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Flashcards in Chapter 10 Cashiering Deck (22)
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Cashiering Department
Responsibilities include:

Receipt and disbursement of checks and wires

Receipt and delivery of securities

Settlement of trades

Money market sweeps


Holding Your Securities
Three options:
1. Physical certificates
2. Street name
3. Direct registration

Physical certificates •Shares are registered in client’s name and delivered to client in certificate form (a fee may be charged) •Shares are registered in client’s name, but held at the B/D in certificate form (still segregated)

Street name •Shares are registered in the B/D’s name, but segregated in bulk from proprietary positions •Street name does not automatically mean book entry

Direct registration •If the Direct Registration System (DRS) is offered by the company, the transfer agent will hold shares directly in client’s name (in electronic form)


Deposit or Withdrawal At Custodian (DWAC)

The DWAC Transaction System is run by DTCC and used to move shares electronically between the issuer’s transfer agent and broker’s/custodian banks

Often used to transfer employee stock options and/or company-issued shares

The Process:
1.Brokerage firm inputs instructions to request the position be transferred from the transfer agent 2.The issuer sends authorizations to transfer agent to move the position
3.If request and authorization match, shares are transferred •If not, DWAC request is rejected
The DWAC process requires a Medallion Signature Guarantee


Settlement versus Regulation T
Settlement date represents the date on which securities are to be delivered and payment is to be made (broker-to-broker); period varies based upon securities involved

Regulation T gives the customer five business days to meet his margin requirement (pay for the trade)

Applies to both cash and margin accounts

Failure to meet Reg. T •Sell out immediately •Freeze the account for 90 days •During freeze, all transactions “in advance” •Payment extensions may be granted by the firm’s SRO

Government and Municipal securities are exempt from Reg. T; payment is generally due at settlement


Settlement versus Payment

see slide 165


Cash transactions for any security settle:
Foreign market transactions settle:

Cash transactions for any security settle: same day as the trade

foreign market transactions settle: own transaction cycle


Good Delivery Requirements
•Properly registered
•Properly endorsed certificate
•Signed stock power
•Medallion Signature Guarantee Program (not the same as a notary public)

Delivery Problems
•Incorrect or missing signatures
•Torn, mutilated, or missing coupons
•Missing CUSIP number
•Security was called or cancelled
•Legal issues


A medallion signature guarantee verifies that the transferring B/D assumes liability in the event of forgery. The guarantee protects customers against unauthorized transfers and also limits the transfer agent’s liability.

Rejection versus Reclamation


Check Processing

Third-party checks
Concern is ---- Kiting (consistently passing checks among bank accounts to inflate balance

Post-dated checks
Controlling check disbursement



Red Flag Issue
An RR repeatedly asks to pick up checks from the cashiering department so that he may hand deliver the funds to an elderly customer. Is this an acceptable practice?



Red Flag Issue
A client from New York is on vacation in Florida. The client asks you to deliver a check to the branch office in Florida rather than the address of record. Is this an acceptable practice?

No should be in writing


Buy-In and Sell-Out

Buy-In: Occurs when a ____ B/D fails to ____

Sell-Out: Occurs when a ____ B/D fails to _____ of securities on the settlement date

Buy-In: Occurs when a selling B/D fails to deliver securities to the buying B/D

Sell-Out: Occurs when a buying B/D fails to accept delivery of securities on the settlement date


10-1 The final determination as to weather a security is in good deliverable form is made by the

a transfer agent


10-2 Broker-Dealer A has sent broker D B a buy -in notice. Broker Dealer - B notifies A that the securities are in transit and should receive soon. Under the Uniform Practice Code:

b. Broker Dealer A must wait three business days before executing a buy-in


10-3 A customer purchases 100 shares of stock on Monday, July 3. The broker-dealer must sell out the position if the customer does not make the required payment by

July 11,

Settlement date is T+3 plus a holiday day july 4

plus 2 business days.
If requirements not paid within two business days of settlement date (reg T payment date), the broker-dealer is required to cancel the transaction by selling the securities


10-4 Rules and requirements regarding the good delivery of securities are outlined under:

C. The UPC (Uniform Practice Code)


10-5 Regular way settlement for a T-bill trade is:



10-5 Regular way settlement for a muni bond trade is :



10-6 What is true about cash settlements is TRUE?

c. may be executed in either a cash or margin account. These shortended settlements must be agreed to by both the buyer and the seller prior to trade execution.


If physical certificate is owned by husband and wife but husband primary SS number , who endorses?



Firm A discovers an issue with a delivery of a security that it previously accepted. The firm can remedy this through a

b. Reclamation


Firm A discovers an issued a check against uncollectable funds. This prohibited practice is referred to as: