A holder executes an assignment conforming in every respect to FINRA Rule 11550 — correct signature, power of substitution, guarantee and transfer instruction form. The issuing company's transfer books have been closed indefinitely. Why does that assignment still not produce good delivery?

An assignment executed while the books are closed lapses once they reopen and must be re-executed

There is no functioning transfer agent or registrar left to process it and record the transfer

FINRA Rule 11550 does not reach a company that has ceased to maintain its own transfer books

The guarantee on the assignment cannot be accepted where the guarantor is not the issuer's agent

FINRA Rule 11560 applies where a company's transfer books are closed indefinitely "for any reason". What does that formulation settle about the rule's reach?

It reaches only those closures the issuer has itself declared to be permanent

It reaches bankruptcy, dissolution and receivership, the three causes the rule contemplates

It reaches every cause, so no particular reason for the closure need be shown

It reaches any cause provided the closure is confirmed by the transfer agent in writing

Where a company's transfer books are closed indefinitely, FINRA Rule 11560 calls for an ownership transfer indemnification before the company's certificate is good delivery. What does that indemnification acknowledge?

The transfer agent's confirmation that the certificate was genuine when the books last closed

The issuing corporation's authorisation of the transfer, given through an officer of the company

The purchaser's acceptance of the certificate despite the defect in its registration

FINRA Rule 11560 limits how often the ownership transfer indemnification may be placed on a given certificate. What is the limit, and how does it compare with what a working transfer-books system does?

Once for each change of beneficial owner, against a books system that records only the registered owner

Once during the certificate's lifetime, against a books system that records successive transfers without limit

Once for each assignor in the chain, against a books system that records the whole chain in one ledger

Once in any twelve-month period, against a books system that operates continuously throughout the year

The Sample Ownership Transfer Indemnification Stamp certifies the transfer "to the bearer hereby". What does that wording do to the way the certificate afterwards changes hands?

It fixes the bearer as at the date of the stamp, so no later holder takes any interest at all

It makes it pass by endorsement, each holder signing the reverse before delivering it onward

It makes it pass by possession, in the way a bearer instrument does rather than a registered one

It makes it pass only on presentation to the issuer, which must record each holder in turn

Beyond its certifying language, the Sample Ownership Transfer Indemnification Stamp requires the signer to acknowledge one thing and to agree to another. Which?

That the certificate has not previously been stamped, and agreement to indemnify the transfer agent

That the shares are free of any lien, and agreement to answer any claim a later holder may bring

That the issuer has been notified of the transfer, and agreement to file the stamp with FINRA

That the corporation's transfer books are closed, and agreement to accept responsibility under the rule

An issuer of registered shares keeps transfer books, usually through a designated transfer agent. What role do those books play for its registered securities?

They are the issuer's record of dividends paid, kept so that each distribution can be matched to the holder who received it

They are the official record of who holds the securities and the means by which each change of owner is recorded

They are the issuer's copy of the clearing agency's position records, kept for reconciling its count of shares outstanding

They are the transfer agent's register of the signature guarantees it has accepted on the assignments presented to it

The ownership transfer indemnification's name points to two functions it combines. Which pair of functions is it?

It asks the issuer to record the transfer once its books have reopened, and gives the transfer agent's assurance that the certificate itself is genuine

It asks the issuer to record the transfer once its books have reopened, and gives the assignor's assurance that the shares carry no lien or other charge

It makes the transfer effective in place of a recording on the issuer's books, and gives the assignor's assurance about ownership that later holders can rely on

It makes the transfer effective in place of a recording on the issuer's books, and gives the buyer's undertaking to indemnify the seller against any claims made later

Issuer A's transfer agent resigns, and Issuer A stops recording transfers without setting any date to resume. Issuer B closes its transfer books while it completes a merger and announces the date on which they will reopen. For which issuer's certificates does FINRA Rule 11560 govern good delivery while the books are closed?

Neither issuer's — the rule reaches a closure only once it has run past the settlement date of the trade

Issuer B's only — a closure during a corporate action such as a merger is the case the rule is written for

Both issuers' — the books of each are closed, and the rule asks only whether a transfer can be recorded

Issuer A's only — its books are closed with no end set, while Issuer B's closure has a stated end

A seller must deliver three Greyfield Mining certificates, and Greyfield's transfer books are closed indefinitely. To save time it has one ownership transfer indemnification stamp placed on the first certificate, with all three certificate numbers written into it. What is the position of the other two certificates?

They are not good delivery, because each certificate must carry an indemnification of its own

They are good delivery once they are handed over in the same bundle as the certificate that bears the stamp

They are good delivery, because the stamp on the first certificate identifies each of them by its number

They are not good delivery until Greyfield's former transfer agent countersigns the stamp on behalf of all three

Greyfield Mining's transfer books closed indefinitely several years ago. A Greyfield certificate is sold on 10 June, and the ownership transfer indemnification is dated and affixed on 12 June. From which date does the acknowledgment given by the indemnification speak?

The settlement date on which the certificate is delivered

12 June, the date of the indemnification itself

10 June, the trade date on which the sale was agreed

The date on which Greyfield's books closed and recording ceased

Apart from its certifying and acknowledgment language, what does the Sample Ownership Transfer Indemnification Stamp provide lines for?

