FINRA Rule 11361

Paragraph (b) requires that a properly executed Uniform Delivery Ticket — the form set forth as Supplementary Material .01 to FINRA Rule 11360, examined in this dictionary's immediately preceding entry — accompany the delivery of securities, with a footnote referencing the same 1971 Final Report of the Banking and Securities Industry Committee entitled Four Uniform Forms that underlies FINRA Rule 11210(b)'s Uniform Comparison requirement. FINRA Rule 11361 was amended by SR-FINRA-2010-030 effective December 15, 2010, with prior amendments effective July 8, 1968 and December 1, 1972 — no amendments have occurred since 2010. One selected notice is associated — Regulatory Notice 10-49.

FINRA Rule 11361 sits within the 11300 Delivery of Securities subsection of the 11000 Uniform Practice Code as the first of the five security-type-specific units of delivery rules, immediately following FINRA Rule 11360's series marker and immediately preceding FINRA Rule 11362's units of delivery framework for bonds.

FINRA Rule 11361(a): The Four Contract-Size Categories

FINRA Rule 11361(a) establishes its framework around the 100-share standard — the round lot — as the organizing reference point for all four numbered subparagraphs, with each subparagraph addressing how stock certificates must be denominated depending on the relationship between the contracted quantity and this 100-share standard.

Paragraph (a)(1) addresses the simplest case — transactions for exactly 100 shares may be delivered in one certificate for the exact number of shares, or in certificates totaling 100 shares. This subparagraph confirms that for a standard round-lot transaction, the delivering party has flexibility in how the certificates are denominated — a single 100-share certificate satisfies the requirement, but so does any combination of certificates whose denominations sum to 100 shares, such as two 50-share certificates or four 25-share certificates.

Paragraph (a)(2) addresses transactions greater than 100 shares and a multiple of 100 — for example, 200, 300, 500, or 1,000 shares. For such transactions, delivery shall be in the exact amount of the contract, or in multiples of 100 shares, or in amounts from which units of 100 shares can be made, or a combination thereof equaling the amount of the contract. 

This subparagraph again provides substantial flexibility — a 500-share contract could be satisfied by a single 500-share certificate, by five separate 100-share certificates, by certificates in other denominations that can be combined into 100-share units, or by some combination of these approaches — provided the total equals the contracted amount.

Paragraph (a)(3) addresses transactions for more than 100 shares but not in a multiple of 100 — for example, 350 shares, representing 3 round lots (300 shares) plus a 50-share odd-lot. For such transactions, delivery shall be in multiples of 100 shares, or in amounts from which units of 100 shares can be made, or a combination thereof, plus either the exact amount for the odd lot or smaller amounts equaling the odd lot. 

This subparagraph separates the contracted quantity into its round-lot component and its odd-lot component, applying the same flexible multiples-of-100 framework from paragraph (a)(2) to the round-lot portion, while addressing the odd-lot portion separately — the odd lot itself may be delivered as a single certificate for the exact odd-lot amount, or as smaller certificates that together aggregate to the odd-lot amount.

Paragraph (a)(4) addresses transactions for less than 100 shares — pure odd-lot transactions, such as a 25-share or 75-share transaction with no round-lot component at all. For such transactions, delivery shall be in the exact amount of the contract, or for smaller units aggregating the amount of the contract — mirroring the flexibility of the odd-lot treatment in paragraph (a)(3)'s second half, but applied to the entire contracted quantity rather than merely an odd-lot remainder after a round-lot portion.

The Underlying Logic: Round-Lot Modularity with Odd-Lot Flexibility

Considered together, FINRA Rule 11361(a)'s four subparagraphs implement a coherent underlying logic — the round-lot unit of 100 shares functions as the basic modular building block for stock certificate denominations, with substantial flexibility built into how that modular unit may be assembled or subdivided, while any odd-lot component — whether the entire transaction in the case of paragraph (a)(4), or the remainder after round lots in the case of paragraph (a)(3) — receives its own parallel flexibility for denominations that aggregate to the odd-lot amount.

