FINRA Rule 11121

The Committee's ruling resolves the trade date question this scenario presents: the correct trade date for a transaction of this type is the day on which the Western dealer accepts the bid or offer, even though the acceptance may not reach the Eastern dealer until the following day. 

This illustrative ruling embodies precisely the same substantive principle codified in declarative form in FINRA Rule 11120(g) — that 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 is the day on which the dealer in the later time zone accepts the trade. 

FINRA Rule 11121 was last amended by SR-FINRA-2010-030 effective December 15, 2010, with a prior amendment effective August 13, 1990. One selected notice is associated — Regulatory Notice 10-49.

FINRA Rule 11121 sits within the 11000 Uniform Practice Code immediately following FINRA Rule 11120's definitions framework and immediately preceding FINRA Rule 11130's when-, as-, and if-issued contracts framework.

The Ruling of the Committee Format: A Worked Example as Rule Text

FINRA Rule 11121's format is distinctive within the Uniform Practice Code — rather than stating a general principle in declarative terms and leaving its application to specific facts to interpretation, the rule presents the principle entirely through a specific worked example, framed explicitly as a Ruling of the Committee. This format directly traces to FINRA Rule 11110's grant of authority to the UPC Committee to issue interpretations or rulings with respect to the applicability of this Code to situations in which there is no substantial disagreement as to the facts involved. FINRA Rule 11121 appears to be a codification of one such Committee ruling — originally issued to resolve a specific cross-time-zone trade date question that arose in practice, and subsequently incorporated directly into the Code's text as FINRA Rule 11121 itself.

This worked-example format has pedagogical value beyond its formal regulatory function. Where FINRA Rule 11120(g) states the cross-time-zone trade date principle in abstract terms — applicable to any transaction between time zones where the bid or offer is accepted in a later time zone than that of the originator — FINRA Rule 11121 demonstrates that same principle through a concrete factual pattern that a market participant can readily map onto their own circumstances. A dealer encountering an actual cross-time-zone transaction can compare their specific facts to FINRA Rule 11121's Eastern-city/Western-city scenario and confirm that the same trade date determination applies.

The Substantive Scenario: Eastern Dealer, Western Dealer, and the Acceptance Timing Gap

The factual scenario FINRA Rule 11121 presents involves three elements that together create the trade date ambiguity the ruling resolves.

First, a dealer in an Eastern city — meaning a dealer located in a time zone earlier in the day relative to the counterparty — leaves a bid or offering with a dealer in a Western city. The leaves a bid or offering formulation describes the originating dealer's action of communicating a proposed transaction term to the counterparty, with that bid or offering remaining open for the Western dealer's potential acceptance.

Second, the bid or offering is good until the close of the latter's business day — meaning the offer remains open and acceptable throughout the Western dealer's entire business day, even though that business day extends later into the calendar day (in absolute time) than the Eastern dealer's own business day would have already ended.

Third, the Western dealer accepts the bid or offering on that day — meaning the Western dealer's acceptance occurs within the Western dealer's own business day, before that business day's close — but due to the difference in time between the two localities, its notice of acceptance is received by the Eastern dealer on the following day. This is the crux of the timing gap: by the time the acceptance notice physically or electronically reaches the Eastern dealer, the calendar date in the Eastern dealer's locality has already advanced to the next day, even though the Western dealer's acceptance occurred on what was, for the Western dealer, still the original day.

The Committee's Resolution: The Accepting Dealer's Date Controls

The Committee's ruling resolves this scenario unambiguously — the correct trade date for a transaction of this type is the day on which the Western dealer accepts the bid or offer, even though the acceptance may not reach the Eastern dealer until the following day.

This resolution establishes a clear governing principle: the trade date is anchored to the moment and locality of acceptance — not to the moment or locality of the original offer, and not to the moment the acceptance notice is actually received by the offering party. The Western dealer's acceptance, occurring within the Western dealer's own business day, fixes the trade date for the transaction as that day — regardless of when, due to time zone differences and communication delays, the Eastern dealer's records might otherwise reflect the transaction.