The trade date, the settlement date, and the signatures of both members

A date, the name of the new owner, and the transfer agent's countersignature

A date, the name of the member, and an authorized signature

The new owner's name and address, and a guarantee of the assignor's signature

How does the Sample Ownership Transfer Indemnification Stamp identify the certificate it is placed on?

By the certificate's number, the trade date of the sale, and the name of the transfer agent that last recorded it

By the certificate's number, the par value of each share, and the date on which the certificate was first issued

By the certificate's number, the class of shares it represents, and the date on which the issuer's books were closed

By the certificate's number, the number of shares it represents, and the company whose shares they are

A Greyfield Mining certificate is registered to Maria and Thomas Vidal. Greyfield's transfer books are closed indefinitely, the ownership transfer indemnification is affixed to the certificate, and Maria signs the assignment without Thomas. Is the certificate good delivery?

Yes, provided Maria's signature is guaranteed and the guarantee states that she acts with the authority of both registered owners

No — a certificate in two or more names needs the signatures of all its registered owners, which the indemnification does not replace

Yes — once the ownership transfer indemnification has been affixed, a single registered owner's assignment is enough to pass the whole certificate

No — a jointly registered certificate cannot carry the indemnification until the owners' holding has been split into separate certificates in each name

Greyfield Mining's transfer books are closed indefinitely. One of its certificates is registered to "Harlow & Co.", and nothing in the endorsement says what kind of entity that is. Beyond the general assignment requirements, what does the delivery call for?

Neither of them, a firm-name registration falling outside the rules for certificates in various names and FINRA Rule 11560 alike

The officer, resolution and incumbency documents a corporation's certificate needs, but not the ownership transfer indemnification

The ownership transfer indemnification, but not the officer, resolution and incumbency documents a corporation's certificate needs

Both the ownership transfer indemnification and the officer, resolution and incumbency documents a corporation's certificate needs

A member holds two certificates it cannot yet deliver. One is torn, and its issuer, trustee, registrar and transfer agent all decline to authenticate it. The other is of an issuer whose transfer books are closed indefinitely and whose transfer agent has resigned. Which of the two can the member still bring into good delivery?

Both of them, since the member delivering each certificate can supply either cure without the issuer taking part

The torn certificate, whose authentication any member firm handling it may give when the issuer's agents decline to act

Neither of them, since each cure has to be given by the issuer or by one of the agents acting on its behalf

The books-closed certificate, whose cure is given from the owner's side and needs no act by the issuer or its agents

In one trade the securities sold have been deemed worthless; in another, the issuer's transfer books are closed indefinitely. In which may an indemnity document be delivered instead of the certificate itself?

The worthless-securities trade, where a Letter of Indemnity may stand in for the securities, the books-closed certificate itself being delivered

The books-closed trade, where the ownership transfer indemnification may stand in for a certificate that the issuer cannot record

Both of them, an indemnity document standing in for the securities wherever a certificate cannot pass in the ordinary way

Neither of them, an indemnity document serving in each case as an addition to the certificate and never in its place

Greyfield Mining's transfer books are closed indefinitely. Alder Holdings Inc. is delivering a Greyfield certificate registered in its own name, and its operations staff are waiting for Greyfield's transfer agent to sign the statement "Proper papers for transfer filed by assignor" on the assignment. What is the position on that statement?

It is not needed, because the ownership transfer indemnification on its own is all a corporation's certificate requires while the issuer's books are closed

It is not the route here — it belongs to delivery while the books are open, and a separate route governs once they are closed indefinitely

It is required as for every certificate registered in a corporation's name, the ownership transfer indemnification then being added alongside it on the certificate

It is still required, but with no transfer agent acting on the issuer's books it is signed by the corporation's own secretary in place of the agent

A member has sold a Greyfield Mining certificate to another member. Greyfield's transfer books are closed indefinitely, and the seller cannot get the ownership transfer indemnification placed on the certificate by the settlement date. It writes to the buyer declaring the trade cancelled, and the buyer does not agree. What is the position?

The trade stands, but the buyer must wait for the stamped certificate, the Code giving it no remedy until delivery is made

The trade is cancelled: a seller that cannot put a books-closed certificate into good form is released once it gives notice

The trade stands: cancelling it takes the consent of both parties, and the buyer may turn to the buy-in procedures instead

The trade is cancelled once the settlement date passes without delivery, whether or not either party gives notice of it

A Greyfield Mining certificate is sold regular way on a Monday, and the Tuesday that follows is a business day. Greyfield's transfer books are closed indefinitely, and the seller has the ownership transfer indemnification placed on the certificate. When and where is the stamped certificate due?

On Tuesday at the seller's office, the purchaser collecting it the day after the trade

On Monday at the seller's office, the purchaser collecting it on the trade date itself

On Monday at the purchaser's office, as soon as the stamp has been placed on it

On Tuesday at the purchaser's office, the first business day after the trade date

Two members trade a Greyfield Mining certificate over the counter; Greyfield's transfer books are closed indefinitely. They settle the trade through a registered clearing agency whose own rules call for the rules of other organizations, FINRA's among them, to apply to such trades. Can FINRA Rule 11560 govern whether the certificate is good delivery?