This modular approach reflects the practical reality of how stock certificates have historically been issued, held, and transferred — certificates may be issued in various denominations by transfer agents, accumulated through prior transactions in various combinations, and held in whatever denominations happen to result from a holder's transaction history. Rather than requiring that delivery occur in some single rigid denomination scheme that might require certificate splitting or combination before a delivery could be made, FINRA Rule 11361(a)'s flexible framework allows whatever certificate denominations a delivering party happens to hold — provided they sum correctly to the contracted amount, with the round-lot and odd-lot components properly accounted for — to satisfy the delivery obligation.

The Connection to FINRA Rule 11350's Odd-Lot Exception

FINRA Rule 11361(a)'s round-lot and odd-lot framework provides the essential vocabulary that FINRA Rule 11350's exception, examined in this dictionary's immediately preceding entry, depends upon. Recall that FINRA Rule 11350 requires a purchaser to accept a part delivery on any contract due, except where the portion remaining undelivered is an amount which includes an odd-lot which was not a part of the original transaction.

FINRA Rule 11361(a) clarifies what odd-lot means in this context — any quantity that is not a multiple of 100 shares. Applying FINRA Rule 11361(a)'s framework to the illustration this dictionary used in its FINRA Rule 11350 entry: a 500-share contract is, under FINRA Rule 11361(a)(2), a transaction greater than 100 shares and a multiple of 100 — it has no odd-lot component at all under FINRA Rule 11361's categorization. If the seller tenders a part delivery of 450 shares, the remaining 50 shares constitutes an odd-lot under FINRA Rule 11361(a)(4)'s less than 100 shares category — an odd-lot that did not exist in the original 500-share contract's categorization under paragraph (a)(2). FINRA Rule 11350's exception would therefore apply, and the purchaser would not be required to accept this 450-share part delivery.

By contrast, a 550-share contract is, under FINRA Rule 11361(a)(3), a transaction for more than 100 shares but not in a multiple of 100 — it already has a 50-share odd-lot component built into its original categorization. A part delivery leaving a 50-share remainder would not create a new odd-lot that was not part of the original transaction, since the original transaction already contemplated this odd-lot under paragraph (a)(3)'s framework — FINRA Rule 11350's exception would not apply, and the purchaser would be required to accept such a part delivery.

FINRA Rule 11361(b): The Uniform Delivery Ticket Requirement

FINRA Rule 11361(b) establishes the documentary requirement that connects this rule directly back to FINRA Rule 11360's Supplementary Material .01 examined in this dictionary's immediately preceding entry — a properly executed Uniform Delivery Ticket must accompany the delivery of securities. The footnote to this provision — specifications for use of the Uniform Delivery Ticket are contained in the Final Report of the Banking and Securities Industry Committee entitled Four Uniform Forms dated December 22, 1971 — uses language virtually identical to the footnote accompanying FINRA Rule 11210(b)'s Uniform Comparison requirement, confirming that both forms trace to the same 1971 standardization effort.

The placement of this Uniform Delivery Ticket requirement specifically within FINRA Rule 11361 — the stocks-specific units of delivery rule — rather than within FINRA Rule 11360 itself, where the form is actually set forth as Supplementary Material .01, might initially seem like an unusual drafting choice. However, this placement makes sense when considered alongside FINRA Rule 11360's role as a pure series marker carrying Supplementary Material but no operative rule text of its own, as this dictionary's FINRA Rule 11360 entry discussed — FINRA Rule 11360 holds the form, while FINRA Rule 11361, as the first substantive rule in the units of delivery cluster, is where the operative requirement to use that form is actually stated. Whether FINRA Rules 11362 through 11365 each separately restate this Uniform Delivery Ticket requirement, or whether FINRA Rule 11361(b)'s statement is intended to apply across the entire units of delivery cluster, is a question this dictionary will be positioned to address as it examines those subsequent rules.

The 1968 and 1972 Amendments: Pre-Decimalization Origins

FINRA Rule 11361's amendment history — effective dates of July 8, 1968 and December 1, 1972, followed by the December 15, 2010 Consolidated Rulebook transfer through SR-FINRA-2010-030, with no amendments since — places the rule's substantive framework among the oldest provisions examined in this dictionary's coverage of the Uniform Practice Code, alongside FINRA Rule 11110's 1968 origin discussed in this dictionary's earlier entry on the UPC Committee.

The 100-share round-lot standard that FINRA Rule 11361(a) is built around reflects a convention that, at the time of the rule's 1968 and 1972 origins, was deeply embedded in U.S. equity market structure — a convention that predates the decimalization of stock prices in the early 2000s and that has persisted, in terms of round-lot trading conventions, even as the specific operational significance of round lots versus odd lots has evolved with electronic trading. FINRA Rule 11361's continued reliance on the 100-share standard, unchanged through the 2010 Consolidated Rulebook transfer, confirms that this fundamental denomination convention has remained stable even as so many other aspects of securities market infrastructure — settlement cycles, electronic communication, depository-based book-entry settlement — have transformed dramatically since 1968.

Connection to FINRA Rules 11210, 11350, 11360, and 11362 Through 11365

FINRA Rule 11361 connects directly to FINRA Rule 11210(b) — whose Uniform Comparison requirement and 1971 Four Uniform Forms footnote parallel FINRA Rule 11361(b)'s Uniform Delivery Ticket requirement and identical footnote, the two forms together spanning the documentary chain from trade confirmation through delivery as discussed in this dictionary's FINRA Rule 11360 entry. It connects directly and substantively to FINRA Rule 11350 — whose odd-lot exception to the purchaser's mandatory part-delivery acceptance obligation depends entirely on the round-lot and odd-lot categorization framework FINRA Rule 11361(a) establishes. It connects to FINRA Rule 11360 — its parent series marker, from which FINRA Rule 11361(b) draws the Uniform Delivery Ticket Form set forth as that rule's Supplementary Material .01. And it connects to FINRA Rules 11362 through 11365 — the remaining units of delivery rules that will establish parallel certificate denomination frameworks for bonds, unit investment trust securities, certificates of deposit for bonds, and securities traded as units or bonds with stock attached respectively, each presumably following a structural pattern analogous to FINRA Rule 11361's contract-size-based categorization approach, adapted to the denomination conventions appropriate to each security type.

Examination Relevance and Key Takeaways

FINRA Rule 11361 is tested on the Series 7 and Series 24 examinations as the units of delivery framework for stocks — establishing the round-lot and odd-lot certificate denomination categories that FINRA Rule 11350's part-delivery odd-lot exception depends upon.

The key points to retain are these: FINRA Rule 11361(a) establishes four contract-size categories for stock certificate delivery — exactly 100 shares, deliverable as one certificate for the exact amount or certificates totaling 100 shares; more than 100 shares and a multiple of 100, deliverable in the exact amount, in multiples of 100, in amounts from which 100-share units can be made, or a combination thereof; more than 100 shares but not a multiple of 100, deliverable with the round-lot portion following the multiples-of-100 framework and the odd-lot portion deliverable as the exact odd-lot amount or smaller aggregating amounts; and less than 100 shares, deliverable as the exact contracted amount or smaller aggregating units; this round-lot and odd-lot categorization framework is what gives operational meaning to FINRA Rule 11350's exception — a part delivery's remainder constitutes an odd-lot not part of the original transaction only when the original contract's FINRA Rule 11361(a) categorization did not already include that odd-lot; FINRA Rule 11361(b) requires a properly executed Uniform Delivery Ticket — the form set forth as Supplementary Material .01 to FINRA Rule 11360, tracing to the 1971 Four Uniform Forms report alongside FINRA Rule 11210(b)'s Uniform Comparison — to accompany the delivery of securities; and the rule was amended December 15, 2010 through SR-FINRA-2010-030, with prior amendments effective July 8, 1968 and December 1, 1972 — no amendments since — and one selected notice, 10-49.