The practical importance of this resolution becomes clear when one considers the alternative possibilities the Committee implicitly rejected. If the trade date were instead determined by when the acceptance notice was received by the originating party, the same transaction could be recorded with different trade dates by the two counterparties — the Western dealer recording it as occurring on the day of acceptance, while the Eastern dealer, absent this ruling, might record it as occurring on the following day when the notice was received. Such a discrepancy would create exactly the kind of uncertainty and lack of uniformity that FINRA Rule 11110 identifies as one of the core problems the Uniform Practice Code and its Committee's interpretive authority are designed to eliminate. By fixing the trade date to the accepting dealer's date of acceptance — a single, objectively determinable moment — FINRA Rule 11121 ensures both counterparties record the same trade date for the same transaction, regardless of which side of the time zone divide each counterparty is located on.

The Relationship Between FINRA Rule 11121 and FINRA Rule 11120(g)

FINRA Rule 11121's relationship to FINRA Rule 11120(g) deserves careful attention, since both provisions address what is substantively the same cross-time-zone trade date question. FINRA Rule 11120(g) — within the broader Definitions rule, itself titled Trade Date — states the principle in general declarative terms applicable to any transaction between time zones where the bid or offer is accepted in a later time zone than that of the originator. FINRA Rule 11121 — a standalone rule also titled Trade Date — presents the identical principle through the specific worked Eastern-city/Western-city example, framed as a Committee ruling.

Rather than representing redundant or conflicting provisions, these two rules can be understood as complementary articulations of the same governing principle at different levels of generality — FINRA Rule 11120(g) provides the abstract statement suitable for inclusion within the Code's definitional framework, while FINRA Rule 11121 provides the concrete illustrative application as a standalone rule, preserving the historical form of the original Committee ruling from which the principle derives. The Code's retention of both formulations — rather than consolidating them into a single provision — reflects the layered, historically accreted character of the Uniform Practice Code, where provisions added at different points across more than five decades of amendment history (FINRA Rule 11121's own history extends back to at least August 13, 1990) coexist even where their substantive content overlaps.

For practical purposes, a market participant encountering a cross-time-zone trade date question can rely on either provision to reach the same correct answer — the day on which the dealer in the later time zone accepts the trade governs, whether that dealer is described abstractly as the dealer in the later time zone under FINRA Rule 11120(g) or concretely as the Western dealer in FINRA Rule 11121's illustrative scenario.

The Broader Significance of Trade Date Determinations in the Uniform Practice Code

The trade date — as distinct from the settlement or delivery date that FINRA Rule 11120(c) defines — is the date on which a transaction is deemed to have been executed, and it serves as the reference point from which numerous other timing calculations throughout the Uniform Practice Code and the broader securities settlement framework are measured. Settlement cycles are calculated from the trade date. The ex-date framework of FINRA Rule 11120(d) and FINRA Rules 11140 through 11160 depends on the relationship between a transaction's trade date and the relevant ex-date for determining whether the transaction occurred with or without the right to a pending dividend or distribution. And the various notice and timing provisions throughout the close-out procedures of FINRA Rules 11800 through 11894 — including the buy-in and sell-out frameworks of FINRA Rules 11810 and 11820 — depend on accurate, consistently-recorded trade dates to determine when various timing-sensitive obligations and rights arise.

Given this foundational role, FINRA Rule 11121's resolution of the cross-time-zone trade date question — even though it addresses what might seem like a narrow edge case — has outsized importance for ensuring that the entire timing-dependent architecture of the Uniform Practice Code operates consistently for transactions that span the United States' multiple time zones, a circumstance that, given the geographic distribution of FINRA's membership, is a routine rather than exceptional occurrence in the over-the-counter markets the Uniform Practice Code governs.

Connection to FINRA Rules 11110, 11120, 11140 Through 11160, 11810, and 11820

FINRA Rule 11121 connects to FINRA Rule 11110 as the source of the UPC Committee's authority to issue the kind of interpretive ruling that FINRA Rule 11121 itself embodies. It connects to FINRA Rule 11120 — specifically FINRA Rule 11120(g) — as the declarative-form counterpart addressing the identical cross-time-zone trade date principle, and to FINRA Rule 11120(c)'s delivery date definition as the related but distinct timing concept that trade date determinations under FINRA Rule 11121 feed into for settlement calculation purposes. It connects to FINRA Rules 11140 through 11160 — whose ex-dividend, ex-rights, ex-warrants, and ex-interest frameworks depend on accurate trade date determinations relative to ex-dates and record dates. And it connects to FINRA Rules 11810 and 11820 — whose buy-in and sell-out timing frameworks depend on consistently-determined trade dates for transactions that may span multiple time zones.

Applying the Ruling: When Delivery Is Due

FINRA Rule 11121 fixes the trade date of a cross-time-zone transaction at the day on which the Western dealer accepts the bid or offer. The Code's delivery dates are counted from the date of the transaction. For a transaction made "regular way", FINRA Rule 11320(b) requires delivery at the office of the purchaser on, but not before, the first business day following the date of the transaction.

Suppose a dealer in an Eastern city leaves a bid for a stock, regular way, with a dealer in a Western city, good until the close of the Western dealer's business day. The Western dealer accepts on a Thursday, and its notice of acceptance reaches the Eastern dealer on the Friday. Thursday and Friday are both business days. The trade date is the Thursday, so delivery is due on the Friday, the first business day following the Thursday. That is the same day on which the Eastern dealer receives the notice of acceptance. Delivery is not due on the Monday, which would be the first business day following the Friday.

A transaction made for "cash" is counted the same way from the same date. FINRA Rule 11320(a) requires delivery at the office of the purchaser on the day of the transaction. For a cash transaction of the kind FINRA Rule 11121 describes, that day is the day on which the Western dealer accepts, not the following day on which the acceptance reaches the Eastern dealer.

Applying the Ruling: Accrued Interest

The trade date also fixes how much interest is added to the price of an interest-paying security. Under FINRA Rule 11620(a), in the settlement of contracts other than for "cash", interest at the rate specified in the security is added to the dollar price, computed up to but not including the first business day following the date of the transaction.

Suppose a Western dealer accepts, on a Monday, an Eastern dealer's regular way offering of an interest-paying bond, and the notice of acceptance reaches the Eastern dealer on the Tuesday. Monday, Tuesday and Wednesday are business days. The trade date is the Monday, so the interest added to the dollar price is computed up to but not including the Tuesday. It is not computed up to the Wednesday, as it would be if the trade were dated from the day the notice arrived.

Applying the Ruling: Comparisons and Their Correction

FINRA Rule 11210(a)(1) requires each party to a transaction to send a Uniform Comparison or Confirmation by the end of the day on the trade date. The Uniform Comparison form carries a trade date field. For the Western dealer in FINRA Rule 11121's example, the trade date is the day on which it accepted, so its comparison is due by the end of that day, not by the end of the following day on which its notice of acceptance reaches the Eastern dealer.

Comparisons are compared on receipt to find any discrepancies, and a corrected comparison is sent by the party in error. Suppose the Western dealer's comparison shows the Thursday on which it accepted and the Eastern dealer's shows the Friday on which the notice of acceptance arrived. The two comparisons disagree on the trade date. Under FINRA Rule 11121 the correct trade date is the Thursday, so it is the Eastern dealer that must send the corrected comparison.

Applying the Ruling: Ex-Dates

FINRA Rule 11120(d) defines the ex-date as the date on and after which the security is traded without a specific dividend or distribution. Whether a cross-time-zone transaction was made on or after the ex-date is therefore judged by its trade date, which FINRA Rule 11121 fixes at the Western dealer's day of acceptance.

