FINRA Rule 11120

FINRA Rule 11120 was last amended by SR-FINRA-2010-030 effective December 15, 2010, with a substantial amendment history extending back through SR-NASD-2005-089 effective October 1, 2005, SR-NASD-91-13 effective November 1, 1991, and earlier amendments effective March 1, 1970, March 18, 1983, and August 13, 1990. One selected notice is associated — Regulatory Notice 10-49.

FINRA Rule 11120 sits within the 11000 Uniform Practice Code immediately following the governance cluster of FINRA Rules 11110 through 11112, and immediately preceding FINRA Rule 11121's trade date framework.

FINRA Rule 11120(a): Code or UPC Code

FINRA Rule 11120(a) establishes a circular but necessary definitional anchor — the term Code or UPC Code as used in the FINRA Rule 11000 Series shall mean the FINRA Rule 11000 Series. This self-referential definition serves an essential function: every other rule throughout FINRA Rules 11100 through 11900 that refers to this Code or the UPC Code is, by virtue of this definition, referring specifically and exclusively to the FINRA Rule 11000 Series as a whole — not to the broader FINRA rulebook, not to any other body of rules, and not to any predecessor NASD rule series except insofar as the FINRA Rule 11000 Series itself represents the current embodiment of that predecessor framework. 

This definitional anchor is what gives terms like this Code throughout the rest of FINRA Rule 11100 through FINRA Rule 11900 — including the non-cancellation provisions of FINRA Rule 11100(c), the CUSIP requirement of FINRA Rule 11100(d), and countless other Code references — their precise scope.

FINRA Rule 11120(b): Committee

FINRA Rule 11120(b) defines Committee as used in this Code, unless the context otherwise requires, as meaning the Uniform Practice Code (UPC) Committee delegated the authority to administer this Code by the Board of Governors. This definition directly cross-references and confirms the institutional structure established by FINRA Rule 11110 — the Committee designated by the Board of Governors with power to issue interpretations and rulings regarding the Code's applicability.

The unless the context otherwise requires qualifier is a standard interpretive safety valve, acknowledging that in rare instances a specific rule's use of the word committee might refer to some other committee entirely — though in the overwhelming majority of uses throughout the Uniform Practice Code, Committee refers to the UPC Committee as FINRA Rule 11120(b) defines it. This definition, combined with FINRA Rule 11112's panel mechanism, means that references to the Committee throughout the Code encompass both the full UPC Committee and any properly constituted panel of that Committee rendering a decision on the Committee's behalf.

FINRA Rule 11120(c): Delivery Date

FINRA Rule 11120(c) establishes that delivery date as used in this Code shall be used interchangeably with settlement date and shall mean the date designated for the delivery of securities. This interchangeability is operationally important throughout the delivery framework of FINRA Rules 11300 through 11650 — wherever those rules refer to settlement date, the same meaning attaches as if they had referred to delivery date, and vice versa. The date designated for delivery of securities formulation ties this term to the specific contractual or regulatory designation governing when delivery must occur for a given transaction — a designation that, for most transactions, follows the standard settlement cycle applicable to the security type involved, but that for specialized transaction types such as when-, as-, and if-issued contracts under FINRA Rule 11130 may be designated according to that contract type's own specific framework.

FINRA Rule 11120(d): Ex-Date

FINRA Rule 11120(d) defines ex-date as the date on and after which the security is traded without a specific dividend or distribution. This is one of the most operationally significant definitions in the entire Uniform Practice Code, since the ex-date concept underlies the entire cluster of specialized transaction-type rules in FINRA Rules 11140 through 11160 — ex-dividend, ex-rights, ex-warrants transactions under FINRA Rule 11140, ex-interest transactions in bonds dealt flat under FINRA Rule 11150, and ex liquidating payments under FINRA Rule 11160.

The ex-date concept addresses a fundamental timing problem in securities trading — when a company declares a dividend or other distribution payable to holders of record as of a specific record date, but the security continues trading in the secondary market both before and after that record date, the market needs a mechanism for determining which transactions in the security carry the right to receive the upcoming distribution and which do not. The ex-date is that mechanism — purchasers who buy the security before the ex-date acquire it with the right to the specific dividend or distribution still attached (the security trades cum-dividend, though FINRA Rule 11120 does not separately define this term), while purchasers who buy on or after the ex-date acquire the security without that right (the security trades ex-dividend, in the language FINRA Rule 11120(d) defines). The securities markets' standard practice of adjusting a security's quoted price downward on the ex-date by approximately the amount of the distribution reflects this same underlying mechanism — the security's value, exclusive of the soon-to-be-paid distribution, is what trades from the ex-date forward.

