NSCC Rules

NATIONAL
SECURITIES
CLEARING
CORPORATION
RULES & PROCEDURES
Effective January 1, 2021

TABLE OF CONTENTS
NATIONAL SECURITIES CLEARING CORPORATION RULES ................................... 1
RULE 1. DEFINITIONS AND DESCRIPTIONS ............................................................. 1
RULE 2. MEMBERS AND LIMITED MEMBERS ......................................................... 20
RULE 2A. INITIAL MEMBERSHIP REQUIREMENTS ................................................ 24
RULE 2B. ONGOING MEMBERSHIP REQUIREMENTS AND MONITORING ........... 31
RULE 3. LISTS TO BE MAINTAINED ......................................................................... 38
RULE 4. CLEARING FUND ......................................................................................... 41
RULE 4(A). SUPPLEMENTAL LIQUIDITY DEPOSITS ............................................... 52
RULE 5. GENERAL PROVISIONS .............................................................................. 59
RULE 6. (RULE NUMBER RESERVED FOR FUTURE USE) ..................................... 61
RULE 7. COMPARISON AND TRADE RECORDING OPERATION

(INCLUDING SPECIAL REPRESENTATIVE/INDEX RECEIPT
AGENT) ....................................................................................................... 62
RULE 8. BALANCE ORDER AND FOREIGN SECURITY SYSTEMS ........................ 67
RULE 9. ENVELOPE SETTLEMENT SERVICE.......................................................... 68
RULE 10. FAILURE TO DELIVER ON SECURITY BALANCE ORDERS .................. 74
RULE 11. CNS SYSTEM ............................................................................................. 75
RULE 12. SETTLEMENT............................................................................................. 81
RULE 13. EXCEPTION PROCESSING ....................................................................... 86
RULE 14. TRANSFER TAXES .................................................................................... 87
RULE 15. ASSURANCES OF FINANCIAL RESPONSIBILITY AND

OPERATIONAL CAPABILITY..................................................................... 88
RULE 16. (RULE NUMBER RESERVED FOR FUTURE USE) ................................... 90
RULE 17. FINE PAYMENTS ....................................................................................... 91
RULE 18. PROCEDURES FOR WHEN THE CORPORATION DECLINES OR

CEASES TO ACT ........................................................................................ 92
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RULE 19. MISCELLANEOUS RIGHTS OF THE CORPORATION ............................. 98
RULE 20. INSOLVENCY ............................................................................................. 99
RULE 21. HONEST BROKER ................................................................................... 100
RULE 22. SUSPENSION OF RULES ........................................................................ 101
RULE 23. ACTION BY THE CORPORATION ........................................................... 102
RULE 24. CHARGES FOR SERVICES RENDERED ................................................ 103
RULE 25. CROSS-GUARANTY OBLIGATION ......................................................... 104
RULE 26. BILLS RENDERED ................................................................................... 105
RULE 27. ADMISSION TO PREMISES OF THE CORPORATION – POWERS

OF ATTORNEY, ETC. ............................................................................... 106
RULE 28. FORMS...................................................................................................... 107
RULE 29. QUALIFIED SECURITIES DEPOSITORIES ............................................. 108
RULE 30. (RULE NUMBER RESERVED FOR FUTURE USE) ................................. 109
RULE 32. SIGNATURES ........................................................................................... 111
RULE 33. PROCEDURES ......................................................................................... 112
RULE 34. INSURANCE ............................................................................................. 113
RULE 35. FINANCIAL REPORTS ............................................................................. 114
RULE 36. RULE CHANGES ...................................................................................... 115
RULE 37. HEARING PROCEDURES ........................................................................ 116
RULE 38. GOVERNING LAW AND CAPTIONS ....................................................... 120
RULE 39. RELIANCE ON INSTRUCTIONS .............................................................. 121
RULE 40. (WIND-DOWN OF A MEMBER, FUND MEMBER OR INSURANCE

CARRIER/RETIREMENT SERVICES MEMBER) ..................................... 122
RULE 41. (CORPORATION DEFAULT).................................................................... 124
RULE 42. WIND-DOWN OF THE CORPORATION................................................... 128
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RULE 44. DELIVERIES PURSUANT TO BALANCE ORDERS ................................ 139
RULE 45. NOTICES................................................................................................... 141
RULE 46. RESTRICTIONS ON ACCESS TO SERVICES ......................................... 143
RULE 47. INTERPRETATION OF RULES ................................................................ 145
RULE 48. DISCIPLINARY PROCEEDINGS .............................................................. 146
RULE 49. RELEASE OF CLEARING DATA AND CLEARING FUND DATA ........... 147
RULE 50. AUTOMATED CUSTOMER ACCOUNT TRANSFER SERVICE .............. 148
RULE 51. OBLIGATION WAREHOUSE ................................................................... 158
RULE 52. MUTUAL FUND SERVICES ..................................................................... 160

A. Fund/SERV® ...................................................................................... 160
B. Networking ........................................................................................ 171
C. DTCC Payment aXis ......................................................................... 173
D. Mutual Fund Profile Service .............................................................. 174
RULE 53. ALTERNATIVE INVESTMENT PRODUCT SERVICES AND

MEMBERS ................................................................................................. 177
RULE 54. DTCC LIMIT MONITORING RISK MANAGEMENT TOOL....................... 188
RULE 55. SETTLING BANKS AND AIP SETTLING BANKS ................................... 190
RULE 57. INSURANCE & RETIREMENT SERVICES .............................................. 195
RULE 58. LIMITATIONS ON LIABILITY ................................................................... 202
RULE 59. ACCOUNT INFORMATION TRANSMISSION SERVICE ......................... 204
RULE 60. (MARKET DISRUPTION AND FORCE MAJEURE) ................................. 205
RULE 61. INTERNATIONAL LINKS.......................................................................... 208
RULE 62. GLOBAL CLEARANCE NETWORK SERVICE ........................................ 209
RULE 63. SRO REGULATORY REPORTING .......................................................... 210
RULE 64. DTCC SHAREHOLDERS AGREEMENT .................................................. 211
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RULE 65. ID NET SERVICE ...................................................................................... 213
NATIONAL SECURITIES CLEARING CORPORATION PROCEDURES .................. 216
PROCEDURE I. INTRODUCTION ............................................................................. 216

PROCEDURE II. TRADE COMPARISON AND RECORDING SERVICE ................. 217
A. Introduction....................................................................................... 217
B. Equity and Listed Debt Securities -- Locked-In Trade Input ............. 217
C. Debt Securities ................................................................................. 218
D. When-Issued and When-Distributed Securities ................................ 224
E. Special Trades.................................................................................. 228
F. Index Receipts.................................................................................. 228
G. Reports and Output .......................................................................... 230
H. Consolidated Trade Summaries ....................................................... 231
PROCEDURE II.A OBLIGATION WAREHOUSE ...................................................... 233
A. Introduction....................................................................................... 233
B. OW Comparison ............................................................................... 234
C. Obligation Warehouse Storage, Tracking, Maintenance and
Settlement ........................................................................................ 235
D. Reconfirmation and Pricing .............................................................. 237
E. Pair Off ............................................................................................. 239
F. Notifications and Reports ................................................................. 239
G. Non-Guaranteed Service .................................................................. 240
H. Applicability of Marketplace Rules .................................................... 240
PROCEDURE III. TRADE RECORDING SERVICE (INTERFACE WITH
QUALIFIED CLEARING AGENCIES) ............................................................ 241
A. Introduction....................................................................................... 241
B. Settlement of Option Exercises and Assignments and
Settlement of Stock Futures Reaching Maturity ............................... 241
PROCEDURE IV. SPECIAL REPRESENTATIVE SERVICE..................................... 243
A. Introduction....................................................................................... 243
B. Institutional Clearing Service ............................................................ 243
C. Correspondent Clearing Service....................................................... 244
D. Qualified Special Representatives .................................................... 245
E. Automated Special Representative Facility ...................................... 245
PROCEDURE V. BALANCE ORDER ACCOUNTING OPERATION ........................ 246
A. Introduction....................................................................................... 246
B. Trade-for-Trade Balance Orders ...................................................... 246
C. Net Balance Orders .......................................................................... 246
D. Balance Order Contracts .................................................................. 247
E. Consolidated Trade Summaries ....................................................... 247
F. Obligation Warehouse ...................................................................... 247
PROCEDURE VI. FOREIGN SECURITY ACCOUNTING OPERATION ................... 248
A. Introduction....................................................................................... 248
B. Trade-for-Trade Foreign Security Receive and Deliver
Instructions ....................................................................................... 248
C. Netted Member-to-Member Receive and Deliver Instructions .......... 248
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PROCEDURE VII. CNS ACCOUNTING OPERATION .............................................. 249
A. Introduction....................................................................................... 249
B. Consolidated Trade Summary .......................................................... 249
C. Receipt and Delivery of Securities .................................................... 250
D. Controlling Deliveries to CNS ........................................................... 252
E. Influencing Receipts from CNS ........................................................ 255
F. Computation of CNS Money Settlement ........................................... 257
G. CNS Dividend Accounting ................................................................ 259
H. Miscellaneous CNS Activity .............................................................. 261
I. CNS Sub-Accounting........................................................................ 267
J. Recording of CNS Buy-Ins ............................................................... 268
PROCEDURE VIII. MONEY SETTLEMENT SERVICE ............................................. 271
A. Settlement Statement ....................................................................... 271
B. Money Settlement............................................................................. 271
C. Final Settlement Statement .............................................................. 271
D. Settling Bank Procedures ................................................................. 272
PROCEDURE IX. SPECIAL SERVICES ................................................................... 279
A. Clearing Centers............................................................................... 279
B. Sponsored Accounts ........................................................................ 279
PROCEDURE X. EXECUTION OF BUY-INS ............................................................ 280
PROCEDURE XI. FEES - SEE ADDENDUM A ......................................................... 282
PROCEDURE XII. TIME SCHEDULE ........................................................................ 283
PROCEDURE XIII. DEFINITIONS ............................................................................. 284
PROCEDURE XIV. FORMS, MEDIA AND TECHNICAL SPECIFICATIONS ............ 286
PROCEDURE XV. CLEARING FUND FORMULA AND OTHER MATTERS ............ 287
PROCEDURE XVI. ID NET SERVICE ....................................................................... 306
PROCEDURE XVII. DTCC LIMIT MONITORING PROCEDURE .............................. 308
A. Introduction....................................................................................... 308
B. DTCC Limit Monitoring Processing................................................... 308
PROCEDURE XVIII. ACATS SETTLEMENT ACCOUNTING OPERATION ............. 311
ADDENDUM A ............................................................................................................ 314
FEE STRUCTURE ................................................................................. 314
ADDENDUM B ............................................................................................................ 334
QUALIFICATIONS AND STANDARDS OF FINANCIAL
RESPONSIBILITY, OPERATIONAL CAPABILITY AND
BUSINESS HISTORY ...................................................................... 334
ADDENDUM C ............................................................................................................ 348
(ADDENDUM LETTER RESERVED FOR FUTURE USE) .................... 348
ADDENDUM D ............................................................................................................ 349
STATEMENT OF POLICY ENVELOPE SETTLEMENT SERVICE,
MUTUAL FUND SERVICES, INSURANCE & RETIREMENT
SERVICES AND OTHER SERVICES OFFERED BY THE
CORPORATION ............................................................................... 349
ADDENDUM E ............................................................................................................ 352
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ADDENDUM F ............................................................................................................ 353
STATEMENT OF POLICY IN RELATION TO SAME DAY FUNDS
SETTLEMENT .................................................................................. 353
ADDENDUM G............................................................................................................ 355
FULLY-PAID-FOR ACCOUNT............................................................... 355
ADDENDUM H ............................................................................................................ 357
INTERPRETATION OF THE BOARD OF DIRECTORS RELEASE
OF CLEARING DATA....................................................................... 357
ADDENDUM I ............................................................................................................. 359
ADDENDUM J ............................................................................................................ 360
STATEMENT OF POLICY LOCKED-IN DATA FROM SERVICE
BUREAUS ........................................................................................ 360
ADDENDUM K ............................................................................................................ 363
THE CORPORATION’S GUARANTY .................................................... 363
ADDENDUM L ............................................................................................................ 364
STATEMENT OF POLICY PERTAINING TO INFORMATION
SHARING ......................................................................................... 364
ADDENDUM M ........................................................................................................... 365
ADDENDUM N ............................................................................................................ 366
(ADDENDUM HEADER RESERVED FOR FUTURE USE) ................... 366
ADDENDUM O............................................................................................................ 367
ADMISSION OF NON-US ENTITIES AS DIRECT NSCC
MEMBERS ....................................................................................... 367
ADDENDUM P ............................................................................................................ 370
FINE SCHEDULE .................................................................................. 370
ADDENDUM Q............................................................................................................ 373
ADDENDUM R ............................................................................................................ 374
ADDENDUM S ............................................................................................................ 375
ADDENDUM T ............................................................................................................ 376
ADDENDUM U ............................................................................................................ 377
GLOBAL CLEARANCE NETWORK SERVICE DATA
PROCESSING PROCEDURES ....................................................... 377
ADDENDUM V ............................................................................................................ 378
BY-LAWS AND CERTIFICATE OF INCORPORATION......................... 378
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(RULE 1)
NATIONAL SECURITIES CLEARING CORPORATION RULES
RULE 1. DEFINITIONS AND DESCRIPTIONS
Changes to this Rule 1, as amended by File Nos. SR-NSCC-2020-003 and SR-NSCC-

2020-802 are available at dtcc.com/~/media/Files/Downloads/legal/rule-
filings/2020/NSCC/SR-NSCC-2020-003.pdf and
dtcc.com/~/media/Files/Downloads/legal/rule-filings/2020/NSCC/SR-NSCC-2020-
802.pdf, respectively. These changes have been approved and not objected to,
respectively, by the SEC, but are not yet implemented. These changes will be
implemented by February 28, 2021. The Corporation will issue an Important Notice
when these changes are implemented, and this legend will automatically be
removed from this Rule 1.
Unless the context requires otherwise, the terms defined in this Rule shall, for all
purposes of these Rules and Procedures, have the meanings herein specified.
ACAT Receive and Deliver Instruction
The term “ACAT Receive and Deliver Instruction” shall mean such document, form, file,
report or other information issued by the Corporation to a Member or to a QSD (as
defined in Rule 50), on behalf of such QSD’s participants, which identifies Automated
Customer Account Transfer receive and deliver obligations.
ACATS Settlement Accounting Operation
The term “ACATS Settlement Accounting Operation” relates to the accounting operation
for the processing of eligible ACATS transactions in accordance with Procedure XVIII.
Accounting Operation
The term “Accounting Operation” includes the ACATS Settlement Accounting

Operation, Balance Order Accounting Operation, the Foreign Security Accounting
Operation and the CNS Accounting Operation.
Actual Deposit
The term “Actual Deposit” has the meaning specified in Rule 4.
AIP Adjusted Credit Balance
The term “Adjusted Credit Balance” has the meaning set forth in Rule 53.
AIP Credit Balance
The term “Credit Balance” has the meaning set forth in Rule 53.
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(RULE 1)
AIP Debit Balance
The term “Debit Balance” has the meaning set forth in Rule 53.
AIP Fund Administrator
The term “AIP Fund Administrator” has the meaning set forth in Rule 53.
AIP Member
The term “AIP Member” means any Person who is specified in Section 2.(ii)(h) of Rule 2
and has qualified pursuant to the provisions of Rule 2A.
AIP Non-Member Fund
The term “AIP Non-Member Fund” means an entity that is not an AIP Member but that
the Corporation has approved to settle AIP Payments as described in Rule 53.
AIP Payment
The term “AIP Payment” has the meaning set forth in Rule 53.
AIP Settlement
The term “AIP Settlement” has the meaning set forth in Rule 53.
AIP Settling Sub-Account
The term “AIP Settling Sub-Account” has the meaning set forth in Rule 53.
AIP Settling Bank
The term “AIP Settling Bank” means
(1) an AIP Member which is a bank or trust company which would otherwise qualify
under Section 2. (ii)(i) of Rule 2, Rule 2A and which is a party to an effective
Appointment of AIP Settling Bank and AIP Settling Bank Agreement whereby the AIP
Member undertakes to perform settlement services for the AIP Member or the AIP Non-
Member Fund which is a party thereto, or
(2) an AIP Settling Bank Only Member which has qualified under Section 2. (ii)(i) of Rule
2, Rule 2A and Addendum B and which is a party to an effective Appointment of AIP
Settling Bank and AIP Settling Bank Agreement whereby the AIP Settling Bank Only
Member undertakes to perform settlement services for the AIP Member or the AIP Non-
Member Fund which is a party thereto.
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(RULE 1)
AIP Settling Bank Only Member
The term AIP “Settling Bank Only Member” means a Person who is specified in Section
2(ii)(i) of Rule 2 and which has qualified pursuant to the provisions of Rule 2A.
Average RFD
The term “Average RFD” has the meaning specified in Rule 4.
Balance Order Accounting Operation
The term “Balance Order Accounting Operation” covers all the operations having to do
with Balance Order Securities after the Comparison Operation to which these Rules are
applicable.
Balance Order Contracts
The term “Balance Order Contracts” has the meaning specified in Rule 5.
Balance Order Securities
The term “Balance Order Securities” means Cleared Securities other than CNS
Securities or Foreign Securities.
Balance Order System
The term “Balance Order System” means the method of accounting for and settling
securities transactions provided for in these Rules.
Board of Directors
The term “Board of Directors” means the Board of Directors or “Board” of National
Securities Clearing Corporation, or a committee thereof, acting on delegated authority.
Business Day
The term “business day” means any day on which the Corporation is open for business.
However, on any business day that banks or transfer agencies in New York State are
closed or a Qualified Securities Depository is closed, no deliveries of securities and no
payments of money shall be made through the facilities of the Corporation.
CFTC
The term “CFTC” shall mean the Commodity Futures Trading Commission.
Cleared Securities
The term “Cleared Securities” means securities included in the lists for which provision
is made in Section 1 of Rule 3 and, until such time as the Corporation shall determine
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(RULE 1)
that it shall cease to be a Cleared Security, any security which may be distributed in
respect of a CNS Security.
Clearing Agency Cross-Guaranty Agreement
The term “Clearing Agency Cross-Guaranty Agreement” shall mean an agreement

between the Corporation and one or more Registered Clearing Agencies, or a clearing
organization affiliated with or designated by contract markets trading specific futures
products under the oversight of the CFTC, relating to the guaranty by the Corporation of
certain obligations of a Member to such Registered Clearing Agency or Agencies or
CFTC recognized clearing organization.
Clearing Fund
The term “Clearing Fund” means the fund created pursuant to Rule 4.
Clearing Fund Cash
The term “Clearing Fund Cash” has the meaning specified in Rule 4.
Closing Position
The term “Closing Position” means the Long Position or the Short Position of a Member
in a security at the close of business on any business day.
CNS Accounting Operation
The term “CNS Accounting Operation” covers all the operations having to do with CNS
Securities after the Comparison Operation to which these Rules are applicable.
CNS Contracts
The term “CNS Contracts” has the meaning specified in Rule 5.
CNS Fails Position
The term “CNS Fails Position” means either a Long Position or a Short Position that did
not settle on the Settlement Date.
CNS Position
The term “CNS Position” has the meaning specified in Rule 18.
CNS Securities
The term “CNS Securities” means securities which are Cleared Securities, are eligible
for transfer on the books of each Qualified Securities Depository and are included in the
list for which provision is made in Section 1(b) of Rule 3.
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(RULE 1)
CNS System
The term “CNS System” means the method of accounting for and settling securities
transactions provided for in these Rules.
Compared Contract
The term “Compared Contract” has the meaning set forth in Rule 5.
Comparison Operation
The term “Comparison Operation” covers all operations having to do with Cleared
Securities to which these Rules are applicable.
Controlling Management
The term “Controlling Management” shall mean the Chief Executive Officer, the Chief
Financial Officer, and the Chief Operations Officer, or their equivalents, of an applicant
or Member.
Corporate Contribution
The term “Corporate Contribution” has the meaning specified in Rule 4.
Corporation
The term “Corporation” means National Securities Clearing Corporation.
Credit Risk Rating Matrix
The term “Credit Risk Rating Matrix” means a matrix of credit ratings of Members
specified in Section 4 of Rule 2B. The matrix is developed by the Corporation to
evaluate the credit risk such Members pose to the Corporation and its Members and is
based on factors determined to be relevant by the Corporation from time to time, which
factors are designed to collectively reflect the financial and operational condition of a
Member. These factors include (i) quantitative factors, such as capital, assets,
earnings, and liquidity, and (ii) qualitative factors, such as management quality, market
position/environment, and capital and liquidity risk management.
Cross-Guaranty Obligation
The term “Cross-Guaranty Obligation” shall mean the obligation of a Member to the
Corporation pursuant to Rule 25.
Cross-Guaranty Party
The term “Cross-Guaranty Party” shall mean a party to a Clearing Agency Cross-
Guaranty Agreement.
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(RULE 1)
Current Market Price
The term “Current Market Price” means the price for a security determined daily by the
Corporation for the purposes of the CNS System. Such price shall be closing price of
such security on the principal stock exchange on which such security is listed on the last
previous day on which there were trades on such exchange in such security, or if the
security is not listed on a national securities exchange, in such market as the
Corporation shall deem appropriate, for trades on the business day prior to the day such
price is used. If no last sale price is available for the business day prior to the day such
price is used, then such price shall be such price as the Corporation shall deem
appropriate.
Cybersecurity Confirmation
The term “Cybersecurity Confirmation” means a written document provided to the

Corporation by all Members, Limited Members and applicants for membership that
confirms the existence of an information system cybersecurity program and includes the
representations listed below.
Each Cybersecurity Confirmation shall (1) be on a form provided by the Corporation;
(2) be signed by a designated senior executive of the Member, Limited Member or
applicant who is authorized to attest to these matters; and (3) include the following
representations, made with respect to the two years prior to the date of the
Cybersecurity Confirmation:
1. The Member, Limited Member or applicant has defined and maintains a
comprehensive cybersecurity program and framework that considers
potential cyber threats that impact their organization and protects the
confidentiality, integrity and availability requirements of their systems and
information.
2. The Member, Limited Member or applicant has implemented and
maintains a written enterprise cybersecurity policy or policies approved by
senior management or the organization’s board of directors, and the
organization’s cybersecurity framework is in alignment with standard
industry best practices and guidelines, as indicated on the form of
Cybersecurity Confirmation.
3. If using a third party service provider or service bureau(s) to connect or
transact business or to manage the connection with the Corporation, the
Member, Limited Member or applicant has an appropriate program to (a)
evaluate the cyber risks and impact of these third-parties, and (b) review
the third-party assurance reports.
4. The cybersecurity program and framework protect the segment of the
Member’s, Limited Member’s or applicant’s system that connects to and/or
interacts with the Corporation.
6
(RULE 1)
5. The Member, Limited Member or applicant has in place an established