Suppose an issuer declares an ordinary cash dividend worth less than 25 percent of the value of its stock, and definitive information is received well before the record date. The record date is a Tuesday, which is a business day, so under FINRA Rule 11140(b)(1) the ex-dividend date is that Tuesday. On the Tuesday, a Western dealer accepts an Eastern dealer's regular way bid for the stock, and the notice of acceptance reaches the Eastern dealer on the Wednesday. The trade date is the Tuesday, the ex-dividend date itself, so the transaction is an ex-dividend transaction.

The ex-date is not always the record date. For a cash distribution worth 25 percent or more of the value of the stock, FINRA Rule 11140(b)(2) makes the ex-dividend date the first business day following the payable date. Suppose the payable date of such a distribution is a Monday and the Tuesday is a business day, so the ex-dividend date is the Tuesday. A Western dealer accepts an Eastern dealer's regular way bid on the Monday, and the notice of acceptance reaches the Eastern dealer on the Tuesday. The trade date is the Monday, before the ex-dividend date, so the transaction is not an ex-dividend transaction.

Where the Ruling Applies: The Scope of the Code

FINRA Rule 11121 is a rule of the Uniform Practice Code, and it governs the transactions the Code governs. FINRA Rule 11100(a) makes over-the-counter secondary market transactions in securities between members subject to the Code, with listed exceptions. One exception is transactions in municipal securities as defined in Section 3(a)(29) of the Exchange Act. So where two members in different time zones trade a municipal security, the transaction is not subject to the Code, and FINRA Rule 11121 does not fix its trade date.

Applying the Ruling: Seller's Option Contracts

A transaction made "seller's option" is due for delivery on the date on which the option expires. Under FINRA Rule 11320(c), the seller may deliver earlier, on any business day after the first business day following the date of the transaction and before the option expires, provided it delivers written notice of its intention to deliver at the office of the purchaser on a business day preceding the day of delivery. For a cross-time-zone transaction of the kind FINRA Rule 11121 describes, that count runs from the day on which the Western dealer accepts.

Suppose a dealer in an Eastern city leaves a bid for a stock, seller's option, with a dealer in a Western city, good until the close of the Western dealer's business day, and the option does not expire until well into the following week. The Western dealer accepts on a Thursday, and its notice of acceptance reaches the Eastern dealer on the Friday. Thursday, Friday, Monday and Tuesday are business days. The first business day following the Thursday is the Friday, so the earliest day on which the Western dealer, as seller, may deliver before the option expires is the Monday, provided it has delivered written notice of its intention to deliver at the Eastern dealer's office on a business day preceding the Monday. It is not the Tuesday, which would be the earliest day if the trade were dated from the Friday on which the notice arrived.

Applying the Ruling: Interest on a Cash Trade

FINRA Rule 11620(a) computes interest differently for a transaction for "cash". In transactions for cash, interest is added to the dollar price at the rate specified in the security up to but not including the date of the transaction.

Suppose a Western dealer accepts, on a Thursday, an Eastern dealer's offering of an interest-paying bond for cash, and the notice of acceptance reaches the Eastern dealer on the Friday. The trade date is the Thursday, so the interest added to the dollar price is computed up to but not including the Thursday. It is not computed up to the Friday, the day on which the notice arrived.

Applying the Ruling: Ex-Rights Dates and Non-Delivery Record Dates

FINRA Rule 11140 also sets ex-dates that are not the record date. Under FINRA Rule 11140(d), in a transferable rights subscription offering where definitive information is received sufficiently in advance of the effective date of the registration statement, the date designated as the ex-rights date is the first business day after that effective date. Under FINRA Rule 11140(b)(1), for a dividend worth less than 25 percent of the value of the stock, where definitive information is received sufficiently in advance of the record date and the record date falls on a day the Committee has designated a non-delivery date, the date designated as the ex-dividend date is the first business day preceding the record date. A regular way cross-time-zone transaction is measured against either date by its trade date, the day on which the Western dealer accepts.