Yes — the Code's exclusion of clearing agency trades gives way to the extent the agency's rules bring other organizations' rules in

No — the Code reaches trades between members solely where they are settled by physical delivery made directly between the two of them

No — a trade settled through a registered clearing agency lies wholly outside the Code, whatever that agency's own rules may say on the point

Yes — but for a different reason: certificates of books-closed issuers form a class that the clearing agency exclusion was never written to cover

Greyfield Mining's transfer books are closed indefinitely. Alder Holdings Inc. and Beech Holdings Inc. each deliver a Greyfield certificate registered in its own name. Alder's assignment is executed by Alder's treasurer and Beech's by Beech's secretary. With each delivery comes every document FINRA Rule 11571(b) calls for, the ownership transfer indemnification included. Which delivery is good?

Neither of them — with the books closed, the instrument must be executed by the issuer's own transfer agent on the corporation's behalf

Beech's only — the instrument must be executed by the secretary, as the officer who keeps the corporation's records

Alder's only — the instrument must be executed by an officer of the corporation other than its secretary

Both of them — any officer of the corporation may execute once the indemnification and the other papers are present

A seller's failure to deliver a stamped Greyfield Mining certificate is costing the buying member money, and the losses keep growing; Greyfield's transfer books are closed indefinitely. The buyer plans to hold back any claim for its losses until it knows the final total, perhaps a year from now. How does that plan sit with the Uniform Practice Code?

It is what the Code expects, which measures such damages only once the nondelivery has been finally resolved

It is beside the point, the Code leaving losses from a nondelivery with the member that bought the certificate

It is open to the buyer, the Code setting no time for such claims so long as the certificate remains undelivered

It conflicts with the Code, which requires claims for damages arising from a nondelivery to be made promptly

Greyfield Mining's transfer books are closed indefinitely. For a Greyfield certificate it is delivering, a seller has no stamp to hand, so it has the ownership transfer indemnification written out, dated and signed directly on the back of the certificate itself. Does that placement satisfy FINRA Rule 11560?

Yes — the indemnification may be affixed to the certificate, as by a stamp, or recorded upon it, and either one will do

No — an indemnification recorded upon the certificate must also be lodged with the issuer's former transfer agent to count

No — the rule is met only by affixing the stamp set out in the supplementary material, not by writing the terms out by hand

Yes, provided a separately signed copy of the same indemnification is also sent to the buyer ahead of the delivery

A holder of a Greyfield Mining certificate representing 500 shares sells 200 of them. Greyfield's transfer books are closed indefinitely, and the holder wants the ownership transfer indemnification stamp to pass just the 200 shares sold. What transfer does the sample stamp's certifying wording provide for?

A transfer of all or part, the choice being noted beside the acknowledgment that the transfer books are closed

A transfer of all the ownership the certificate represents, the stamp having no wording for transferring part

A transfer of the 200 shares sold, entered in the stamp as the number of shares it certifies as transferred

A transfer of any part of the holding, provided the member's authorized signature is placed against that part

Greyfield Mining's transfer books are closed indefinitely. Alder Holdings Inc. is delivering a Greyfield certificate registered in its own name. Alder's president executes the assignment, and a copy of the board's resolution, a completed and executed certificate of incumbency and the ownership transfer indemnification on the certificate are all in order. Nothing else accompanies the delivery. What does it still lack?

A letter from Greyfield's former transfer agent confirming that Alder is the registered holder whose name the certificate bears

Nothing further, the president's execution together with the resolution, the incumbency certificate and the indemnification being enough

A guarantee of the president's signature, given by a person who has the authority to make such a guarantee

A second execution by Alder's secretary, attesting that the president currently holds the office that the board's resolution names

Two members trade a Greyfield Mining certificate while Greyfield's transfer books are open. Before the settlement date Greyfield closes its transfer books indefinitely, and the seller delivers the certificate on the settlement date with no ownership transfer indemnification on it. Is the certificate good delivery?

No — the trade cannot settle by delivery until the former transfer agent confirms in writing the date on which the books were closed

Yes — a trade struck while the books were open settles as agreed, the indemnification being needed only for trades struck after the closure

Yes — the books have to be closed for the whole period from the trade date to the settlement date before the rule reaches the certificate

No — the rule judges the certificate by the state of its company's books when it is delivered, and by then they are closed indefinitely

FINRA Rule 11560 | Financial Regulation Courses

Certificate of Company Whose Transfer Books Are Closed

SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES

FINRA Rule 11560 addresses a category of registered security presenting a unique delivery obstacle — a certificate of a company whose transfer books are closed indefinitely, meaning the issuer's own registration and transfer mechanism is, for whatever reason, no longer operating, leaving the standard assignment-and-transfer framework of FINRA Rule 11550 without the institutional infrastructure it presupposes.

The rule establishes a substitute mechanism — the ownership transfer indemnification — that allows such certificates to remain capable of good delivery despite the issuer's transfer books being closed. The rule consists of a General Requirements section with three sentences, plus Supplementary Material .01 setting forth the Sample Ownership Transfer Indemnification Stamp.

The first sentence establishes the core rule: a certificate of a company whose transfer books are closed indefinitely for any reason shall be good delivery only if the required ownership transfer indemnification is affixed to or recorded upon the certificate.