FINRA Rule 11120(e): Immediate Return Receipt

FINRA Rule 11120(e) defines immediate return receipt as the acknowledgement by the receiving member of a written notice and which shall be issued, upon receipt, via the media in which such notice is received. This definition establishes both what an immediate return receipt is — an acknowledgment by the recipient — and how it must be transmitted — via the same media through which the underlying notice was received, and issued upon receipt rather than after any delay.

This concept becomes operationally significant throughout the Uniform Practice Code wherever a specific rule requires that a member provide an immediate return receipt in response to a notice from another member — a requirement that ensures the sending member has prompt confirmation that a time-sensitive notice was actually received, which can be critical for notices with strict timing consequences, such as notices given in connection with the buy-in procedures of FINRA Rule 11810 or the various reclamation notices throughout FINRA Rules 11700 through 11740. The via the media in which such notice is received formulation ensures the acknowledgment travels back to the sender through a channel the sender is actively monitoring — an acknowledgment of a facsimile notice via facsimile, or of an electronic mail notice via electronic mail, rather than through some other channel the sender might not be checking.

FINRA Rule 11120(f): Record Date

FINRA Rule 11120(f) defines record date as the date fixed by the trustee, registrar, paying agent or issuer for the purpose of determining the holders of equity securities, bonds, similar evidences of indebtedness or unit investment trust securities entitled to receive dividends, interest or principal payments or any other distributions. This definition identifies the corporate or trust action — fixing a record date — that triggers the ex-date mechanism defined in FINRA Rule 11120(d). The record date is the date on which the issuer, trustee, registrar, or paying agent determines who is officially recorded as a holder for purposes of a specific distribution; the ex-date, by contrast, is the secondary-market trading date that the Uniform Practice Code framework establishes — typically preceding the record date by an amount of time tied to the standard settlement cycle — to allocate the right to that distribution correctly between buyers and sellers trading around the record date.

The breadth of security types covered — equity securities, bonds, similar evidences of indebtedness, and unit investment trust securities — confirms that the record date concept applies across the range of security types for which the Uniform Practice Code's ex-date and related distribution-timing mechanisms are relevant, consistent with the security types addressed throughout FINRA Rules 11140 through 11170 and the units-of-delivery framework of FINRA Rules 11360 through 11365.

FINRA Rule 11120(g): Trade Date — The Cross-Time-Zone Rule

FINRA Rule 11120(g), titled Trade Date, does not provide a general definition of trade date in the manner of the other paragraphs' general definitions — instead, it establishes a specific rule for a specific circumstance: in a transaction between time zones where the bid or offer is accepted in a later time zone than that of the originator, the correct trade date shall be the day on which the dealer in the later time zone accepts the trade.

This provision addresses a genuine practical problem in a securities market that operates across multiple time zones. When a dealer in one time zone originates a bid or offer, and a dealer in a later time zone — meaning a time zone where it is already later in the calendar day, such as a dealer on the U.S. East Coast originating an offer that a dealer in a Pacific time zone or further west accepts — accepts that bid or offer, the calendar date in the originator's time zone and the calendar date in the accepting dealer's time zone could differ around midnight. FINRA Rule 11120(g) resolves this ambiguity definitively: the trade date is the day on which the dealer in the later time zone — the accepting dealer — accepts the trade, regardless of what calendar date it might have been in the originating dealer's time zone at that same moment.

This cross-time-zone rule should be understood as a specific application within the broader trade date framework that FINRA Rule 11121 — the very next rule in the Code, addressed in its own entry — establishes more generally. FINRA Rule 11120(g)'s narrow focus on the cross-time-zone acceptance scenario complements rather than duplicates FINRA Rule 11121's general trade date provisions.

FINRA Rule 11120(h): Written Notices

FINRA Rule 11120(h) defines written notice as used in this Code to include a notice delivered by hand, letter, facsimile transmission, electronic mail or other comparable media. This broad, technology-inclusive definition ensures that the numerous notice requirements scattered throughout the Uniform Practice Code — in the reclamation framework of FINRA Rules 11700 through 11740, the close-out procedures of FINRA Rules 11800 through 11894, and elsewhere — can be satisfied through any of the enumerated delivery methods or other comparable media, without requiring members to use any single specific channel.

The or other comparable media formulation gives this definition future-proof flexibility — as new communication technologies and media emerge, they can be incorporated into the written notice definition without requiring a textual amendment to FINRA Rule 11120(h) itself, provided they are comparable in their function to hand delivery, letter, facsimile transmission, or electronic mail in terms of creating a documented, addressed communication to the recipient.

The Amendment History: Definitions Refined Across Five Decades

FINRA Rule 11120's amendment history — original effective dates including March 1, 1970 and March 18, 1983 and August 13, 1990, followed by SR-NASD-91-13 effective November 1, 1991, SR-NASD-2005-089 effective October 1, 2005, and finally SR-FINRA-2010-030 effective December 15, 2010 — reflects the progressive addition and refinement of definitions as the Uniform Practice Code's operational framework evolved. The 2005 amendment through SR-NASD-2005-089 likely reflects updates to definitions addressing electronic communication methods — consistent with the electronic mail reference in paragraph (h)'s written notice definition — as electronic communication became standard practice in the securities industry during the 2000s. The final 2010 amendment, like FINRA Rules 11100 through 11112, reflects the transfer of the Uniform Practice Code into the Consolidated FINRA Rulebook with updated institutional references from NASD to FINRA terminology.

Connection to FINRA Rules 11110, 11112, 11121, 11140 Through 11170, 11360 Through 11365, and 11700 Through 11894

FINRA Rule 11120 connects to FINRA Rule 11110 — whose UPC Committee establishment is confirmed and cross-referenced by FINRA Rule 11120(b)'s Committee definition. It connects to FINRA Rule 11112 — whose panel mechanism operates within the Committee definition of FINRA Rule 11120(b). It connects to FINRA Rule 11121 — whose general trade date framework complements FINRA Rule 11120(g)'s specific cross-time-zone trade date rule. It connects to FINRA Rules 11140 through 11170 — whose ex-dividend, ex-rights, ex-warrants, ex-interest, and ex liquidating payment provisions all depend on FINRA Rule 11120(d)'s ex-date definition and FINRA Rule 11120(f)'s record date definition. It connects to FINRA Rules 11360 through 11365 — whose units-of-delivery provisions for various security types rely on FINRA Rule 11120(c)'s delivery date definition. And it connects broadly to FINRA Rules 11700 through 11894 — the reclamation and close-out procedures whose various notice requirements depend on FINRA Rule 11120(e)'s immediate return receipt definition and FINRA Rule 11120(h)'s written notice definition.

Examination Relevance and Key Takeaways

FINRA Rule 11120 is tested on the Series 7 and Series 24 examinations as the definitional foundation of the Uniform Practice Code — a rule whose eight defined terms underpin the operational mechanics of the entire FINRA Rule 11000 series.

The key points to retain are these: FINRA Rule 11120(a) defines Code or UPC Code as the FINRA Rule 11000 Series itself; FINRA Rule 11120(b) defines Committee as the UPC Committee delegated authority by the Board of Governors under FINRA Rule 11110, encompassing panels under FINRA Rule 11112; FINRA Rule 11120(c) defines delivery date as interchangeable with settlement date — the date designated for delivery of securities; FINRA Rule 11120(d) defines ex-date as the date on and after which a security trades without a specific dividend or distribution — the foundational concept for FINRA Rules 11140 through 11160; FINRA Rule 11120(e) defines immediate return receipt as a receiving member's acknowledgment of a written notice, issued upon receipt via the same media through which the notice was received; FINRA Rule 11120(f) defines record date as the date fixed by the trustee, registrar, paying agent, or issuer for determining holders entitled to dividends, interest, principal payments, or other distributions across equity securities, bonds, similar evidences of indebtedness, and unit investment trust securities; FINRA Rule 11120(g), titled Trade Date, establishes the specific rule that for cross-time-zone transactions, the correct trade date is the day on which the dealer in the later time zone accepts the trade — distinct from and complementary to FINRA Rule 11121's general trade date framework; FINRA Rule 11120(h) defines written notice broadly to include hand delivery, letter, facsimile transmission, electronic mail, or other comparable media; and the rule was last amended December 15, 2010 through SR-FINRA-2010-030, with prior amendments effective 1970, 1983, 1990, 1991, and 2005, and one selected notice — 10-49.