Suppose an issuer makes a transferable rights subscription offering, definitive information is received well in advance, and the registration statement becomes effective on a Monday. The Tuesday is a business day, so the ex-rights date is the Tuesday. On the Tuesday, a Western dealer accepts an Eastern dealer's regular way bid for the stock, and the notice of acceptance reaches the Eastern dealer on the Wednesday. The trade date is the Tuesday, the ex-rights date itself, so the transaction is an ex-rights transaction.

Now suppose an issuer declares a cash dividend worth less than 25 percent of the value of its stock, definitive information is received well before the record date, and the record date is a Monday that the Committee has designated a non-delivery date. The Friday before it is a business day, so the ex-dividend date is that Friday. On the Thursday, a Western dealer accepts an Eastern dealer's regular way bid for the stock, and the notice of acceptance reaches the Eastern dealer on the Friday. The trade date is the Thursday, before the ex-dividend date, so the transaction is not an ex-dividend transaction.

Applying the Ruling: Buy-Ins

When a seller fails to deliver, the buyer's remedy is provided by FINRA Rule 11810, and its timing is counted from the date delivery was due. Under FINRA Rule 11810(a), a contract that has not been completed by the seller according to its terms may be closed by the buyer not sooner than the third business day following the date delivery was due. Under FINRA Rule 11810(k), a contract made for cash may be bought in without notice during the normal trading hours on the day following the date delivery is due.

Suppose a Western dealer accepts, on a Monday, an Eastern dealer's regular way bid for a stock, and the notice of acceptance reaches the Eastern dealer on the Tuesday. The contract is not subject to the buy-in requirements of a national securities exchange or a registered clearing agency, and Monday through Friday are business days. Delivery was due on the Tuesday, the first business day following the Monday. If the Western dealer fails to deliver, the earliest day on which the Eastern dealer may close the contract by buy-in is the Friday, the third business day following the Tuesday.

If the same bid had been for cash, delivery would have been due on the Monday, the day of the transaction. A failure to deliver would then permit a buy-in on the Tuesday, the day following, which is the same day on which the Eastern dealer receives the notice of acceptance.

Two Localities, One Clock: The Buy-In Notice Deadline

FINRA Rule 11810(b)(1) states its deadline in Eastern Time. Written notice of buy-in must be delivered to the seller at its office not later than 12:00 noon, Eastern Time, two business days preceding the execution of the proposed buy-in.

Suppose an Eastern dealer has bought stock from a Western dealer whose office is in a city where local time runs three hours behind Eastern Time. The Western dealer has failed to deliver, and the Eastern dealer proposes to execute a buy-in on a Thursday. The contract is not subject to the buy-in requirements of a national securities exchange or a registered clearing agency. Tuesday, Wednesday and Thursday are business days. The written notice must reach the Western dealer's office by 12:00 noon Eastern Time on the Tuesday, which is 9:00 a.m. local time at that office. Noon local time at the Western office would be 3:00 p.m. Eastern Time, which is too late.

Two Localities: Where and When Delivery Is Made

Under FINRA Rule 11320(h), delivery is made at the office of the purchaser between the hours established by rule or practice in the community where that office is located. Where the Eastern dealer in FINRA Rule 11121's example leaves a bid, it is the buyer, and the Western dealer who accepts the bid is the seller.

Suppose a dealer whose only office is in an Eastern city leaves a bid for a stock, regular way, with a dealer in a Western city, and the Western dealer accepts. The Eastern dealer is the purchaser and the Western dealer is the seller. The Western dealer must deliver at the Eastern dealer's office, during the hours established by rule or practice in the Eastern city, not during the hours of its own Western city.

Applying the Ruling: When No Comparison Comes Back

FINRA Rule 11210(c) and (d) set out two Don't Know procedures. Either may be used when a party to a transaction sends a comparison or confirmation of a trade but does not receive a comparison or confirmation, or a signed DK, from the contra-member by the end of the day on the trade date. FINRA Rule 11210 does not apply to transactions that clear through the National Securities Clearing Corporation or other clearing organizations registered under the Exchange Act.

Suppose a Western dealer accepts an Eastern dealer's bid on a Thursday and sends its Uniform Comparison that day, and the notice of acceptance reaches the Eastern dealer on the Friday. The trade does not clear through a registered clearing organization. The trade date is the Thursday. Nothing from the Eastern dealer has reached the Western dealer by the end of the Thursday, so the Western dealer may use a Don't Know procedure, although the Eastern dealer had not yet learned of the trade.

Two Localities: Marking a Contract to the Market

FINRA Rule 11740 lets a party that is partially unsecured by a change in the market value of the subject of a contract demand a deposit from the other party. Paragraphs (d) and (f) of the rule turn on where a party has its office. Under FINRA Rule 11740(d), a demand is delivered at the office of the party upon whom it is made, during the business hours of member banks of the Federal Reserve System located in the community where that party maintains its office. Under FINRA Rule 11740(f), a contract may not be closed for failure to comply before the expiration of regular delivery time in the community where the party making the demand maintains its office, on the next business day following the day on which the other party received notice of the demand.

Suppose an Eastern dealer and a Western dealer have an open seller's option contract, and the market moves so that the Eastern dealer is partially unsecured. Its written demand for a deposit is delivered at the Western dealer's office, during the business hours of Federal Reserve member banks in the Western city. If the Western dealer receives the demand on a Tuesday and does not comply, and the Wednesday is a business day, the Eastern dealer may not close the contract before regular delivery time has expired in the Eastern city on the Wednesday.

Where the Ruling Applies: Unit Investment Trusts

FINRA Rule 11100(a)(4) excludes from the Code transactions in redeemable securities issued by companies registered under the Investment Company Act. It provides, however, that the Code applies to secondary market transactions between members in any security issued by a registered investment company classified as a unit investment trust. So where two members in different time zones trade units of a unit investment trust over the counter in the secondary market, and do not compare, clear or settle the trade through a registered clearing agency, the transaction is subject to the Code and FINRA Rule 11121 fixes its trade date. Where they trade other redeemable securities issued by a registered investment company, the transaction is not subject to the Code.

Applying the Ruling: Liability Notices for Expiring Securities

Some contracts are for securities that face an expiring event. Under FINRA Rule 11810(j)(1)(A), if a contract is for warrants, rights, convertible securities or other securities which are due to expire by their terms, have been called for redemption, are the subject of a tender or exchange offer, or are subject to other expiring events, and the last day on which the securities must be delivered or surrendered, called the expiration date, is the settlement date of the contract or later, the receiving member may deliver a Liability Notice to the delivering member as an alternative to the close-out procedures of paragraphs (b) through (h) of that rule. Under FINRA Rule 11120(c), the terms delivery date and settlement date are used interchangeably and mean the date designated for the delivery of securities.

Under FINRA Rule 11810(j)(2), if the delivering member fails to deliver the securities on the expiration date, it is liable for any damages which may accrue, and a Liability Notice delivered under the rule serves as notification by the receiving member of the existence of a claim for damages.

Suppose a dealer in an Eastern city leaves a bid to buy warrants, regular way, with a dealer in a Western city, good until the close of the Western dealer's business day. The warrants are due to expire by their terms, and the last day on which they must be delivered or surrendered is a Tuesday. The contract is not subject to the buy-in requirements of a national securities exchange or a registered clearing agency, and Monday, Tuesday and Wednesday are business days. The Western dealer accepts on the Monday, and its notice of acceptance reaches the Eastern dealer on the Tuesday. The trade date is the Monday, so under FINRA Rule 11320(b) the settlement date is the Tuesday, the first business day following the Monday. The expiration date is the settlement date, so the Eastern dealer, as the receiving member, may deliver a Liability Notice to the Western dealer. If the trade were dated from the Tuesday on which the notice arrived, the settlement date would be the Wednesday, after the expiration date, and the condition would not be met.

Applying the Ruling: Due-Bills for Rights

Among other cases, FINRA Rule 11630(c) deals with a sale made before the stock trades ex-rights but delivered late. A security sold before it trades "ex-dividend" (for stock and scrip dividends) or "ex-rights" and delivered too late for transfer on or before the record date must be accompanied by a due-bill for the distribution to be made. Under FINRA Rule 11630(a), a due-bill is an instrument evidencing the transfer of title to any security or rights pertaining to any security contracted for, or evidencing the obligation of a seller to deliver such to a subsequent purchaser. The requirement in FINRA Rule 11630(c) to pro-rate the value of the contract does not apply to rights.

Whether a cross-time-zone sale was made before the stock traded ex-rights is judged by its trade date. Under FINRA Rule 11140(d), in a transferable rights subscription offering where definitive information is received sufficiently in advance of the effective date of the registration statement, the date designated as the ex-rights date is the first business day after that effective date.

Suppose an issuer makes a transferable rights subscription offering, definitive information is received well in advance, and the registration statement becomes effective on a Wednesday. The Thursday is a business day, so the ex-rights date is the Thursday. The record date for the rights is the Wednesday. On the Wednesday, a Western dealer accepts an Eastern dealer's regular way bid to buy the stock, and the notice of acceptance reaches the Eastern dealer on the Thursday. The trade date is the Wednesday, so the stock was sold before it traded ex-rights. The Western dealer delivers on the Thursday, the first business day following the Wednesday. That delivery comes after the record date, too late for transfer on or before it, so it must be accompanied by a due-bill for the rights. If the trade were dated from the Thursday on which the notice arrived, the sale would have been made on the ex-rights date, not before it.

Applying the Ruling: Counting the Days of Interest

FINRA Rule 11620(b) computes interest on the basis of a 360-day year. Every calendar month is considered to be 1/12 of 360 days, and every period from a date in one month to the same date in the following month is considered to be 30 days. The Note to that paragraph figures the period from the 15th of May to the 6th of June as 21 days. Under FINRA Rule 11620(a), in a contract other than for cash, the interest is computed up to but not including the first business day following the date of the transaction.

Suppose the interest to be added on a bond runs from the 10th of March. On Thursday the 7th of April, a Western dealer accepts an Eastern dealer's regular way offering of the bond, and the notice of acceptance reaches the Eastern dealer on Friday the 8th of April. Friday the 8th is a business day, and the next business day after it is Monday the 11th. The trade date is Thursday the 7th, so the interest is computed up to but not including Friday the 8th. On the 360-day basis, the period from the 10th of March to the 10th of April is 30 days, so the period from the 10th of March to the 8th of April is 28 days. If the trade were dated from Friday the 8th, when the notice arrived, the interest would run up to but not including Monday the 11th, which is 31 days.

Examination Relevance and Key Takeaways

FINRA Rule 11121 is tested on the Series 7 and Series 24 examinations as the cross-time-zone trade date rule — presented in the distinctive form of an illustrative Committee ruling rather than abstract declarative text.

The key points to retain are these: FINRA Rule 11121 is framed entirely as a Ruling of the Committee presenting a worked example — a dealer in an Eastern city leaves a bid or offering with a dealer in a Western city, good until the close of the Western dealer's business day; the Western dealer accepts on that day, but due to the time difference the acceptance notice reaches the Eastern dealer only on the following day; the Committee's ruling is that the correct trade date is the day on which the Western dealer — the dealer in the later time zone — accepts the bid or offer, even though the acceptance notice may not reach the Eastern dealer until the following day; this principle is substantively identical to FINRA Rule 11120(g)'s declarative statement that for transactions between time zones, the correct trade date is the day on which the dealer in the later time zone accepts the trade; the trade date — distinct from the settlement or delivery date defined in FINRA Rule 11120(c) — is the foundational reference point for settlement cycle calculations, ex-date determinations under FINRA Rules 11140 through 11160, and close-out timing under FINRA Rules 11810 and 11820; and the rule was last amended December 15, 2010 through SR-FINRA-2010-030, with a prior amendment effective August 13, 1990, and one selected notice — 10-49.