The second sentence describes the indemnification's substantive content and a one-time-use limitation: the indemnification acknowledges the assignor(s)' ultimate responsibility for the ownership of the certificate as of the date of the indemnification, and shall be affixed or recorded only once during the lifetime of the certificate.

The third sentence ties FINRA Rule 11560 back to FINRA Rule 11550's general delivery requirements: certificates delivered pursuant to this Rule must conform with all the applicable delivery requirements set forth in Rule 11550. FINRA Rule 11560 was amended by SR-NASD-91-13 effective November 1, 1991, and by both SR-FINRA-2010-030 and SR-FINRA-2010-060, both effective December 15, 2010. One selected notice is associated — Regulatory Notice 10-49.

FINRA Rule 11560 sits within the 11500 Delivery of Securities with Restrictions subsection of the 11000 Uniform Practice Code, immediately following FINRA Rule 11550's assignments and powers of substitution framework and immediately preceding FINRA Rule 11570's series marker for the Certificates in Various Names cluster.

What "Transfer Books Closed Indefinitely" Means and Why It Creates a Delivery Problem

A company's transfer books — maintained by the company itself or, more commonly, by a designated transfer agent — constitute the official record of who holds the company's registered securities, and the mechanism through which ownership transfers are recorded when securities change hands.

FINRA Rule 11550's entire assignment and power of substitution framework presupposes that this mechanism is operational — an assignment, executed in conformance with FINRA Rule 11550's technically correct signature standard and accompanied by whatever power of substitution, guarantee, and Uniform Transfer Instruction Form the rule requires, is ultimately presented to a transfer agent or registrar who processes the transfer by updating the company's transfer books to reflect the new owner.

FINRA Rule 11560 addresses the scenario where this presupposition fails — a company whose transfer books are closed indefinitely for any reason.

The for any reason formulation is notably broad — FINRA Rule 11560 does not limit itself to any specific cause of the transfer books being closed (such as bankruptcy, dissolution, or a specific corporate action), but applies whenever, for whatever reason, the transfer books are closed on an indefinite basis.

A security certificate registered in a holder's name, where the issuing company's transfer books are closed indefinitely, presents an obvious problem under FINRA Rule 11550's framework — even if the holder executes a perfectly conforming assignment, with all required signatures, powers of substitution, and guarantees, there is no functioning transfer agent or registrar to process that assignment and record the transfer on the company's books, because those books are closed and will remain closed indefinitely.

Without some accommodation, this would leave such certificates effectively undeliverable — incapable of good delivery under FINRA Rule 11550's framework, since that framework's entire purpose (effecting a recorded transfer on the issuer's books) cannot be accomplished when those books are permanently inaccessible. FINRA Rule 11560 provides that accommodation.

The Ownership Transfer Indemnification: A Substitute for the Transfer-Books Mechanism

FINRA Rule 11560's solution is the ownership transfer indemnification — a document or stamp, affixed to or recorded upon the certificate itself, that substitutes for the formal books-based transfer mechanism that FINRA Rule 11550 presupposes but that, for a transfer-books-closed company, is unavailable.

The indemnification's substantive content, per the second sentence, acknowledges the assignor(s)' ultimate responsibility for the ownership of the certificate as of the date of the indemnification. This is the core mechanism by which FINRA Rule 11560 substitutes for the books-based transfer — rather than the transfer being recorded on the issuer's (closed) books, the assignor instead provides an acknowledgment, affixed to the certificate itself, of their ultimate responsibility for the certificate's ownership as of the indemnification's date.

This acknowledgment travels with the certificate from that point forward — any subsequent holder of the certificate can look to this affixed or recorded indemnification as evidence of the chain of ownership responsibility, in lieu of the books-based record that would exist for a company with operational transfer books.

The indemnification's name itself — ownership transfer indemnification — signals its dual character. It is simultaneously a transfer mechanism (it is what makes the certificate's transfer effective, in place of a books-based recording) and an indemnification (the assignor is providing something in the nature of a guarantee or assurance regarding their ownership as of the relevant date, upon which subsequent holders can rely).

The Once-During-the-Lifetime-of-the-Certificate Limitation

The second sentence's final clause establishes a critical limitation — the indemnification shall be affixed or recorded only once during the lifetime of the certificate.

This once-only limitation is significant when considered against the books-based transfer mechanism the indemnification substitutes for. A functioning transfer-books system can record an unlimited number of successive transfers over a certificate's lifetime — each time the certificate changes hands, the books are updated to reflect the new owner, with no limit on how many such updates can occur. FINRA Rule 11560's indemnification mechanism, by contrast, can be affixed or recorded only once during the certificate's entire lifetime.

This limitation has an important practical implication: FINRA Rule 11560's accommodation is, in effect, a one-time bridge across the transfer-books-closed gap, not an ongoing substitute transfer-recording system. Once the indemnification has been affixed or recorded — establishing the assignor's responsibility for ownership as of that date — the certificate has, in some sense, used its one available transfer-books-closed accommodation. The rule's text does not explicitly address what happens if the certificate needs to be transferred again after the indemnification has already been affixed once — the once during the lifetime of the certificate language settles only that a second affixation would not satisfy FINRA Rule 11560's requirements.