process to remediate cyber issues identified to fulfill the Member’s, Limited
Member’s or applicant’s regulatory and/or statutory requirements.
6. The cybersecurity program’s and framework’s risk processes are updated
periodically based on a risk assessment or changes to technology,
business, threat ecosystem, and/or regulatory environment.
7. A comprehensive review of the Member’s, Limited Member’s or applicant’s
cybersecurity program and framework has been conducted by one of the
following:
• The Member, Limited Member or applicant, if that organization has
filed and maintains a current Certification of Compliance with the
Superintendent of the New York State Department of Financial
Services pursuant to 23 NYCRR 500;
• A regulator who assesses the program against a designated
cybersecurity framework or industry standard, including those that
are listed on the form of the Cybersecurity Confirmation and in an
Important Notice issued by the Corporation from time to time;
• An independent external entity with cybersecurity domain expertise,
including those that are listed on the form of the Cybersecurity
Confirmation and in an Important Notice issued by the Corporation
from time to time; and
• An independent internal audit function reporting directly to the
board of directors or designated board of directors committee of the
Member, Limited Member or applicant, such that the findings of that
review are shared with these governance bodies.
Data Services Only Member
The term “Data Services Only Member” means a Person who is specified in Section
2.(ii)(a) of Rule 2 and has qualified pursuant to the provisions of Rule 2A.
Declared Non-Default Loss Event
The term “Declared Non-Default Loss Event” has the meaning specified in Rule 4.
Defaulting Member
The term “Defaulting Member” has the meaning specified in Rule 4.
Defaulting Member Event
The term “Defaulting Member Event” has the meaning specified in Rule 4.
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(RULE 1)
DTC
The term “DTC” means The Depository Trust Company.
Eligible Clearing Fund Agency Security
The term “Eligible Clearing Fund Agency Security” shall mean a direct obligation of
those U.S. agencies or government sponsored enterprises as the Corporation may
designate from time to time, and which satisfies such criteria set forth in notices issued
by the Corporation from time to time.
Eligible Clearing Fund Security
The term “Eligible Clearing Fund Security” shall mean unmatured bonds which are
either an Eligible Clearing Fund Agency Security, an Eligible Clearing Fund Mortgage-
Backed Security or an Eligible Clearing Fund Treasury Security.
Eligible Clearing Fund Mortgage-Backed Security
The term “Eligible Clearing Fund Mortgage-Backed Security” shall mean a mortgage-
backed pass through obligation issued by those U.S. agencies or government
sponsored enterprises as the Corporation may designate from time to time, and which
satisfies such criteria set forth in notices issued by the Corporation from time to time.
Eligible Clearing Fund Treasury Security
The term “Eligible Clearing Fund Treasury Security” shall mean a direct obligation of the
U.S. government and which satisfies the criteria set forth in notices issued by the
Corporation from time to time.
Eligible Government Security
The term “Eligible Government Security” means a Government Security included in the
list for which provision is made in Section 1.(e) of Rule 3.
Eligible ID Net Security
The term “Eligible ID Net Security” has the meaning specified in Rule 65.
Eligible Letter of Credit
The term “Eligible Letter of Credit” has the meaning specified in Rule 4.
Event Period
The term “Event Period” has the meaning specified in Rule 4.
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(RULE 1)
Family-Issued Security
The term “Family-Issued Security” means a security that was issued by a Member or an
affiliate of that Member.
FATCA
The term “FATCA” means (i) the provisions of sections 1471 through 1474 of the
Internal Revenue Code of 1986, as amended, (the “Code”) that were implemented as
part of The Foreign Account Tax Compliance Act (or any amendment thereto or
successor sections thereof), and the related Treasury Regulations or other official
interpretations thereof, as in effect from time to time, and (ii) the provisions of any
intergovernmental agreement to implement The Foreign Account Tax Compliance Act
as in effect from time to time between the United States and the jurisdiction of the FFI
Member’s (or applicant’s) residency.
FATCA Certification
The term “FATCA Certification” means an executed copy of the relevant tax form
required by the Internal Revenue Service under FATCA, as in effect from time to time,
that each Member and Limited Member (or applicant to become such) shall provide
from time to time to the Corporation as set forth under these Rules.
FATCA Compliance Date
The term “FATCA Compliance Date” shall mean, as applicable, either (i) January 1,
2014, with respect to any FFI Member approved for membership by the Corporation on
January 1, 2014 or thereafter (or, if the commencement of all FATCA withholding with
respect to such FFI Members is delayed beyond January 1, 2014 under FATCA, two
calendar months plus one day before such delayed effective date), or (ii) May 1, 2014,
with respect to any FFI Member approved for membership by the Corporation at any
time prior to January 1, 2014 (or, if the commencement of all FATCA withholding with
respect to such FFI Members is delayed beyond July 1, 2014 under FATCA, two
calendar months plus one day before such delayed effective date).
FATCA Compliant
The term “FATCA Compliant” or “FATCA Compliance” means, with respect to an FFI
Member, that such FFI Member has qualified under such procedures promulgated by
the Internal Revenue Service as are in effect from time to time to establish exemption
from withholding under FATCA such that the Corporation will not be required to withhold
under FATCA either (i) on “gross proceeds from the sale or other disposition of any
property of a type which can produce interest or dividends from sources within the
United States” within the meaning of Code section 1473(1)(A)(ii), as may be amended
or re-codified from time to time, or (ii) on interest, dividends, etc. from sources within the
United States within the meaning of Code section 1473(1)(A)(i), as may be amended or
re-codified from time to time, in each case, paid to such FFI Member.
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(RULE 1)
FFI Member
The term “FFI Member” means any Member or Limited Member that is treated as a non-
U.S. entity for U.S. federal income tax purposes. For the avoidance of doubt, FFI
Member includes any Member or Limited Member that is a U.S. branch of an entity that
is treated as a non-U.S. entity for U.S. federal income tax purposes.
Foreign Financial Institution
The term “Foreign Financial Institution” means any foreign entity/organization or person
with whom the Corporation enters into a link agreement pursuant to Rule 61.
Foreign Securities
The term “Foreign Securities” means Cleared Securities which the Corporation has
determined to include in the Foreign Security Accounting Operation.
Foreign Security Accounting Operation
The term “Foreign Security Accounting Operation” covers all the operations having to do
with Foreign Securities after the Comparison Operation to which these Rules are
applicable.
Foreign Security System
The term “Foreign Security System” means the method of accounting for and settling
securities transactions provided for in these Rules.
Fund Member
The term “Fund Member” (previously referred to as a Fund/SERV Member) means any
Person who is specified in Section 2.(ii)(b) of Rule 2 and has qualified pursuant to the
provisions of Rule 2A.
Fund/SERV Eligible Fund
The term “Fund/SERV Eligible Fund” means a fund or other pooled investment entity
included in the list for which provision is made in Section 1.(c) of Rule 3.
Fund/SERV Member - (See “Fund Member”)
Gross Credit Balance
The term “Gross Credit Balance” for a business day as used in respect of a Member,
Mutual Fund/Insurance Services Member, Insurance Carrier/Retirement Services
Member or Fund Member means the aggregate amount of money the Corporation
credits to the Member’s, Mutual Fund/Insurance Services Member’s, Insurance
Carrier/Retirement Services Member’s or Fund Member’s account pursuant to these
Rules on such business day without accounting for any amount of money the
10
(RULE 1)
Corporation debits or charges to such participant’s account pursuant to these Rules for
such business day. The contribution of a Member, Mutual Fund/Insurance Services
Member, Insurance Carrier/Retirement Services Member or Fund Member to the
Clearing Fund from time to time does not constitute part of such participant’s Gross
Credit Balance.
Gross Debit Balance
The term “Gross Debit Balance” for a business day as used in respect of a Member,
Member or Fund Member means the aggregate amount of money the Corporation
debits or charges to the Member’s, Mutual Fund/Insurance Services Member’s,
Insurance Carrier/Retirement Services Member’s or Fund Member’s account pursuant
to these Rules on such business day without accounting for any amount of money the
Corporation credits to such participant’s account pursuant to these Rules for such
business day. Any obligation of a Member, Mutual Fund/Insurance Services Member,
Insurance Carrier/Retirement Services Member or Fund Member to contribute, or make
up a deficit in its contribution, to the Clearing Fund does not constitute part of such
participant’s Gross Debit Balance.
He, him, his
The words “he”, “him” and “his” shall include partnerships, corporations or other
organizations or entities, as well as individuals, when the context so requires.
I&RS Eligible Product
The term “I&RS Eligible Product” means an insurance product or a retirement or other
benefit plan or program included in the list for which provision is made in Section 1.(d)
of Rule 3.
Id Net Subscriber
The term “ID Net Subscriber” has the meaning specified in Rule 65.
Index Receipt Agent
The term “Index Receipt Agent” has the meaning specified in Rule 7.
Illiquid Position
The term “Illiquid Position” means a Net Unsettled Position in an Illiquid Security that
exceeds applicable volume thresholds. For net buy positions in an Illiquid Security, the
volume thresholds shall be no greater than 100 million shares and based on the
Member’s rating on the Credit Risk Rating Matrix. For net sell positions in an Illiquid
Security, the volume threshold shall be no greater than 1 million shares on an absolute
value basis, and based on both the Member’s excess net capital and the Member’s
rating on the Credit Risk Rating Matrix.
11
(RULE 1)
In determining if the volume threshold is met with respect to a net sell position in Illiquid
Securities, the Corporation shall apply an offset against shares of Illiquid Securities in
the Member’s inventory at DTC to the quantity of shares in a Member’s Illiquid Position.
Such offset shall not be applied to (1) net buy positions in Illiquid Securities, or (2)
Members that have the weakest rating on the Credit Risk Rating Matrix.
Illiquid Security
The term “Illiquid Security” means a security, other than a family-issued security as
defined in Procedure XV, that either (i) is not traded on or subject to the rules of a
national securities exchange registered under the Securities Exchange Act of 1934, as
amended; or (ii) is an OTC Bulletin Board or OTC Link issue.
Insurance Carrier/Retirement Services Member
The term “Insurance Carrier/Retirement Services Member” (previously referred to as an

Insurance Carrier Member) means any Person who is specified in Section 2.(ii)(c) of
Rule 2 and who has qualified pursuant to the provisions of Rule 2A.
Insurance Company
The term “Insurance Company” means any Person who is subject to supervision or
regulation pursuant to the provisions of state insurance law and issues insurance
contracts.
Insurance Deposit
The term “Insurance Deposit” has the meaning specified in Rule 4.
Insurance Entity
The term “Insurance Entity” means an insurance company, partnership, corporation,

limited liability corporation or other organization or entity who is licensed to sell
insurance products and is subject to supervision or regulation pursuant to the provisions
of state insurance laws.
Insurance Participant
The term “Insurance Participant” has the meaning specified in Rule 4.
Issuer
The term “Issuer” has the meaning specified in Rule 4.
12
(RULE 1)
Investment Manager/Agent Member
The term “Investment Manager/Agent Member” (or IMA Member) means any Person
who is specified in Section 2. (ii)(j) of Rule 2 and has qualified pursuant to the provisions
of Rule 2A.
IPO Tracking System
The term “IPO Tracking System” means the system offered by DTC pursuant to its rules
and procedures which allows lead managers and syndicate members of Initial Public
Offerings to monitor flipping of new issues in an automated book-entry environment.
Lender
The term “Lender” has the meaning specified in Rule 4.
Limited Member
The term “Limited Member” means a Person whose use of the Corporation’s services is
limited to those services specified by the Corporation and is of a member type specified
in Rule 2 as a “Limited Member”.
LM Member-provided Data
The term “LM Member-provided Data” has the meaning specified in Rule 54.
LM Trade Date Data
The term “LM Trade Date Data” has the meaning specified in Rule 54.
LM Transaction Data
The term “LM Transaction Data” has the meaning specified in Rule 54.
Long Position
The term “Long Position” means the number of units of a CNS Security which a Member
is entitled to receive from the Corporation.
Loss Allocation Cap
The term “Loss Allocation Cap” has the meaning specified in Rule 4.
Loss Allocation Notice
The term “Loss Allocation Notice” has the meaning specified in Rule 4.
13
(RULE 1)
Loss Allocation Withdrawal Notice
The term “Loss Allocation Withdrawal Notice” has the meaning specified in Rule 4.
Loss Allocation Withdrawal Notification Period
The term “Loss Allocation Withdrawal Notification Period” has the meaning specified in
Rule 4.
Member
The term “Member” means any Person specified in Section 2.(i) of Rule 2 who has
qualified pursuant to the provisions of Rule 2A. Except where the text of the Rule
indicates a contrary intent, the term “Member” shall also include Special Representative.
Municipal Comparison Only Member
The term “Municipal Comparison Only Member” means any municipal securities broker
or municipal securities dealer, as defined in Section 3(a)(30) and 3(a)(31) respectively,
of the Securities Exchange Act of 1934, as amended, who is specified in Section
2.(ii)(d) of Rule 2 and has qualified pursuant to the provisions of Rule 2A.
Municipal Securities Brokers’ Broker
The term “Municipal Securities Brokers’ Broker” means any municipal securities broker
as defined in Rule 15c3-1(a)(8)(ii) of the Securities Exchange Act of 1934, as amended.
Mutual Fund Deposit
The term “Mutual Fund Deposit” has the meaning specified in Rule 4.
Mutual Fund Participant
The term “Mutual Fund Participant” has the meaning specified in Rule 4.
Mutual Fund/Insurance Services Member
The term “Mutual Fund/Insurance Services Member”1 means a Person who is specified
in Section 2.(ii)(e) of Rule 2 and has qualified pursuant to the provisions of Rule 2A
1
The members now known as “Mutual Fund/Insurance Services Members” were previously known as
either “Mutual Fund Services Members” or “Annuities Agency Members”. The members known as
“Mutual Fund Services Members” were, at one point, referred to as “Mutual Fund Services Broker-
Dealers” or “Fund/SERV Broker-Dealers”.
14
(RULE 1)
National Securities Clearing Corporation
The term “National Securities Clearing Corporation” means National Securities Clearing
Corporation, a New York corporation.
Net Close Out Position
The term “Net Close Out Position” has the meaning specified in Rule 18.
Net Credit Balance
The term “Net Credit Balance” for a business day as used with respect to a Member,
Member or Fund Member means the amount by which its Gross Credit Balance for such
business day exceeds its Gross Debit Balance on such business day.
Net Debit Balance
The term “Net Debit Balance” for a business day as used with respect to a Member,
Member or Fund Member means the amount by which its Gross Debit Balance for such
business day exceeds its Gross Credit Balance on such business day.
NSCC Website
The term “NSCC Website” means any URL (Uniform Resource Locator) designated by
the Corporation from time to time.
Obligation Warehouse
The term “Obligation Warehouse” has the meaning specified in Rule 51.
Off-the-Market Transaction
The term “Off-the-Market Transaction” shall mean either of the following:
(1) A single transaction that is: (a) greater than $1 million in gross proceeds
and (b) on the day of the submission of the transaction to the Corporation, either
higher or lower than the most recently observed market price of the underlying
Cleared Security by a percentage amount determined by the Corporation based
upon market conditions and factors that impact trading behavior of the underlying
Cleared Security, including the volatility, liquidity and other characteristics of such
security; or
(2) A series of transactions submitted by or on behalf of two Members within

the same settlement cycle that, if looked at as a single transaction, would be
encompassed by subsection (1) of this definition.
15
(RULE 1)
OW Obligation
The term “OW Obligation” has the meaning specified in Rule 51.
Person
The term “Person” means a partnership, corporation, limited liability corporation or other
organization, entity or an individual.
Procedures
The term “Procedures” means the Procedures of the Corporation adopted pursuant to
Rule 33.
Qualified Securities Depository
The term “Qualified Securities Depository” means a Registered Clearing Agency which
has entered into an agreement with the Corporation pursuant to which it will act as a
securities depository for the Corporation and effect book-entry transfers of securities to
and by the Corporation in respect of the CNS System.
RBC Ratio
The term “RBC Ratio” means the Risk-Based Capital ratio of an Insurance Company,
calculated pursuant to the law of the state of such Insurance Company’s state regulator.
Refusal
The term “Refusal” has the meaning specified in Rule 55.
Registered Broker-Dealer
The term “Registered Broker-Dealer” means a broker or dealer registered under the
Securities Exchange Act of 1934, as amended.
Registered Clearing Agency
The term “Registered Clearing Agency” means a clearing agency as defined in Section
3(a)(23) of the Securities Exchange Act of 1934, as amended which has been
registered by the Securities and Exchange Commission pursuant to the provisions of
Section 19(a) of the Securities Exchange Act of 1934, as amended.
Required Fund Deposit
The term “Required Fund Deposit” has the meaning specified in Rule 4.
RP Member-provided Data
The term “RP Member-provided Data” has the meaning specified in Rule 54.
16
(RULE 1)
RP Trade Date Data
The term “RP Trade Date Data” has the meaning specified in Rule 54.
RP Transaction Data
The term “RP Transaction Data” has the meaning specified in Rule 54.
RVP/DVP Transaction
The term “RVP/DVP Transaction” means any wholly executory receipt-versus-payment

or delivery-versus-payment transaction between a Member and an RVP/DVP Customer.
RVP/DVP Customer
The term “RVP/DVP Customer” means a party who has executed a RVP/DVP
Transaction with a Member for whom the Corporation has declined or ceased to act, or
with an introducing broker who clears through a Member for whom the Corporation has
declined or ceased to act.
Security
The term “security” shall have the meaning given that term in the Securities Exchange
Act of 1934, as amended, and the General Rules and Regulations thereunder. The
term “securities” shall mean more than one security.
Settlement Agent
The term “Settlement Agent” means the bank or trust company that the Corporation
may, from time to time, designate to act as its agent for purposes of receiving money
settlement debit amounts from Settling Banks and participants and paying money
settlement credit amounts to Settling Banks and participants.
Settlement Date
The term “Settlement Date” means, with respect to any contracts, security balance
orders, security orders or other transactions to which these Rules and Procedures
apply, the date specified for the settlement of such contract, security balance order,
security order or transaction, as provided in these Rules and Procedures.
Settlement Day
The term “settlement day” means any business day on which banks and transfer
agencies in New York State are open and on which deliveries of securities and
payments of money may be made through the facilities of the Corporation.
17
(RULE 1)
Settling Bank
The term “Settling Bank” means
(1) a Member which is a bank or trust company which would otherwise qualify
under Section 2.(ii)(f) of Rule 2, Rule 2A and which is a party to an effective
Appointment of Settling Bank and Settling Bank Agreement whereby the Member
undertakes to perform settlement services for a Member, Mutual Fund/Insurance
Services Member, Insurance Carrier/Retirement Services Member or Fund
Member which is a party thereto, or
(2) a Settling Bank Only Member which has qualified under Section 2.(ii)(f) of
Rule 2, Rule 2A and Section 8 of Addendum B and which is a party to an
effective Appointment of Settling Bank and Settling Bank Agreement whereby the
Settling Bank Only Member undertakes to perform settlement services for the
Member, Mutual Fund/Insurance Services Member, Insurance Carrier/Retirement
Services Member or Fund Member which is a party thereto.
Settling Bank Only Member
The term “Settling Bank Only Member” means a Person who is specified in Section
2.(ii)(f) of Rule 2 and which has qualified pursuant to the provisions of Rule 2A.
Short Position
The term “Short Position” means the number of units of a CNS Security that a Member
is obligated to deliver to the Corporation.
Special Representative
The term “Special Representative” has the meaning specified in Rule 7. Unless the
context otherwise requires, the term “Special Representative” also includes “Qualified
Special Representative”, as defined in Rule 7.
Special Trade
The term “Special Trade” means a transaction reported to the Corporation involving a
Cleared Security either which the parties thereto agree to settle on a Member-to-
Member basis or which the Corporation designates as settling on a Member-to-Member
basis. Special Trades shall be accounted for and settled as provided in these Rules.
Specified Location
The term “Specified Location” shall be the location where a Member receives envelope
deliveries.
18
(RULE 1)
Statutory Disqualification
The term “Statutory Disqualification” shall have the meaning given that term in Section
3(a)(39) of the Securities Exchange Act of 1934, as amended.
Termination Date
The term “Termination Date” has the meaning specified in Rule 2B.
Third Party Administrator Member
The term “Third Party Administrator Member” (or “TPA Member”) means any Person
that acts as a third party administrator on behalf of a retirement or other benefit plan,
who is specified in Section 2.(ii)(g) of Rule 2 and has qualified pursuant to the
provisions of Rule 2A.
Third Party Provider Member
The term “Third Party Provider Member” (or TPP Member) means any Person that acts
as a routing platform for financial intermediaries, who is specified in Section 2.(ii)(k) of
Rule 2 and has qualified pursuant to the provisions of Rule 2A.
Voluntary Termination Notice
The term “Voluntary Termination Notice” has the meaning specified in Rule 2B.
Watch List
The term “Watch List” means, at any time and from time to time, the list of Members
whose credit ratings derived from the Credit Risk Rating Matrix are 5, 6 or 7, as well as
Members and Limited Members that, based on the Corporation’s consideration of
relevant factors, including those set forth in Section 4(d) of Rule 2B, are deemed by the
Corporation to pose a heightened risk to the Corporation and its Members.
19
(RULE 2)
RULE 2. MEMBERS AND LIMITED MEMBERS
SEC. 1. The Corporation shall make its services, or certain of its services,
available to Persons who (i) apply to the Corporation to act for them, (ii) meet the
membership qualifications specified in these Rules, (iii) are approved by the Corporation
or the Board of Directors, as applicable, and (iv) if required, have contributed to the
Clearing Fund as provided in Rule 4.
SEC. 2. Membership Types
The Corporation shall have the following membership types:
(i) Member -
A Member, unless otherwise limited by the Corporation pursuant to these

Rules, may generally access all services made available by the
Corporation. Only Members shall be entitled to settle contracts through
the Corporation and to participate in the Comparison and Recording
Operation and Accounting Operation.
(ii) Limited Members -
In addition to Members, upon the request of an applicant, the Corporation

may approve an application by a Person to become a Limited Member,
whose use of the Corporation’s services is limited to those services
specified by the Corporation. Such Limited Members will be termed as
follows:
(a) Data Services Only Member –
Participates solely in the transmission of data and

information, and shall utilize only those features of services
that the Corporation may, from time to time, expressly
designate as eligible for access by a Data Services Only
Member.
(b) Fund Member –
Participates in the Corporation’s Mutual Fund Services,

acting as a mutual fund’s 1) principal underwriter, 2) co-
distributor, 3) sub-distributor, or 4) an entity that is otherwise
authorized to process transactions on behalf of a mutual
fund.
(c) Insurance Carrier/Retirement Services Member -
Participates in the Corporation’s Insurance & Retirement

Services as provided for in Rule 57.
20
(RULE 2)
(d) Municipal Comparison Only Member –
Participates in the Corporation’s Comparison Operation,

solely for the comparison of municipal securities
transactions.
(e) Mutual Fund/Insurance Services Member -
Participates in the Corporation’s Mutual Fund Services and

Insurance & Retirement Services as provided for in Rules 52
and 57.
(f) Settling Bank Only Member -
Undertakes to perform settlement services with respect to

transactions or matters covered by these Rules on behalf of
Members, Fund Members, Mutual Fund/Insurance Services
Members and Insurance Carrier/Retirement Services
Members.
(g) Third Party Administrator Member -
Participates in the Corporation’s Mutual Fund Services for

the purpose of communicating order, redemption or other
information on behalf of a retirement or other benefit plan.
(h) AIP Member
Participates in the Corporation’s AIP Services as provided in

Rule 53.
(i) AIP Settling Bank Only Member
Undertaken to perform settlement services with respect to

AIP Settlement on behalf of AIP Members and/or AIP Non-
Member Funds.
(j) Investment Manager/Agent (“IMA”) Member
Participates in the Corporation’s Mutual Fund Services as or

on behalf of one or more investment managers to a
managed account or similar program.
(k) Third Party Provider Member -
Participates in the Corporation’s Mutual Fund Services as a

routing platform for financial intermediaries.
21
(RULE 2)
When these Rules refer to “Members and Limited Members”, the reference
includes all member types; when reference is made to “participants” in these Rules, the
reference generally means all participants other than Settling Bank Only Members,
unless the context makes clear it refers to one or more specific member types.
SEC. 3. Responsible as Principal
A participant who submits, compares, settles or carries out through the

Corporation any contract or transaction for a Person who is not also a participant
(hereinafter a non-Member) shall, so far as the rights of the Corporation and all other
participants are concerned, be liable as a principal, except with respect to municipal
security transactions compared by a Member on behalf of the non-Member pursuant to
a Municipal Comparison Only Multi-Number Agreement, in which case the non-Member
shall remain liable as principal on the underlying transactions. A non-Member who
compares, settles or carries out transactions through a participant shall not be deemed
to possess any of the rights or benefits of a participant.
SEC 4. Compliance with Applicable Law
(i) General
Members and Limited Members may not submit or confirm any transaction,
charge, request, instruction or transmission through the Corporation’s services,
nor otherwise utilize the Corporation’s services, in contravention of any law, rule,
regulation or statute, including, but not limited to, those related to securities,
taxation and money laundering, as well as sanctions administered and enforced
by the Office of Foreign Assets Control (“OFAC”).
(ii) OFAC
All Members and Limited Members must agree not to conduct any transaction or
activity through NSCC that it knows to violate sanctions administered and
enforced by OFAC.
All Members and Limited Members subject to the jurisdiction of the U.S. (as
defined by OFAC regulations), with the exception of Data Services Only
Members, Municipal Comparison Only Members, Third Party Administrator
Members and Investment Manager/Agent Member are required to periodically
confirm that they have implemented a risk-based program reasonably designed
to comply with applicable OFAC sanctions regulations. Failure to do so in the
manner and timeframes set forth by the Corporation from time to time will result
in a fine.
(iii) FATCA
Beginning on the FATCA Compliance Date, each FFI Member must agree not to
conduct any transaction or activity through the Corporation if such FFI Member is
22
(RULE 2)
not FATCA Compliant, unless such requirement has been explicitly waived in
writing by the Corporation with respect to the specific FFI Member, provided,
however, that no such waiver will be issued if it shall cause the Corporation to be
obligated to withhold under FATCA on gross proceeds from the sale or other
disposition of any property.
All FFI Members are required, as applicable under FATCA, to certify and
periodically recertify to the Corporation that they are FATCA Compliant by
providing to the Corporation a FATCA Certification. Failure to do so in the
manner and timeframes set forth by the Corporation from time to time will result
in a fine, unless such requirement has been explicitly waived in writing by the
Corporation with respect to the specific FFI Member, provided, however, that no
such waiver will be issued if it shall cause the Corporation to be obligated to
withhold under FATCA on gross proceeds from the sale or other disposition of
any property.
An FFI Member shall indemnify the Corporation for any loss, liability or expense
sustained by the Corporation as a result of such FFI Member failing to be FATCA
Compliant.
23
(RULE 2A)
RULE 2A. INITIAL MEMBERSHIP REQUIREMENTS
SEC. 1. ELIGIBILITY FOR MEMBERSHIP
In furtherance of the Corporation’s rights and authority to establish standards for

membership, the Corporation shall establish, as it deems necessary or appropriate,
standards of financial responsibility, operational capability, experience and competence
for membership applicable to Members and to Limited Members. The Corporation shall
also establish guidelines for the application of such membership standards.
A. Qualifications
A Person shall be qualified to become a participant if it satisfies the qualifications

for membership applicable to its membership type, as set forth in Addendum B of these
Rules.
B. Membership Standards
The Corporation shall approve a membership application only upon a

determination by the Corporation that the applicant meets the qualifications and
financial, operational and other standards applicable to its membership type as set forth
in Addendum B of these Rules, or such other qualifications and standards as the
Corporation may promulgate. 1 In addition, with regard to any applicant that shall be an
FFI Member, such applicant must be FATCA Compliant.
C. Application Documents
Each applicant shall, as required by the Corporation from time to time, complete
and deliver to the Corporation an Applicant Questionnaire in such form as prescribed by
the Corporation from time to time and shall provide such other reports, opinions,
financial and other information as the Corporation may determine are appropriate for
each membership type.
As part of its membership application, each applicant (as determined by the

Corporation with regard to membership type) shall complete and deliver to the
Corporation (1) a FATCA Certification, and (2) a Cybersecurity Confirmation.
Each applicant (as determined by the Corporation) must also fulfill, within the
timeframes established by the Corporation, any operational testing requirements (the
scope of such testing to be determined by the Corporation in its sole discretion) and
related reporting requirements (such as reporting test results to the Corporation in a
1
Pursuant to its authority, the Corporation has established (i) a policy statement on the admission of
Non-U.S. entities as Members, Mutual Fund/Insurance Services Members, Fund Members and
Insurance Carrier/Retirement Services Members, which policy statement is set forth as Addendum O
to these Rules and (ii) guidelines with regard to character and other considerations that are reflected
in subsection G of this Rule.
24
(RULE 2A)
manner specified) that may be imposed by the Corporation to ensure the operational
capability of the applicant.
Any information furnished to the Corporation pursuant to this Rule shall be held
in the same degree of confidence as may be required by law or the rules and
regulations of the appropriate regulatory body having jurisdiction over the applicant or
which relate to the confidentiality of records, to the extent permitted by law, rule or
regulation.
D. Evaluation of Applicant
In evaluating a membership application, the Corporation shall, in addition to

reviewing the qualifications and standards set forth in Sections 1.A. and 1.B. of this
Rule, review any Applicant Questionnaire and any other information submitted by the
applicant to the Corporation and shall have such authority to examine the financial
responsibility and operational capability of any applicant as set forth in Rule 15.
The Corporation shall approve an applicant only upon a determination by the

Corporation that the applicant meets the qualifications, standards and other
requirements applicable to the relevant membership type.
Notwithstanding that a membership application shall have been approved by the

Corporation, if a material change in condition at the applicant occurs which could bring
into question the applicant’s ability to perform, and such material change becomes
known to the Corporation prior to the applicant commencing use of the Corporation’s
services (or, for Settling Bank Only Members, prior to the applicant commencing the
services of a Settling Bank ), the Corporation shall have the right to stay
commencement by the applicant until a reconsideration of the applicant’s financial
responsibility and operational capability can be completed. As a result of such
reconsideration, the Corporation may determine to withdraw approval or condition the
approval upon the furnishing of additional information or assurances.
If the Corporation determines that the applicant fails to meet any membership
standards, but in the opinion of the Corporation any one or more of such standards as
applied to the applicant is unduly or disproportionately severe or the conduct of the
applicant has been such as not to make it against the interests of the Corporation, its
participants, creditors or investors to approve such application, the Corporation may
approve the application either unconditionally or on a temporary or other conditional
basis. When approving an application on a conditional or temporary basis, the
Corporation may obtain additional assurances from the applicant as provided for in
Rule 15.
Notwithstanding the foregoing, the Corporation may deny an application or

request to use one or more additional services of the Corporation upon a determination
by the Corporation that the Corporation does not have adequate personnel, space, data
processing capacity or other operational capability at such time to perform its services
for the applicant or participant without impairing the ability of the Corporation to provide
25
(RULE 2A)
services for its existing participants, to assure the prompt, accurate and orderly
processing and settlement of securities transactions or to otherwise carry out its
functions; provided, however, that any such applications which are denied pursuant to
this paragraph shall be approved as promptly as the capabilities of the Corporation
permit.
Before denying an application pursuant to this Rule, the Corporation shall furnish
the applicant with a concise written statement setting forth the specific grounds under
consideration upon which any such denial may be based and shall notify the applicant
of its right to request a hearing to determine whether the application should be denied,
such request to be filed by the applicant with the Corporation pursuant to Rule 37.
E. Membership and Other Agreements
Each applicant to become a Member, Mutual Fund/Insurance Services Member,

Insurance Carrier/Retirement Services Member, Fund Member, Third Party
Administrator Member, Third Party Provider Member, Investment Manager/Agent
Member, AIP Member or Data Services Only Member shall sign and deliver to the
Corporation an instrument in writing whereby the applicant shall agree, among other
things:
(a) That the only services or systems which the participant may utilize are
those that are permitted by the Corporation. If the participant intends only to use
the (i) AIP Services, (ii) Mutual Fund Services and/or (iii) the Insurance &
Retirement Services, that the participant will so limit its activities at the
Corporation;
(b) The Rules of the Corporation shall be a part of the terms and conditions of
every contract or transaction which the participant may take or have with or
through the Corporation;
(c) Not to submit, clear or settle through the Corporation any contract or
transaction unless the Rules of the Corporation are part of the terms and
conditions of such contract or transaction;
(d) That it has reviewed the Rules of the Corporation including the provisions
of Rule 4 relating to the Clearing Fund and Addendum D relating to the non-
guarantee by the Corporation of payments made in the settlement of transactions
submitted through the Corporation’s services;
(e) To abide by the Rules of the Corporation and be bound by all the
provisions thereof, and that the Corporation shall have all the rights and
remedies contemplated by said Rules. Notwithstanding that the participant may
have ceased to be a participant, the participant shall continue to be bound by the
Rules of the Corporation as to all matters and transactions occurring while a
participant;
26
(RULE 2A)
(f) To be bound by any amendment to the Rules of the Corporation with

respect to any transaction occurring subsequent to the time such amendment
takes effect, as fully as though such amendment were now a part of the Rules of
the Corporation; provided, however, that no such amendment shall affect the
participant’s right to cease to be a participant or alter the provisions of Rule 4,
unless before such amendment becomes effective, the participant is given an
opportunity to give written notice to the Corporation of the participant’s election
that the Corporation shall cease to act for the participant;
(g) Not to submit or confirm any transaction, charge, request, instruction or

transmission through the Corporation’s services, nor to otherwise utilize the
Corporations services, in contravention of any law, rule, regulation or statute;
(h) To pay to the Corporation the compensation provided for under the Rules
of the Corporation for services rendered to the participant, while a participant2;
(i) To pay such fines while a participant as may be imposed in accordance

with the Rules of the Corporation for the failure to comply therewith;
(j) If applicable to its membership type, to pay to the Corporation any

amounts which, pursuant to the provisions of Rule 4, shall become payable by
the participant to the Corporation and that the determination by the Board of
Directors of the Corporation of all questions affecting the charges to which the
participant’s contribution to the Clearing Fund (if required pursuant to Rule 4) are
or may be subject shall be final and conclusive;
(k) That its books and records3 shall at all times be open to the inspection of
the duly authorized representatives of the Corporation, and that the Corporation
2
With respect to Fund Members, the applicant shall agree to pay to the Corporation the compensation
provided for by the Rules of the Corporation for Fund/SERV Eligible Fund transactions if the applicant
distributes shares on a principal basis. However, to the extent the applicant distributes shares of an
investment company regulated under the Investment Company Act of 1940, as amended, on an
agency basis, then the applicant shall agree to pay to the Corporation the compensation provided for
by the Rules of the Corporation for transactions in such investment company shares to the extent that
the applicant can recover such amount from the investment company(ies) whose shares it distributes.
Whether the applicant distributes shares on a principal or agency basis, the applicant shall agree to
pay such fines as may be imposed in accordance with such Rules of the Corporation for the failure to
comply therewith.
3
With respect to Fund Members, the applicant shall agree that the Fund Member’s books and records
and, to the extent the applicant is not a management company, the books and records of each
management company affiliated with the applicant and, with respect to Fund/SERV Eligible Funds
that are not investment companies regulated under the Investment Company Act of 1940, as
amended, the books and records of any entity affiliated or having any regulatory connection with the
fund, shall at all times be open to inspection by the duly authorized representatives of the Corporation
and that the Corporation shall be furnished with all such information in respect of its business and
transactions as the Corporation may require; provided that if it shall cease to be a Fund Member, the
Corporation shall have no right to inspect its books and records, or the books and records of each
such management company and/or entity affiliated or connected with the fund, as the case may be,
27
(RULE 2A)
shall be furnished with all such information in respect of the participant’s

business and transactions as it may require, provided that if the participant shall
cease to be a participant, the Corporation shall have no right to inspect the
participant’s books and records or to require information relating to transactions
wholly subsequent to the time when the participant ceases to be such; 4 and
(l) That to the extent the participant authorizes an agent (if permitted
pursuant to the Corporation’s Rules) to receive from and/or transmit to the
Corporation data or payments, the participant shall be solely responsible for the
acts of said agents as if it were receiving and/or transmitting such data itself and
that the failure of said agents to perform shall not excuse the participant from a
violation of the Corporation’s Rules.
In addition to the above:
1. Members:
Members that are Municipal Securities Brokers’ Broker sponsored account

applicants shall sign and deliver to the Corporation an agreement in writing
whereby the applicant shall agree that (i) if securities received on a business day
are pledged prior to money settlement on that business day, the Corporation
shall be paid directly by the pledgee bank the amount the applicant is required to
pay for the securities received or the applicant’s net settlement obligation for that
business day, whichever is less; and (ii) no securities received on a business day
through a qualified securities depository shall be placed in transfer, withdrawn or
delivered to a third party for no value prior to paying the Corporation the amount
the applicant is obligated to pay for the receipt of the securities or the applicant’s
net settlement obligation for that business day, whichever is less.
2. Third Party Administrator Members, Third Party Provider Members and

Investment Manager/Agent Members:
Applicants for Third Party Administrator Member, Third Party Provider

Member and Investment Manager/Agent Members shall sign and deliver to the
Corporation, (i) documentation and/or agreements in such form as required by
the Corporation from time to time, for the payment or collection of charges
pursuant to Rule 26 of the Corporation for the processing of transactions through
the Mutual Fund Services and (ii) a duly completed Consent And Authorization
Form, designating the Member(s)/Mutual Fund/Insurance Services Member(s)
who will be responsible for the settlement of orders initiated by the applicant.
or to require information relating to transactions wholly subsequent to the time when it ceased to be a
Fund Member.
4
This provision is not applicable to DSO Members, IMA Members, TPP Members or TPA Members.
28
(RULE 2A)
Each applicant to become a Settling Bank Only Member or Municipal

Comparison Only Member shall sign and deliver to the Corporation such instruments in
writing as the Corporation may require from time to time.
F. Original Clearing Fund Contribution
An applicant whose application has been approved by the Corporation shall, if

required, pay to the Corporation its original contribution to the Clearing Fund determined
in accordance with the provisions of Rule 4 and shall, if required, sign and deliver to the
Corporation an instrument in writing evidencing any open account indebtedness
permitted pursuant to Rule 4.
G. Disqualification Criteria
Rule 15 provides the Corporation with the authority to establish, as it deems

necessary or appropriate, standards of financial responsibility, operational capability,
experience and competence for membership. The Rule also provides the Corporation
with the authority to establish guidelines for the application of such membership
standards. Pursuant to this authority, the Corporation has determined to establish the
following additional standards. The Corporation may deny membership to any applicant
or cease to act for any participant when such participant or its Controlling Management
has a record that reflects:
(i) the applicant is subject to any Statutory Disqualification as defined in

Section 3(a)(39) of the Exchange Act, or an order of similar effect issued by a
Federal or State banking authority, or other examining authority or regulator,
including a non-U.S. examining authority or regulator;
(ii) the applicant or its Controlling Management is responsible for: (A)

making a misstatement of a material fact or has omitted to state a material fact
to the Corporation in connection with its application to become a Member or
thereafter, (B) fraudulent acts or a violation of the Securities Act of 1933, the
Exchange Act, or the Investment Company Act, the Investment Advisers Act or
any rule or regulation promulgated thereunder;
(iii) the applicant or its Controlling Management has been convicted within
the ten years preceding the filing of the application or at any time thereafter of
(A) any criminal offense involving the purchase, sale or delivery of any security,
or bribery, or burglary, or conspiracy to commit any offense referred to in this
subparagraph (iii), (B) the larceny, theft, robbery, embezzlement, extortion,
fraudulent conversion, fraudulent concealment, forgery or misappropriation of
funds, securities or other property, (C) any violation of Sections 1341, 1342 or
1343 of Title 18, United States Code, or (D) any other criminal offense involving
breach of fiduciary obligation, or arising out of the conduct of business as a
broker, dealer, investment company, adviser or underwriter, bank, trust
company, fiduciary, insurance company, or other financial institution;
29
(RULE 2A)
(iv) the applicant or its Controlling Management has been permanently or

temporarily enjoined or prohibited by order, judgment or decree of any court or
other governmental authority of competent jurisdiction from acting as a broker,
dealer, investment company, advisor or underwriter, bank, trust company,
fiduciary, insurance company, or other financial institution, or from engaging or
in continuing any conduct or practice in connection with any such activity, or in
connection with the purchase, sale or delivery of any security, and the
enforcement of such injunction or prohibition has not been stayed; or
(v) the applicant has been expelled or suspended from or had its
participation terminated by a national securities association or exchange
registered under the Exchange Act, or self-regulatory organization as defined in
Section 3(a)(26) of the Exchange Act, or a Corporation that engages in
clearance and settlement activities or a securities depository, or has been
barred or suspended from being associated with any member of such an
exchange, association, organization, Corporation, or securities depository.
The Corporation shall retain the right to deny membership to an applicant if the
Corporation becomes aware of any factor or circumstance about the applicant or its
Controlling Management, which may impact the suitability of that particular applicant as
a Member of the Corporation. Further, applicants are required to inform the Corporation
as to any member of its Controlling Management that is or becomes subject to Statutory
Disqualification (as defined in Section 3(a)(39) of the Exchange Act).
Finally, this Rule shall not be construed to limit the Corporation’s authority to
deny membership to, cease to act for, or obtain further assurances from, any applicant
or participant in accordance with the Corporation’s Rules and Procedures when the
circumstances warrant even if such circumstances include (or consist solely of) items
that are specifically not grounds for such action under this Rule.
30
(RULE 2B)
RULE 2B. ONGOING MEMBERSHIP REQUIREMENTS AND MONITORING
SEC. 1. REQUIREMENTS
The qualifications and standards provided for in Rule 2A1 shall be continuing
membership requirements. In addition, each Member, Fund Member, Insurance
Carrier/Retirement Services Member, Municipal Comparison Only Member, Mutual
Fund/Insurance Services Member, Data Services Only Member, Settling Bank Only
Member, Third Party Administrator Member, Third Party Provider Member, Investment
Manager/Agent Member and AIP Member shall comply with the ongoing informational
and operational requirements set forth below.
SEC. 2. DATA TO BE FILED WITH THE CORPORATION
A. Reports and Information
Each Member, Mutual Fund/Insurance Services Member, Fund Member, and

Insurance Carrier/Retirement Services Member (each hereinafter in this rule referred to
collectively as “participants”) shall submit to the Corporation the following reports and
information as applicable to such participant, together with all addenda and
amendments applicable thereto, within the time periods prescribed by the Corporation
from time to time. (Unless specifically set forth below, the time periods prescribed by the
Corporation are set forth in the form of notices posted at the Corporation’s Website.
Pursuant to Section 7 of Rule 45, it is the participant’s responsibility to retrieve all
notices daily from the Website.):
(a) with respect to each such participant, a copy of the participant’s

annual audited financial statements and, with respect to each such participant
whose membership is contingent upon a guarantee of a third party, a copy of the
annual audited financial statements of such guarantor. If annual audited financial
statements of the entity that is the participant or its guarantor are not available,
the Corporation in its sole discretion may accept consolidated financial
statements or financial information prepared at the level of the parent of such
entity. Financial statements submitted in respect of an Insurance Company shall
be prepared substantially in the form adopted by the National Association of
Insurance Commissioners (the “NAIC”);
(b) with respect to a participant that is a broker or dealer registered under

Section 15 of the Exchange Act, a copy of its: (i) Form X-17-A-5 (Financial and
Operational Combined Uniform Single (“FOCUS”) Report); (ii) report of its
independent auditors on internal controls; and (iii) any supplemental report
required to be filed with the SEC pursuant to SEC Rule 17a-11 or 17 C.F.R.
Section 405.3, or any successor rules or regulations thereto;
1
Including Addendum O to these Rules, as set forth in Section 1.B of Rule 2A.
31
(RULE 2B)
(c) with respect to a participant that is a bank or a trust company, if the

bank or trust company is required to file a Consolidated Report of Condition and
Income (“Call Report”), a copy of its Call Report, and (to the extent not contained
within such Call Reports) information containing each of its capital levels and
ratios; if the bank or trust company is not required to file a Call Report, a copy of
its unaudited quarterly financial statements as provided to the state regulatory
authority having jurisdiction over the participant, containing each of its capital
levels and ratios;
(d) with respect to a participant that is an SEC-registered investment

adviser, copies of its Form ADV;
(e) with respect to a participant that is subject to capital or other financial

requirements prescribed by its regulatory authority, copies of any regulatory
notification required to be made when the participant’s capital level or other
financial requirement falls below the levels prescribed by the applicable regulator;
(f) with respect to a participant that has received from its regulators an
extension of time by which one of the above-listed reports or submissions to the
regulator is otherwise due, a copy of the extension letter or other regulatory
communication granting such extension; and
(g) with respect to a participant that has provided to the SEC any notice
required pursuant to paragraph (e) of the SEC’s Rule 15c3-1 shall notify the
Corporation of the provision of such notice, and shall furnish the Corporation with
a copy of such notice, by the Close of Business on the day that it so provides such
notice to the SEC.
Each Member and Limited Member shall complete and deliver to the Corporation
a Cybersecurity Confirmation at least every two years, on a date that is set by the
Corporation and following notice that is provided no later than 180 calendar days prior
to such due date.
The Corporation may from time to time require the submission of additional
reports and other information as it may deem necessary or advisable. Reports and
information provided to the Corporation pursuant to this Rule shall be provided in the
form and to the persons or departments specified by the Corporation from time to time
and the provisions of Rule 45 shall not apply thereto.
B. Notification of Changes in Condition
(a) Each Member, Mutual Fund/Insurance Services Member, Fund Member,

Municipal Comparison Only Member, Insurance Carrier/Retirement Services Member,
TPA Member, TPP Member, Investment Manager/Agent Member, AIP Member and
Data Services Only Member shall:
(i) promptly inform the Corporation, within two business days, both orally and
in writing, if it is no longer in compliance with any of the relevant
32
(RULE 2B)
qualifications and standards for membership set forth in these Rules as

applicable to its type of membership (regardless of whether in effect at the
time the participant was admitted), or with respect to any additional
qualifications as required by the Corporation in connection with approval
of its admission to, or continued participation in, the Corporation, including
in the event of the participant becoming subject to a Statutory
Disqualification. Such notification must be given by the participant as
soon as practicable and in any event must be received by the Corporation
within two business days from the date on which the participant first learns
of its non-compliance;
(ii) submit to the Corporation written notice of material organization changes

including mergers, acquisitions, changes in corporate form, name changes
at least 90 calendar days prior to the effective date of such event unless
the member demonstrates that it could not have reasonably given notice
within such timeframe.
(b) Each Member shall submit to the Corporation written notice of any event that
would effect a change in control of the participant or could have a material impact on
such participant’s business and/or financial condition, including but not limited to:
(i) material changes in ownership, control or management;
(ii) material changes in business lines, including but not limited to new
business lines undertaken; or
(iii) participation as a defendant in litigation which could reasonably be

anticipated to have a direct negative impact on the participant’s financial
condition or ability to conduct business.
With respect to an event (such as a merger or a planned change in business) for

which the participant has advance knowledge, written notification must be received by
the Corporation as soon as practicable upon the participant’s having knowledge that
such event is scheduled to occur and, with respect to an event for which the participant
does not have advance knowledge thereof, such written notification must be received by
the Corporation as soon as practicable after such event has occurred.
(c) Beginning on the FATCA Compliance Date, each FFI Member shall inform
the Corporation, both orally and in writing, if it (i) undergoes a change in circumstance
that would affect its FATCA Certification or (ii) otherwise has reason to know that it is
not, or will not be, FATCA Compliant, in each case, within two days of knowledge
thereof.
(d) Notice provided to the Corporation pursuant to this Section shall be provided
in the form and to the persons or departments specified by the Corporation from time to
time and the provisions of Rule 45 shall not apply thereto.
33
(RULE 2B)
(e) Failure to notify the Corporation under this Section may be deemed to be a
violation of the Corporation’s Rules and therefore may be subject to sanctions. In
addition, the Corporation may review the financial responsibility and operational
capability of the Member to the extent provided in these Rules and Procedures and
otherwise require from the Member additional reporting of its financial or operational
condition at such intervals and in such detail as the Corporation shall determine,
including, but not limited to, such information as the Corporation may request regarding
the businesses and operations of the Member and its risk management practices with
respect to services of the Corporation utilized by the Member for another Person or
Persons, and shall make a determination as to whether such Member should be placed
on the Watch List and/or be subject to enhanced surveillance by the Corporation
consistent with the provisions of Section 4 of Rule 2B.
SEC. 3. OPERATIONAL TESTING
(a) The Corporation may, from time to time, determine those Members, Fund
Members, Insurance Carrier/Retirement Services Members, Municipal Comparison Only
Members, Mutual Fund/Insurance Services Members, Data Services Only Members,
Settling Bank Only Members, Investment Manager/Agent Members, AIP Members, AIP
Settling Bank Only Members, Third Party Provider Members and Third Party
Administrator Members (collectively, “participants”) who shall be required to fulfill, within
the time frames established by the Corporation, certain operational testing requirements
(the scope of such testing to be determined by the Corporation in its sole discretion) and
related reporting requirements (such as reporting the test results to the Corporation in a
manner specified by the Corporation) that may be imposed by the Corporation to ensure
the continuing operational capability of the participant. The Corporation may assess a
fine upon those participants that fail to fulfill any such operational testing and related
reporting requirements within the time frames established by the Corporation.
(b) The Corporation has established standards for designating those participants
who shall be required to participate in annual business continuity and disaster recovery
testing that the Corporation reasonably determines are, taken as a whole, the minimum
necessary for the maintenance of fair and orderly markets in the event that business
continuity and disaster recovery plans are required to be activated. The standards shall
take into account factors such as: (1) activity-based thresholds; (2) significant
operational issues of the participant during the twelve months prior to the designation;
and (3) past performance of the participant with respect to operational testing. The
specific standards adopted by the Corporation and any updates or modifications thereto
shall be published to participants and applied on a prospective basis.
Upon notification that the participant has been designated to participate in the
annual business continuity and disaster recovery testing, as described above,
participants shall be required to fulfill, within the timeframes established by the
Corporation, certain testing requirements (the scope of such testing to be determined by
the Corporation in its sole discretion) and related reporting requirements (such as
reporting the test results to the Corporation in a manner specified by the Corporation)
that may be imposed by the Corporation.
34
(RULE 2B)
SEC. 4. ONGOING MONITORING
(a) All Members and certain Limited Members will be monitored and reviewed
by the Corporation on an ongoing and periodic basis, which may include monitoring of
news and market developments and review of financial reports and other public
information.
(b) (i) A Member that is (A) a U.S. bank or trust company that files the
Consolidated Report of Condition and Income (“Call Report”), (B) a
U.S. broker-dealer that files the Financial and Operational
Combined Uniform Single Report (“FOCUS Report”) or the
equivalent with its regulator or (C) a non-U.S. bank or trust
company that has audited financial data that is publicly available,
will be assigned a credit rating by the Corporation in accordance
with the Credit Risk Rating Matrix. Such Member’s credit rating will
be reassessed each time the Member provides the Corporation
with requested information pursuant to Section 2B(e) of Rule 2B, or
as may be otherwise required under the Rules and Procedures
(including this Rule 2B, Section 4).
(ii) Because the factors used as part of the Credit Risk Rating Matrix
may not identify all risks that a Member specified in paragraph (b)(i)
of this Section 4 may present to the Corporation, the Corporation
may, in its discretion, override such Member’s credit rating derived
from the Credit Risk Rating Matrix to downgrade the Member. This
downgrading may result in the Member being placed on the Watch
List, and/or it may subject the Member to enhanced surveillance
based on relevant factors, including those set forth in paragraph (d)
below. The Corporation may also take such additional actions with
regard to the Member as are permitted by the Rules and
Procedures.
(c) Members other than those specified in paragraph (b)(i) of this Section 4
and Limited Members that are monitored and reviewed by the Corporation pursuant to
paragraph (a) of this Section 4 will not be assigned a credit rating by the Credit Risk
Rating Matrix but may be placed on the Watch List and/or may be subject to enhanced
surveillance based on relevant factors, including those set forth in paragraph (d) below,
as the Corporation deems necessary to protect the Corporation and its Members.
(d) The factors to be considered by the Corporation under paragraphs (b)(ii)

and (c) of this Section 4 include, but are not limited to, (i) news reports and/or regulatory
observations that raise reasonable concerns relating to the Member or Limited Member,
(ii) reasonable concerns around the Member’s or Limited Member’s liquidity
arrangements, (iii) material changes to the Member’s or Limited Member’s
organizational structure, (iv) reasonable concerns of the Corporation about the
Member’s or Limited Member’s financial stability due to particular facts and
circumstances, such as material litigation or other legal and/or regulatory risks, (v)
35
(RULE 2B)
failure of the Member or Limited Member to demonstrate satisfactory financial condition

or operational capability or if the Corporation has a reasonable concern regarding the
Member’s or Limited Member’s ability to maintain applicable membership standards and
(vi) failure of the Member or Limited Member to provide information required by the
Corporation to assess risk exposure posed by the Member’s or Limited Member’s
activity (including information requested by the Corporation pursuant to Section 2B(e) of
this Rule 2B).
(e) The Corporation may require a Member or Limited Member that has been
placed on the Watch List to make and maintain a deposit to the Clearing Fund over and
above the amount determined in accordance with Procedure XV (which additional
deposit shall constitute a portion of the Member’s or Limited Member’s Required Fund
Deposit), or such higher amount as the Board may deem necessary for the protection of
the Corporation or other Members, which higher amount may include, but is not limited
to, additional payments or deposits in any form to offset potential risk to the Corporation
and its Members arising from activity submitted by such Member or Limited Member.
The Corporation may also retain any deposit in excess of the Required Fund Deposit of
a Member or Limited Member that has been placed on the Watch List as provided in
Section 9 of Rule 4.
(f) A Member or Limited Member being subject to enhanced surveillance or

being placed on the Watch List shall result in a more thorough monitoring of the
Member’s or Limited Member’s financial condition and/or operational capability, which
could include, for example, on-site visits or additional due diligence information requests
from the Corporation. In addition, the Corporation may require a Member or Limited
Member placed on the Watch List and/or subject to enhanced surveillance to make
more frequent financial disclosures, including, without limitation, interim and/or pro
forma reports. Members and Limited Members that are subject to enhanced
surveillance are also reported to the Corporation’s management committees and
regularly reviewed by a cross-functional team comprised of senior management of the
Corporation. The Corporation may also take such additional actions with regard to any
Member or Limited Member (including a Member or Limited Member placed on the
Watch List and/or subject to enhanced surveillance) as are permitted by the Rules and
Procedures.
(g) Unless the context otherwise requires, the parent bank holding company
of a Member that has been admitted to membership in accordance with section
1.B.2.(a)(ii) of Addendum B, and any material banking subsidiary of such parent bank
holding company, shall, for the purpose of applying this Section 4, be treated as if it
were also a Member, so that the Member, the parent bank holding company and any
affiliated material banking subsidiary shall be required individually to meet the standards
for a Member not on the Watch List, if the Member is not to be placed on the Watch List.
SEC. 5. VOLUNTARY TERMINATION
A Member, Fund Member, Insurance Carrier/Retirement Services Member,

Municipal Comparison Only Member, Mutual Fund/Insurance Services Member, Data
36
(RULE 2B)
Services Only Member, Investment Manager/Agent Member, AIP Member, Third Party
Provider Member or Third Party Administrator Member each may elect to voluntarily
terminate such membership by providing the Corporation with a written notice of such
termination (“Voluntary Termination Notice”). The participant shall specify in the
Voluntary Termination Notice a desired date for its withdrawal from membership;
provided, however, such date shall not be prior to the scheduled final settlement date of
any remaining obligation owed by the participant to the Corporation as of the time such
Voluntary Termination Notice is submitted to the Corporation, unless otherwise
approved by the Corporation.
Such termination will not be effective until accepted by the Corporation, which
shall be no later than ten (10) business days after the receipt of the Voluntary
Termination Notice from such participant. The Corporation’s acceptance shall be
evidenced by a notice to the Corporation’s participants announcing the participant’s
termination and the last trade date for the participant. The effective date of the
participant’s termination shall be the final settlement date of all transactions of the
participant (the “Termination Date”). After the close of business on the Termination
Date, a participant that terminates its membership in the Corporation shall no longer be
eligible or required to submit transactions to the Corporation for clearance and
settlement, unless the Board determines otherwise in order to ensure an orderly
liquidation of the participant’s open obligations. If any transaction is submitted to the
Corporation by such participant that is scheduled to settle after the Termination Date,
such participant’s Voluntary Termination Notice will be deemed void, and the participant
will remain subject to these Rules and Procedures as if it had not given such Voluntary
Termination Notice.
A participant’s voluntary termination of membership shall not affect its obligations

to the Corporation, or the rights of the Corporation, with respect to transactions
submitted to the Corporation before the Termination Date (including, but not limited to,
any pro-rata charge made by the Corporation pursuant to Section 4 of Rule 4). The
return of the participant’s Clearing Fund deposit shall be governed by Sections 7, 13
and 14 of Rule 4, as applicable. If an Event Period were to occur after a participant has
submitted its Voluntary Termination Notice but on or prior to the Termination Date, in
order for such participant to benefit from its Loss Allocation Cap pursuant to Section 4 of
Rule 4, the participant will need to comply with the provisions of Section 6 of Rule 4 and
submit a Loss Allocation Withdrawal Notice, which notice, upon submission, shall
supersede and void any pending Voluntary Termination Notice previously submitted by
the participant.
37
(RULE 3)
RULE 3. LISTS TO BE MAINTAINED
SEC. 1. (a) The Corporation shall maintain a list of the securities which may be
the subject of contracts cleared through the Corporation (hereinafter referred to as
“Cleared Securities”), and may from time to time add securities to such list or remove
securities therefrom. Unless the Corporation shall otherwise determine, Cleared
Securities may only be those issues of securities the issuer of which is subject to, or
regularly complies with, Rule 10b-17 of the Securities and Exchange Commission,
promulgated pursuant to the Securities Exchange Act of 1934, as amended. The
Corporation shall accept an issue of securities as a Cleared Security only upon a
determination by the Corporation that it has the existing operational capability to do so
and to continue successfully to provide its services to Members.
A Cleared Security that the Corporation in its discretion determines no longer

meets the requirements imposed pursuant to this Section 1 shall cease to be a Cleared
Security. In addition, the Corporation may determine that a Cleared Security shall
cease to be a Cleared Security in the event that: (1) such Cleared Security shall have
been suspended from trading in the over-the- counter market or on any national
securities exchange by the Securities and Exchange Commission pursuant to Section
12(k) of the Securities Exchange Act of 1934, as amended, or has been suspended
from trading by another regulatory authority or by a self-regulatory organization (as
defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended), which
has authority to suspend such activity; or (2) the Corporation finds that the level of
activity in the security during the period of three consecutive months preceding that
determination is insufficient to produce benefits commensurate with the costs to the
Members arising from its continued inclusion as a Cleared Security; or (3) the
Corporation determines that there may exist a legal impediment to the validity or legality
of the issuance or continued transfer or delivery of the security; or (4) the Corporation
determines, after discussion with the appropriate marketplace regulator, where possible,
that continued clearance and settlement by the Corporation presents unacceptable risks
to the Corporation and/or its participants; or (5) the Corporation determines that the
location of the transfer agent(s) for the security or such transfer agent’s capability for
reissuing certificates for the security is such as to impair the efficient operation of
clearing procedures.
(b) The Corporation shall also maintain a list of Cleared Securities that are
eligible for book-entry transfer on the books of each Qualified Securities Depository and
are subject to clearance and settlement in the CNS System and may from time to time
add Cleared Securities to such list or remove Cleared Securities therefrom.
A Cleared Security shall be removed from the list of CNS Securities upon receipt
by the Corporation of written notice from a Qualified Securities Depository that the
security is no longer eligible under its rules for transfer by book-entry. A Cleared
Security may be removed from the list of CNS Securities, for example, if in the judgment
of the Corporation Members may lose important rights or additional risk may be
presented to the Corporation or its Members by reason of its continued status as a CNS
38
(RULE 3)
Security. Any such removal shall be promptly communicated to all Members by the
Corporation.
(c) The Corporation shall maintain a list of funds and other pooled investment
entities which may be the subject of orders processed through the Corporation’s Mutual
Fund Services (hereinafter referred to as “Fund/SERV Eligible Funds”) and may from
time to time add funds and other pooled investment entities to such list or remove
Fund/SERV Eligible Funds therefrom. Unless the Corporation shall otherwise
determine, a Fund/SERV Eligible Fund must be assigned a CUSIP 1 number, and may
only be: (i) an investment company regulated under the Investment Company Act of
1940, as amended; (ii) a fund or other pooled investment entity that is subject to
regulation under applicable federal and state banking and/or insurance law; or (iii) a
fund or other pooled investment entity subject to regulation under other applicable law
which meets criteria established by the Corporation from time to time.
(d) The Corporation shall maintain a list of insurance products and retirement or
other benefit plans or programs which may be the subject of orders processed through
the Insurance & Retirement Services (hereinafter referred to as “I&RS Eligible
Products”) and may from time to time add I&RS Eligible Products to such list or remove
I&RS Eligible Products therefrom. An I&RS Eligible Product must have been assigned
a CUSIP number.
(e) The Corporation shall maintain a list of government securities which may be
the subject of contracts processed through the Corporation (hereinafter referred to as
“Eligible Government Securities”) and may from time to time add government securities
to such list or remove government securities therefrom. An Eligible Government
Security may only be: an unmatured, marketable debt security in book-entry form that is
a direct obligation of the United States Government; such other security issued or
guaranteed by the United States, a U.S. government agency or instrumentality, or a
U.S. government-sponsored corporation; or, such other security as determined by the
(f) The Corporation shall maintain a list of Eligible ID Net Securities as defined in
Rule 65 and may from time to time add CNS Securities to such list or remove CNS
Securities therefrom.
SEC. 2. The Corporation shall maintain a list of Eligible Clearing Fund

Securities.
SEC. 3. (a) The Corporation shall maintain a list of those Persons who are
entitled under the provisions of New York law to pay New York State stock transfer
taxes through the facilities of the Corporation.
1
CUSIP is a registered trademark of the American Bankers Association.
39
(RULE 3)
(b) The Corporation shall maintain a list of Members and Limited Members as set
forth in Rule 2.
(c) The Corporation shall maintain a list of broker dealers and others on whose
behalf Members have indicated they will act in comparing, clearing and/or settling
trades. Members shall provide the Corporation with such information, in accordance
with the Procedures as may be adopted from time to time by the Corporation, or
pursuant to agreement.
(d) The Corporation shall maintain a list of Members and Settling Bank Only
Members that have agreed to act as Settling Banks.
SEC. 4. Members, Mutual Fund/Insurance Services Members, Fund Members,

Insurance Carrier/Retirement Services Members, Municipal Comparison Only Members,
TPA Members, TPP Members, Investment Manager/Agent Members, and AIP Members
shall not:
(a) submit to the Corporation for processing, or
(b) request the inclusion on any list maintained pursuant to this Rule 3 of,
any security or other financial instrument if its issuer is: (i) listed on the Office of Foreign
Assets Control (“OFAC”) list of specially designated nationals distributed by the U.S.
Department of the Treasury, or (ii) incorporated in a country that is on the OFAC list of
countries subject to comprehensive sanctions.
SEC. 5. The Corporation shall maintain a list of AIP Members and AIP Eligible
Products as referenced in Rule 53. The Corporation shall maintain a list of AIP Settling
Bank Members and AIP Settling Bank Only Members that have agreed to act as AIP
Settling Banks.
40
(RULE 4)
RULE 4. CLEARING FUND
SEC. 1. Required Fund Deposits. Each Member shall make and maintain on an
ongoing basis a deposit to the Clearing Fund.1 The amount of each Member’s required
deposit shall be determined by the Corporation in accordance with Procedure XV and
other applicable Rules and Procedures (the “Required Fund Deposit”). The minimum
Required Fund Deposit for each Member shall be $10,000. The Corporation may
require any such Member to deposit additional amounts to the Clearing Fund pursuant
to Rule 15. A Member may in its discretion maintain additional deposits at the
Corporation, subject to any Procedures or other requirements the Corporation may
establish for such excess amounts. For purposes of these Rules and Procedures, such
additional deposits shall be deemed to be part of the Clearing Fund and the Member’s
Actual Deposit but shall not be deemed to be part of the Member’s Required Fund
Deposit.
The Corporation may permit Members to satisfy their Required Fund Deposit
obligations through a combination of cash and open account indebtedness secured by
Eligible Clearing Fund Securities, as further described in Procedure XV 2. The
aggregate of cash deposited, the collateral value of pledged Eligible Clearing Fund
Securities determined in accordance with Section III of Procedure XV, and the face
amount of any Eligible Letters of Credit shall not at any time be less than the Member’s
Required Fund Deposit.
Each Member grants to the Corporation a first priority perfected security interest
in its right, title and interest in and to any Eligible Clearing Fund Securities, funds and
assets pledged to the Corporation to secure the Member’s open account indebtedness
1
Clearing Fund deposits for Sponsored Accounts (as defined in Procedure IX.B.) relative to such
Sponsored Accounts’ DTC activity will be calculated and held by DTC in accordance with their
procedures, and shall not be included in determining the Required Fund Deposit or the minimum cash
requirement.
2
In addition, the Corporation reserves the right to require participants to post a letter of credit in an
instance where the Corporation, in its discretion, believes the participant presents legal risk. In such
circumstances the Corporation may require part of a participant’s deposit to be evidenced by an open
account indebtedness supported by one or more irrevocable letters of credit with a maturity of no
more than one year issued on behalf of the participant in favor of the Corporation (i) under which a
bank, trust company or United States branch or agency of a foreign bank (hereinafter, an “Issuer”), in
each case approved by the Corporation for such purpose, is obligated to honor drafts up to a
specified amount drawn on it by the Corporation and (ii) the terms and conditions of which the
Corporation determines are acceptable to the Corporation in its sole discretion (each such letter of
credit, an “Eligible Letter of Credit”). Any amount drawn on any Eligible Letters of Credit shall be
deposited into, and constitute an additional cash deposit to, the Clearing Fund and shall reduce the
participant’s open account indebtedness by a corresponding amount. Within ten (10) calendar days
prior to the stated expiration date of any such Eligible Letter of Credit or within such time as the
Corporation shall direct upon receipt by the Corporation of written notice from an approved bank of an
earlier expiration date of any Eligible Letter of Credit supporting a participant’s open account
indebtedness, such participant shall make a substitution for the Eligible Letter of Credit, in
accordance with the provisions of this Rule, in the amount required, effective upon or prior to the
expiration of the Eligible Letter of Credit.
41
(RULE 4)
or placed by a Member in the possession of the Corporation (or its agents acting on its
behalf) (collectively with any Eligible Letters of Credit issued on behalf of a Member in
favor of the Corporation, the Member’s “Actual Deposit”), in each case to secure all
such Member’s obligations to the Corporation. The Corporation shall be entitled to
exercise the rights of a pledgee under common law and a secured party under Articles 8
and 9 of the New York Uniform Commercial Code with respect to such assets. Eligible
Clearing Fund Securities pledged to secure a Member’s open account indebtedness
shall be delivered to the Corporation’s account at DTC, or on such other terms and
conditions as the Corporation may require. The Corporation may in its discretion hold
pledged Eligible Clearing Fund Securities in its account at a financial institution
designated by the Corporation.
SEC. 2. Permitted Use, Investment, and Maintenance of Clearing Fund Assets.

The Clearing Fund shall only be used by the Corporation (i) to secure each Member’s
performance of obligations to the Corporation, including each Member’s obligations with
respect to any loss allocations as set forth in Section 4 of this Rule, (ii) to provide
liquidity to the Corporation to meet its settlement obligations, including, without
limitation, through the direct use of cash in the Clearing Fund or through the pledge or
rehypothecation of pledged Eligible Clearing Fund Securities in order to secure liquidity,
and (iii) for investment as set forth in this section.
Each time the Corporation uses any part of the Clearing Fund pursuant to clause
(ii) in the preceding paragraph for more than 30 calendar days, the Corporation, at the
close of business on the 30th calendar day (or on the first business day thereafter) from
the day of such use, shall consider the amount used but not yet repaid as a loss to the
Clearing Fund incurred as a result of a Defaulting Member Event and immediately
allocate such loss in accordance with Section 4 of this Rule.
The Corporation may invest any cash in the Clearing Fund, including (i) cash
deposited by a Member as part of its Actual Deposit, (ii) the proceeds of (x) any loans
made to the Corporation secured by the pledge by the Corporation of Eligible Clearing
Fund Securities pledged to the Corporation or (y) any sales of Eligible Clearing Fund
Securities pledged to the Corporation, (iii) cash receipts from any investment of,
repurchase or reverse repurchase agreements relating to, or liquidation of, Clearing
Fund assets, and (iv) cash payments on Eligible Letters of Credit (collectively, “Clearing
Fund Cash”), in accordance with the Clearing Agency Investment Policy adopted by the
Corporation.
The Corporation shall not be required to segregate each Member’s Actual

Deposit, but shall maintain books and records concerning the assets that constitute
each Member’s Actual Deposit.
42
(RULE 4)
Each Member shall be entitled to any interest earned or paid on Clearing Fund
cash deposits.3 Any interest on pledged Eligible Clearing Fund Securities that is
received by the Corporation shall be credited to the Member’s cash deposit to the
Clearing Fund, except in the event of a default by such Member on any obligations to
the Corporation, in which case the Corporation may exercise its rights under Section 3
of this Rule.
SEC. 3. Application of Clearing Fund Deposits and Other Amounts to Members’

Obligations. If a Member is obligated to the Corporation pursuant to these Rules and
Procedures and (i) fails to satisfy the obligation or (ii) the obligation is a Cross-Guaranty
Obligation, the Corporation shall apply to such obligation the amount of such Member’s
Actual Deposit, any amounts available under a Clearing Agency Cross-Guaranty
Agreement, and any proceeds of any of the foregoing to satisfy the obligation, and the
Corporation may take any and all actions with respect to such assets and amounts,
including assignment, transfer, and sale of any Eligible Clearing Fund Securities, that
the Corporation determines is appropriate. If such application results in any deficiency
in the Member’s Actual Deposit as compared to its Required Fund Deposit, the Member
shall immediately replenish its Actual Deposit. If the Member fails to do so, the
Corporation may take disciplinary action against such Member pursuant to Rule 46 or
Rule 48. Any disciplinary action that the Corporation takes pursuant to Rule 46 or Rule
48 or the voluntary or involuntary cessation of membership shall not affect the
Member’s obligations to the Corporation or any remedy to which the Corporation may
be entitled under applicable law.
SEC. 4. Loss Allocation Waterfall, Off-the-Market Transactions. For the

purposes of this Rule, the following terms shall have the following meanings:
“Defaulting Member” shall mean a Member for which the Corporation has ceased
to act pursuant to Rule 46.
“Defaulting Member Event” shall mean the determination by the Corporation to

cease to act for a Member pursuant to Rule 46.
“Declared Non-Default Loss Event” shall mean the determination by the Board of
Directors that a loss or liability incident to the clearance and settlement business of the
Corporation may be a significant and substantial loss or liability that may materially
impair the ability of the Corporation to provide clearance and settlement services in an
orderly manner and will potentially generate losses to be mutualized among Members in
order to ensure that the Corporation may continue to offer clearance and settlement
services in an orderly manner.
3
Sponsored Accounts (as defined in Procedure IX.B.) will receive interest earned or paid on their
Clearing Fund deposits held at DTC at such rate or rates as DTC pays to its participants.
43
(RULE 4)
If the Corporation incurs a loss or liability arising out of or relating to a Defaulting

