastructure

What this video covers

• The exact scope of the Uniform Practice Code (UPC): OTC secondary-market broker-to-broker transactions and nothing else
• Why customer confirmations, mutual fund redemptions, and municipal securities sit outside the UPC under their own rule sets
• The six specific UPC exclusions the exam repeatedly tests: registered clearing agency trades, exempted securities, municipal securities, mutual funds (non-secondary-market), Direct Participation Programs (DPPs), and customer-facing confirmations
• When FINRA mandates clearing through a registered clearing agency using continuous net settlement (CNS) for ADF, TRF, and OTC corporate debt activity
• How CNS collapses bilateral counterparty risk into a single net long or short position with the central counterparty
• The same-carrying-member carve-out for OTC corporate debt and why it is extremely narrow, not a broad bilateral settlement permission
• The principal's daily supervisory checklist for mapping markets to clearing agencies and verifying ex-clearing trades use the UPC while cleared trades follow the clearing agency's rulebook