This limitation may reflect a policy judgment that the ownership transfer indemnification mechanism — being a substitute for, rather than the genuine article of, a books-based transfer record — is appropriately treated as an exceptional, limited accommodation rather than as a fully equivalent ongoing alternative to a functioning transfer-books system. A single indemnification bridges the gap created by the transfer books having closed at some point in the certificate's history, but does not establish an indefinitely repeatable mechanism for all future transfers of that same certificate.

The Sample Ownership Transfer Indemnification Stamp

Supplementary Material .01 sets forth the Sample Ownership Transfer Indemnification Stamp, confirmed from the FINRA.org page as containing: a date field; certifying language stating that the undersigned owner of this certificate (number), representing a specified number of shares of a specified company, hereby certifies the transfer of all ownership therewith to the bearer hereby; an acknowledgment that the transfer books of the herein named corporation are closed and an agreement to accept responsibility in accordance with the provisions of Rule 11560 of the FINRA Uniform Practice Code; and signature lines for the name of the member and an authorized signature.

This sample stamp's structure directly embodies the General Requirements section's substantive description. The certifies the transfer of all ownership therewith to the bearer hereby language operationalizes the transfer itself — rather than a books-based recording naming a specific new registered owner, the indemnification stamp transfers ownership to the bearer, consistent with how the certificate, once stamped, can subsequently change hands through bearer-type possession rather than through a books-based registration update. The explicit acknowledgment that the transfer books of the herein named corporation are closed and the agreement to accept responsibility in accordance with the provisions of Rule 11560 directly ties the stamp to FINRA Rule 11560's framework, ensuring that whoever signs the stamp does so with explicit acknowledgment of the transfer-books-closed circumstance and explicit agreement to the responsibility framework FINRA Rule 11560 establishes.

The to the bearer hereby language is particularly notable — it suggests that, once the ownership transfer indemnification stamp has been affixed, the certificate effectively converts, for practical transfer purposes, into something functioning more like a bearer instrument (transferable through possession) than a registered instrument (transferable through books-based recording) — a sensible adaptation given that the books-based recording mechanism that would otherwise govern a registered security's transfers is, by FINRA Rule 11560's own predicate, unavailable for a transfer-books-closed company.

FINRA Rule 11560's Cross-Reference to FINRA Rule 11550

The third sentence's requirement that certificates delivered pursuant to this Rule must conform with all the applicable delivery requirements set forth in Rule 11550 confirms that FINRA Rule 11560's ownership transfer indemnification mechanism operates as an addition to, rather than a wholesale replacement of, FINRA Rule 11550's general framework. A transfer-books-closed certificate must still satisfy whatever applicable delivery requirements FINRA Rule 11550 establishes — to the extent those requirements remain applicable given the transfer-books-closed circumstance — with the ownership transfer indemnification serving as the specific additional mechanism FINRA Rule 11560 layers on top of FINRA Rule 11550's framework to address the specific gap that a closed transfer-books system creates.

The applicable qualifier is doing meaningful work here — not every requirement FINRA Rule 11550 establishes would necessarily remain applicable, or even meaningful, for a transfer-books-closed certificate. For example, FINRA Rule 11550(g)'s power-of-substitution blank-execution chain presupposes an ongoing series of transfers each requiring fresh blank powers of substitution — a presupposition that may not map cleanly onto FINRA Rule 11560's once-only indemnification framework and its bearer-like to the bearer hereby transfer mechanism. The applicable qualifier allows FINRA Rule 11560 to incorporate FINRA Rule 11550's framework to whatever extent that framework remains meaningfully applicable given the transfer-books-closed circumstance, without requiring a strained application of every one of FINRA Rule 11550's provisions to a situation those provisions may not have been designed with in mind.

The 1991 Amendment and the 2010 Dual Amendments

FINRA Rule 11560's amendment history — SR-NASD-91-13 effective November 1, 1991, followed by two separate 2010 amendments, SR-FINRA-2010-030 and SR-FINRA-2010-060, both effective December 15, 2010 — places its substantive framework within the same 1991 modernization wave this dictionary has encountered in connection with FINRA Rules 11120, 11320, and 11530, all also amended through SR-NASD-91-13 effective November 1, 1991.

The presence of two separate 2010 amendment filings — SR-FINRA-2010-030 and SR-FINRA-2010-060 — both effective on the same December 15, 2010 date, mirrors the pattern this dictionary observed in FINRA Rule 11100's entry, which was also amended by both SR-FINRA-2010-060 and SR-FINRA-2010-030. This dual-filing pattern for the Consolidated FINRA Rulebook transfer suggests that different aspects of the Uniform Practice Code's transfer into the FINRA framework were processed through separate but coordinated rule filings, both becoming effective on the same December 15, 2010 date that this dictionary has now encountered repeatedly throughout its coverage of the 11000 series.

Connection to FINRA Rules 11100, 11110, 11120, 11320, 11500, 11530, and 11550

FINRA Rule 11560 connects to FINRA Rule 11100's dual SR-FINRA-2010-030 and SR-FINRA-2010-060 amendment pattern, both effective December 15, 2010, as a shared structural feature of the Consolidated FINRA Rulebook transfer. It connects to FINRA Rule 11110, under which the Uniform Practice Code Committee may issue interpretations or rulings on the Code's applicability, and it is the latest in the sequence of good-delivery-disqualifying-and-curing-condition rules within the FINRA Rule 11500 subsection — temporary status (FINRA Rule 11510), mutilation (FINRA Rule 11520), called or worthless status (FINRA Rule 11530), governmental documentation or stoppage (FINRA Rule 11540), and now transfer-books-closed status. It connects to FINRA Rule 11120 and FINRA Rule 11320 — both amended through the same SR-NASD-91-13 effective November 1, 1991 that amended FINRA Rule 11560, situating this rule within the broader early-1990s Uniform Practice Code modernization. It connects to FINRA Rule 11500 as its parent series marker. It connects to FINRA Rule 11530 — sharing the SR-NASD-91-13 1991 amendment, and both addressing scenarios where a security's status has changed in ways that create delivery accommodations distinct from the standard case. And it connects directly and by explicit cross-reference to FINRA Rule 11550 — whose general assignment, power of substitution, and transfer documentation framework FINRA Rule 11560's third sentence incorporates as a continuing baseline (to the extent applicable) alongside the ownership transfer indemnification mechanism FINRA Rule 11560 specifically adds for transfer-books-closed companies.

Closed Indefinitely: An Open-Ended Closure, Not a Scheduled One

FINRA Rule 11560 applies to a certificate of a company whose transfer books are closed "indefinitely". The word concerns how long the books are closed, not why they closed. Suppose an issuer closes its transfer books for a stated period and announces the date on which they will reopen. It has not closed them indefinitely, so that closure does not bring its certificates within FINRA Rule 11560.

Once a closure is open-ended, its cause makes no difference. Consider Greyfield Mining. After its transfer agent resigns, Greyfield stops recording transfers and sets no date for starting again. Its books are closed indefinitely. The rule applies "for any reason", so a member delivering a Greyfield certificate is within FINRA Rule 11560 without having to establish why the books closed.

Placing the Indemnification on Each Certificate

The rule allows two ways of placing the indemnification. It may be affixed to the certificate, for example as a stamp, or it may be recorded upon the certificate. Either satisfies the rule. What the rule does not allow is an indemnification that travels separately from the certificate. A signed indemnification kept in the delivering member's files, or sent to the buyer as a separate letter, is neither affixed to nor recorded upon the certificate. A certificate delivered that way is not good delivery.

The requirement applies certificate by certificate. The rule refers to "the certificate" and requires the indemnification to be affixed to or recorded upon it, and the sample stamp identifies one certificate by its number. Suppose a seller delivers three Greyfield certificates. Each must carry its own indemnification. A stamp on one of them does nothing for the other two.

The date on the indemnification matters because the acknowledgment speaks from that date. Suppose a trade in a Greyfield certificate is made on 3 March and the stamp is dated and affixed on 5 March, years after the books closed. The assignor then acknowledges ultimate responsibility for the certificate's ownership as of 5 March, the date of the indemnification. It is not as of the trade date or the date on which the books closed.

Reading the Sample Stamp Field by Field

The sample stamp is tied to one particular certificate. It records the certificate's number, the number of shares that certificate represents and the company whose shares they are.

The stamp transfers the whole holding the certificate represents. Its wording certifies "the transfer of all ownership therewith". It contains no wording for transferring part of the holding.

The stamp names no new owner. It certifies the transfer to "the bearer", so the buying member's name appears nowhere on it, and neither does anyone else's as transferee.

The signature block has two lines, one for the name of the member and one for an authorized signature. A date line heads the stamp. So the completed stamp carries a date, a member's name and an authorized signature.

Once During the Lifetime of the Certificate: The Limit Applied

The once-only limit is counted per certificate over its whole life, not per owner or per sale. Suppose Harmon Securities bought a Greyfield certificate in 2021, and the seller placed the ownership transfer indemnification on it then. In 2025 Harmon sells the same certificate to another member and proposes to add a fresh indemnification in its own name. The rule does not allow this. The indemnification "shall be affixed or recorded only once during the lifetime of the certificate", and this certificate has already had it.

The text settles that a second indemnification may not be placed on a certificate. It does not say in terms how a later delivery of a certificate that already bears its indemnification is to be treated, and this section draws no conclusion on that point.

Certificates Registered Jointly or in a Corporate, Firm or Deceased Person's Name

FINRA Rule 11560 refers to the "assignor(s)", which allows for more than one. Where a certificate is registered in two or more names, FINRA Rule 11550(e) sets its own condition: the certificate "shall be a good delivery only if signed by all the registered owners". That condition stands alongside FINRA Rule 11560. Suppose a Greyfield certificate is registered to Ana and Luis Ortega, carries the ownership transfer indemnification, and is assigned by Ana alone. It is not good delivery. The indemnification does not supply Luis's missing signature.

The same holds for the signature standard. FINRA Rule 11550(c) requires the signature to an assignment to correspond with the name written on the certificate "in every particular without alteration or enlargement, or any change whatever". The only variations it allows are "and" or "&" and "Company" or "Co.". Suppose a Greyfield certificate registered to Robert Kline carries the indemnification, but its assignment is signed "Robt. Kline". It is not good delivery. The indemnification deals with the closed books, not with a signature that departs from the registered name.

Where the assignment is made on separate paper rather than on the certificates, FINRA Rule 11550(b) requires "a separate assignment for each certificate". So a seller delivering three Greyfield certificates with detached assignments needs three assignments as well as three indemnifications. One detached assignment covering all three certificates does not meet FINRA Rule 11550(b).

A certificate registered in the name of a corporation calls for more. FINRA Rule 11571(b) covers the case where the certificate, the assignment or the power of attorney is in a corporation's name and the issuer's transfer books "are closed indefinitely for any reason". The certificate is good delivery if the instrument effecting the transfer is executed by an officer of the corporation other than the secretary and is accompanied by three things: a guarantee of that officer's signature by a person with authority to make it; a copy of a corporate resolution and a completed and executed certificate of incumbency; and "the ownership transfer indemnification, as provided in Rule 11560, affixed to or recorded on the certificate". Suppose Alder Holdings Inc. is delivering a Greyfield certificate registered in its own name. The indemnification is one element of that package, not the whole of it.

The officer who executes cannot be the corporation's secretary. If Alder's secretary signs the assignment, the delivery does not meet FINRA Rule 11571(b), even with every other document present.

When the books are open, a corporation's certificate is good delivery only if the statement "Proper papers for transfer filed by assignor" is placed on the assignment and signed by the transfer agent. That route depends on a transfer agent's signature. When the issuer's books are closed indefinitely, FINRA Rule 11571(b) sets out the route instead. A seller waiting for Greyfield's transfer agent to sign that statement is following the books-open paragraph, which does not describe this delivery.

A certificate registered in a firm or business name is treated differently. FINRA Rule 11572 presumes that such stock is registered in the name of a partnership, not a corporation, "Unless the endorsement specifies otherwise". Suppose a Greyfield certificate is registered to "Lane & Co." and nothing in the endorsement says otherwise. The corporate package of FINRA Rule 11571(b) (officer, resolution and incumbency certificate) is not called for. The FINRA Rule 11560 indemnification still is, because FINRA Rule 11560 applies to any certificate of a company whose transfer books are closed indefinitely, whatever name it is registered in.

The indemnification also does not cure an assignment by someone who has since died. Under FINRA Rule 11574(a)(1), a certificate "shall not be a good delivery with an assignment or power of substitution executed by a ... person since deceased". Suppose the registered owner of a Greyfield certificate signed the assignment and then died before the certificate was delivered. The certificate is not good delivery on that assignment, even with the ownership transfer indemnification in place.

How the Indemnification Differs from Other Good-Delivery Cures

FINRA Rule 11520(a) cures a mutilated security through authentication "by the trustee, registrar, transfer agent, or issuer". That cure comes from the issuer's side. The FINRA Rule 11560 cure comes from the owner's side. It is the assignor's acknowledgment of responsibility, placed on the certificate over a member's name and an authorized signature, and it requires no act by the issuer, its transfer agent or its registrar.

FINRA Rule 11530(b) lets a delivery of securities that have been deemed worthless consist of "(A) the worthless securities or (B) a Letter of Indemnity" granting the purchaser the holders' rights and privileges. That letter is delivered in place of the securities. The FINRA Rule 11560 indemnification never replaces the certificate. It is placed on the certificate, and the certificate itself is delivered.

FINRA Rule 11540(a) sets a separate condition. Where a government with jurisdiction requires a license, clearance certificate, affidavit of ownership or similar document for transferring a security, the security "shall not be a good delivery unless accompanied by the document or documents so required". Suppose a Greyfield certificate carries the indemnification, but a government with jurisdiction requires an affidavit of ownership for its transfer and none accompanies it. It is not good delivery. The ownership transfer indemnification is not the governmental document and does not stand in for it.

FINRA Rule 11640(b) involves a different instrument. A buyer who failed to have stock transferred in time may ask the seller to collect a dividend or rights for it. The seller may then require from the buyer "a guarantee of indemnity for liability arising out of any further demand for said dividend or rights". That guarantee comes from the buyer and concerns a distribution. The FINRA Rule 11560 indemnification comes from the assignor and concerns ownership of the certificate. Supplying one does not satisfy a demand for the other.

When the Seller Cannot Deliver in Good Form, and Where the Rule Reaches

Suppose a seller cannot get the indemnification placed on a Greyfield certificate in time and delivers nothing on the settlement date. The contract is not cancelled. FINRA Rule 11100(c) provides that failure to deliver the securities sold, on or after the settlement date, "does not effect a cancellation of the contract". The buyer's remedy is under FINRA Rule 11810, Buy-In Procedures and Requirements.

The contract ends by cancellation only if both parties agree. FINRA Rule 11100(c) directs the buyer to the buy-in remedy "unless the parties mutually consent to cancel the trade". A buyer that does not want to wait for the stamp may agree with the seller to cancel. Neither party may cancel alone.

The defaulting party also bears the cost of the failure. "In every such case of nondelivery of securities, the party in default shall be liable for any damages which may accrue thereby", and "All claims for such damages shall be made promptly." A buyer harmed while it waits for a stamped certificate should make its claim promptly.

The stamped certificate has to be delivered on time and in the right place. In a regular way transaction, 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". A Greyfield certificate sold regular way on a Tuesday that is followed by a business day is due, with its indemnification in place, at the purchaser's office on Wednesday.

Having the stamp ready early does not let the seller deliver early. Suppose the indemnification is placed on the certificate on the trade date and the seller tenders it that day in a regular way contract. FINRA Rule 11320(g) makes acceptance "at the election of the purchaser", and a rejection is "without prejudice to his rights". The purchaser may refuse the early tender.

FINRA Rule 11560 is part of the Uniform Practice Code. Under FINRA Rule 11100(a), the Code governs over-the-counter secondary market transactions in securities between members. Suppose two members trade a Greyfield certificate over the counter and settle by physical delivery directly between themselves. That trade is within the Code, and FINRA Rule 11560 governs whether the certificate is good delivery.

The Code excludes "transactions in securities between members which are compared, cleared or settled through the facilities of a registered clearing agency, except to the extent that the rules of the clearing agency provide that rules of other organizations shall apply". Suppose a trade between members is settled through a registered clearing agency whose rules make no such provision. That trade falls outside the Code, and FINRA Rule 11560 does not govern it.

What Brings a Certificate Within the Rule: Closed Books When It Is Delivered

FINRA Rule 11560 applies because of the state of a company's transfer books, not because of any particular event. Its first sentence applies to "a certificate of a company whose transfer books are closed indefinitely for any reason". The words "for any reason" mean that the cause of a closure makes no difference. They do not make an event a closure where the books have not in fact closed.

Suppose Greyfield Mining's transfer agent resigns, and the same day Greyfield appoints a successor transfer agent, which takes over Greyfield's transfer books and goes on recording transfers without a break. Greyfield's transfer books have not closed. FINRA Rule 11560 does not apply to Greyfield certificates, and a member delivering one needs no ownership transfer indemnification under it. The resignation alone does not bring the rule into play.

The rule's condition is a condition of good delivery, and it describes the certificate by the present state of its company's books: a certificate of a company whose transfer books "are closed indefinitely" "shall be good delivery only if" the indemnification is affixed to or recorded upon it. The rule refers to no trade date. So what counts is the position when the certificate is delivered. Suppose two members trade a Greyfield certificate while Greyfield's transfer books are open, and before the settlement date Greyfield closes its books indefinitely. The certificate delivered on the settlement date is a certificate of a company whose transfer books are closed indefinitely. It is good delivery only if the ownership transfer indemnification is affixed to or recorded upon it. That the books were open on the trade date does not change this.

Foreign Internal Securities

FINRA Rule 11550(i) sets aside part of FINRA Rule 11550 for Foreign Internal Securities in registered form. Except for Canadian Securities, American Depositary Receipts, American Shares, New York Shares and similar securities, paragraphs (b) through (g) of FINRA Rule 11550, and FINRA Rule 11572, "shall not apply" to them. FINRA Rule 11560 is not in that list. The same paragraph provides that "In default of specific Rules in this Code", the usual conditions of delivery and transfer in the foreign market where the security is principally traded apply. FINRA Rule 11560 is a specific rule of the Code for certificates of companies whose transfer books are closed indefinitely.

Suppose a Foreign Internal Security in registered form, not one of the listed exceptions, is registered in an individual's name, and its issuer's transfer books are closed indefinitely. Two members trade it over the counter and settle by physical delivery directly between themselves, so the trade is within the Uniform Practice Code. FINRA Rule 11550(i) does not displace FINRA Rule 11560. The certificate is good delivery only if the ownership transfer indemnification is affixed to or recorded upon it, and the usual conditions of the foreign market do not stand in for the indemnification. A certificate in a corporation's name would also bring in FINRA Rule 11571, which makes its own provision for foreign internal securities in paragraph (c); this example does not involve one.

Examination Relevance and Key Takeaways

FINRA Rule 11560 is tested on the Series 7 and Series 24 examinations as the framework addressing certificates of companies whose transfer books are closed indefinitely — establishing the ownership transfer indemnification as a substitute mechanism for the books-based transfer recording that FINRA Rule 11550's general framework presupposes.

The key points to retain are these: FINRA Rule 11560 provides that a certificate of a company whose transfer books are closed indefinitely for any reason is good delivery only if the required ownership transfer indemnification is affixed to or recorded upon the certificate; the indemnification acknowledges the assignor's or assignors' ultimate responsibility for the certificate's ownership as of the indemnification's date, and may be affixed or recorded only once during the lifetime of the certificate — a limitation suggesting the mechanism functions as a one-time bridge rather than an indefinitely repeatable transfer-recording system; Supplementary Material .01's Sample Ownership Transfer Indemnification Stamp certifies transfer of ownership to the bearer and includes an explicit acknowledgment that the issuer's transfer books are closed, with the to the bearer formulation suggesting the certificate functions more like a bearer instrument for subsequent transfers once stamped; certificates delivered under FINRA Rule 11560 must still conform with FINRA Rule 11550's applicable delivery requirements, with the indemnification operating as an addition to, rather than a wholesale replacement of, that general framework; and the rule was amended by SR-NASD-91-13 effective November 1, 1991, and by both SR-FINRA-2010-030 and SR-FINRA-2010-060, both effective December 15, 2010, with one selected notice — 10-49.