Member Event or a Declared Non-Default Loss Event, the Corporation shall address the
loss or liability as follows:
Defaulting Member Events and/or Declared Non-Default Loss Events that occur
within a period of ten (10) business days (an “Event Period”) shall be grouped together
for purposes of applying the limits on loss allocation set forth in this Rule.
In the case of a Defaulting Member Event, an Event Period begins on the day the
Corporation notifies Members that it has ceased to act for the Defaulting Member (or the
next business day, if such day is not a business day).
In the case of a Declared Non-Default Loss Event, an Event Period begins on the
day that the Corporation notifies Members of the Declared Non-Default Loss Event (or
the next business day, if such day is not a business day), which notification shall be
issued promptly following any such determination. If a subsequent Defaulting Member
Event or Declared Non-Default Loss Event occurs during an Event Period, any losses or
liabilities arising out of or relating to any such subsequent event shall be resolved as
losses or liabilities that are part of the same Event Period, without extending the
duration of such Event Period.
Each Member shall be obligated to the Corporation for the entire amount of any
loss or liability incurred by the Corporation arising out of or relating to any Defaulting
Member Event with respect to such Member. To the extent that such loss or liability is
not satisfied pursuant to Section 3 of this Rule 4, the Corporation shall apply a
Corporate Contribution thereto and charge the remaining amount of such loss or liability
ratably to other Members, as further provided below.
The Corporation shall apply the Corporate Contribution to losses and liabilities
that arise out of or relate to one or more Defaulting Member Events and/or Declared
Non-Default Loss Events that occur within an Event Period. If losses and liabilities with
respect to such Event Period remain unsatisfied following application of the Corporate
Contribution, the Corporation shall allocate such losses and liabilities to Members,
subject to the requirements and limitations below.
Each Member that is a Member on the first day of an Event Period shall be
obligated to pay its pro rata share of losses and liabilities arising out of or relating to
each Defaulting Member Event (other than a Defaulting Member Event with respect to
which it is the Defaulting Member) and each Declared Non-Default Loss Event occurring
during the Event Period. Any Member for which the Corporation ceases to act on a
non-business day, triggering an Event Period that commences on the next business
day, shall be deemed to be a Member on the first day of that Event Period.
A loss allocation “round” means a series of loss allocations relating to an Event

Period, the aggregate amount of which is limited by the sum of the Loss Allocation Caps
of affected Members (a “round cap”). When the aggregate amount of losses allocated
in a round equals the round cap, any additional losses relating to the applicable Event
44
(RULE 4)
Period would be allocated in one or more subsequent rounds, in each case subject to a
round cap for that round. The Corporation may continue the loss allocation process in
successive rounds until all losses from the Event Period are allocated among Members
that have not submitted a Loss Allocation Withdrawal Notice in accordance with Section
6 of this Rule.
Each loss allocation shall be communicated to Members by the issuance of a

notice that advises the Members of the amount being allocated to them (“Loss
Allocation Notice”). Each Member’s pro rata share of losses and liabilities to be
allocated in any round shall be equal to (i) the average of its Required Fund Deposit for
the seventy (70) business days preceding the first day of the applicable Event Period or
such shorter period of time that the Member has been a Member (each Member’s
“Average RFD”), divided by (ii) the sum of Average RFD amounts of all Members
subject to loss allocation in such round.
Each Loss Allocation Notice shall specify the relevant Event Period and the
round to which it relates. The first Loss Allocation Notice in any first, second, or
subsequent round shall expressly state that such Loss Allocation Notice reflects the
beginning of the first, second, or subsequent round, as the case may be, and that each
Member in that round has five (5) business days from the issuance of such first Loss
Allocation Notice for the round (such period, a “Loss Allocation Withdrawal Notification
Period”) to notify the Corporation of its election to withdraw from membership pursuant
to Section 6 of this Rule, and thereby benefit from its Loss Allocation Cap. The “Loss
Allocation Cap” of a Member shall be equal to the greater of (x) its Required Fund
Deposit on the first day of the applicable Event Period and (y) its Average RFD.
After a first round of loss allocations with respect to an Event Period, only
Members that have not submitted a Loss Allocation Withdrawal Notice in accordance
with Section 6 of this Rule shall be subject to further loss allocation with respect to that
Event Period.
Members shall pay to the Corporation the amount specified in any first round
Loss Allocation Notice on the second business day after the Corporation issues any
such notice. Members shall pay to the Corporation the amount specified in any
subsequent round Loss Allocation Notice on the second business day after the
Corporation issues such notice, unless the Member has timely notified (or will timely
notify) the Corporation of its election to withdraw from membership with respect to a
prior loss allocation round pursuant to Section 6 of this Rule.
To the extent that a Member’s Loss Allocation Cap exceeds the Member’s
Required Fund Deposit on the first day of the applicable Event Period, the Corporation
may, in its discretion, retain any excess amounts on deposit from the Member, up to the
Member’s Loss Allocation Cap.
If a Member fails to make payment to the Corporation in respect of a Loss

Allocation Notice by the time such payment is due, the Corporation shall have the right
45
(RULE 4)
to proceed against such Member as a Member that has failed to satisfy an obligation in
accordance with Section 3 of this Rule.
If a Member notifies the Corporation of its election to withdraw from membership

pursuant to Section 6 of this Rule, the Member shall comply with the provisions of
Section 6 of this Rule. If, after notifying the Corporation of its election to withdraw from
membership pursuant to Section 6 of this Rule, the Member fails to comply with the
provisions of Section 6 of this Rule, its notice of withdrawal shall be deemed void and
any further losses resulting from the applicable Event Period may be allocated against it
as if it had not given such notice.
To the extent that a loss or liability of the Corporation is determined by the

Corporation to arise in connection with the close-out or liquidation of an Off-the-Market
Transaction in the portfolio of a Defaulting Member, it shall be allocated directly and
entirely to the Member that was the counterparty to such Off-the-Market Transaction;
however, no allocation shall be made if the Defaulting Member has satisfied all
applicable intraday mark-to-market margin charges assessed by the Corporation with
respect to the Off-the-Market Transaction, as permitted by these Rules and Procedures,
prior to its default.
SEC. 5. Corporate Contribution. For any loss allocation pursuant to Section 4 of

this Rule, whether arising out of or relating to a Defaulting Member Event or a Declared
Non-Default Loss Event, the Corporation’s corporate contribution to losses or liabilities
that are incurred by the Corporation with respect to an Event Period (“Corporate
Contribution”) shall be an amount that is equal to fifty (50) percent of the amount
calculated by the Corporation in respect of its General Business Risk Capital
Requirement as of the end of the calendar quarter immediately preceding the Event
Period. The Corporation’s General Business Risk Capital Requirement, as defined in its
Clearing Agency Policy on Capital Requirements, is, at a minimum, equal to the
regulatory capital that the Corporation is required to maintain in compliance with Rule
17Ad-22(e)(15) under the Securities Exchange Act of 1934, as amended. If the
Corporate Contribution is applied by the Corporation against a loss or liability relating to
an Event Period, whether arising out of or relating to a Defaulting Member Event or a
Declared Non-Default Loss Event, the Corporate Contribution for any subsequent Event
Periods occurring during the two hundred fifty (250) business days thereafter shall be
reduced to the remaining unused portion of the Corporate Contribution amount that
applied for the first Event Period. The Corporation shall notify Members of any such
reduction to the Corporate Contribution.
Nothing in these Rules and Procedures shall prevent the Corporation from
voluntarily applying amounts greater than the Corporate Contribution against any loss or
liability of the Corporation, whether arising out of or relating to a Defaulting Member
Event or a Declared Non-Default Loss Event, if the Board of Directors, in its sole
discretion, believes such to be appropriate under the factual situation existing at the
time.
46
(RULE 4)
SEC. 6. Withdrawal Following Loss Allocation. If a Member timely notifies the

Corporation of its election to withdraw from membership in respect of a loss allocation
round as set forth in Section 4 of this Rule (“Loss Allocation Withdrawal Notice”), the
Member shall:
(i) specify in the Loss Allocation Withdrawal Notice an effective date for its
withdrawal from membership, which date shall not be later than ten (10) business
days following the last day of the Loss Allocation Withdrawal Notification Period,
(ii) cease all activity that would result in transactions being submitted to the
Corporation for clearance and settlement for which such Member would be
obligated to perform, where the scheduled final settlement date would be later
than the effective date of the Member’s withdrawal, and
(iii) ensure that all clearance and settlement activity for which such Member is
obligated to the Corporation is fully and finally settled by the effective date of the
Member’s withdrawal from membership, including, without limitation, by resolving
by such date all fails and buy-in obligations.
A Member that withdraws in compliance with the requirements of this section

shall nevertheless remain obligated for its pro rata share of losses and liabilities with
respect to any Event Period for which it is otherwise obligated hereunder; however, its
aggregate obligation shall be limited to the amount of its Loss Allocation Cap (as fixed in
the round for which it withdrew).
If the Member fails to comply with the requirements in this section, its Loss
Allocation Withdrawal Notice will be deemed void, and the Member will remain subject
to further loss allocations pursuant to Section 4 of this Rule as if it had not given such
Loss Allocation Withdrawal Notice.
SEC. 7. Return of Members’ Clearing Fund Deposits. If a Member gives notice

to the Corporation of its election to withdraw from membership, the Member’s Actual
Deposit in the form of (i) cash or securities shall be returned to it within thirty (30)
calendar days and (ii) Eligible Letters of Credit shall be returned to it within ninety (90)
calendar days, after all of its transactions have settled and all matured and contingent
obligations to the Corporation for which the Member was responsible while a Member
have been satisfied. Notwithstanding the foregoing, the Corporation may retain for up
to two (2) years the Actual Deposits from Members who have Sponsored Accounts at
DTC.
SEC. 8. Changes in Members’ Required Fund Deposits. Each Member shall

deposit in the Clearing Fund such amount that is necessary to satisfy any increase in
its Required Fund Deposit within such time as the Corporation shall require. At the time
the increase becomes effective, the Member’s obligations to the Corporation shall be
determined in accordance with the increased Required Fund Deposit whether or not the
Member has satisfied such increased amount.
47
(RULE 4)
SEC. 9. Excess Clearing Fund Deposits. The Corporation shall determine with
such frequency as it shall, from time to time to specify, whether the amount deposited
by each Member to the Clearing Fund may be in excess of such Member’s Required
Fund Deposit. On any day that the Corporation has determined that an excess deposit
exists with respect to any Member, the Corporation will, in the form and manner
required by the Corporation, notify each such Member of such excess. Subject to the
Corporation’s rights under these Rules and Procedures to require additional amounts to
be deposited by a Member, upon a Member’s request, and in accordance with such
procedures as the Corporation may set forth from time to time, the Corporation shall
return to the Member such amount of its excess cash on deposit (subject to the
minimum amount of cash required to be maintained in the Clearing Fund) and/or
pledged Eligible Clearing Fund Securities (valued at their collateral value in accordance
with Section III of Procedure XV on the day of such withdrawal) as the Member
requests. Notwithstanding the foregoing, the Corporation may, in its discretion,
determine to withhold all or part of any excess deposit of a Member if such Member has
been placed on the Watch List pursuant to these Rules and Procedures or if the
Corporation determines that the Member’s anticipated activities in the Corporation in the
near future may reasonably be expected to be materially different than its activities of
the recent past.
The provisions of this Section 9 of Rule 4 shall not limit the rights or remedies of
the Corporation as provided by Rule 15 of the Rules and Procedures of the Corporation.
SEC. 10. No waiver; Subsequent Recovery Against Loss Amounts. No loss

allocation under this Rule shall constitute a waiver of any claim the Corporation may
have against a Member for any losses or liabilities, including, without limitation, any loss
or liability to which the Member is subject under these Rules and Procedures. If a loss
charged pro rata is afterward recovered by the Corporation, in whole or in part, the net
amount of the recovery shall be credited to the Persons, including the Corporation,
against whom the loss was charged in proportion to the amounts charged against them.
SEC. 11. Substitution or Withdrawal of Pledged Securities. Upon notice to the

Corporation provided in such form and within such timeframe as determined by the
Corporation from time to time, a Member may withdraw or substitute pledged Eligible
Clearing Fund Securities, provided that the Member continues to satisfy at all times its
Required Fund Deposit.
SEC. 12. Authority of Corporation. In furtherance of the rights of the Corporation

pursuant to these Rules and Procedures, the Corporation shall have full power and
authority to pledge, repledge, hypothecate, transfer, create a security interest in, or
assign any or all Actual Deposits and any proceeds thereof for the purpose of securing
loans made to the Corporation (the party making any such loan to the Corporation
hereinafter referred to as the “Lender”); provided that the proceeds of such loans are
used for a purpose permissible under Section 2 of this Rule. Such loans shall be on
terms and conditions deemed necessary or advisable by the Corporation (including
collateralization thereof) in its sole discretion, and may be in amounts greater, and
extend for periods of time longer, than the obligations, if any, of any Member to the
48
(RULE 4)
Corporation for which such property and Eligible Letters of Credit (if any) were pledged
to or deposited with the Corporation; provided, however, that if any such loan is made
as a result of a loss or liability suffered by the Corporation, the Corporation will promptly,
but in no event later than 30 calendar days from the day the loan is made, repay the
loan in full. No Member shall have any right, claim or action against any secured
Lender (or any collateral agent of such secured Lender) for the return, or otherwise in
respect, of any such collateral pledged by the Corporation to such secured Lender (or
its collateral agent), so long as any loans made by such Lender to the Corporation or
other obligations, secured by such collateral, are unpaid and outstanding. Subject to
the foregoing and to the terms and conditions of such loan, the Corporation shall remain
obligated to each such Member to return, and to allow substitution for or withdrawal of,
cash, and Eligible Clearing Fund Securities, and Eligible Letters of Credit (if any)
pledged or deposited by such Member as a Clearing Fund deposit, or otherwise to
collateralize such Member’s obligations to the Corporation, under the circumstances
and within the time frames specified in these Rules and Procedures. In the event of any
conflict or inconsistency between this Rule 4 and any agreement between the
Corporation and any Member, this Rule 4 shall govern and prevail.
SEC. 13. Mutual Fund Deposits. Each Member that uses the Mutual Fund
Services to submit mutual fund purchases, redemptions, or exchanges to any Fund
Member or another Member and each Mutual Fund/Insurance Services Member shall,
and each Fund Member (collectively with such Members and Mutual Fund/Insurance
Services Members, “Mutual Fund Participants”) may, be required to make a cash
deposit to the Clearing Fund in the amounts determined in accordance with Procedure
XV and other applicable Rules and Procedures (its “Mutual Fund Deposit” and, unless
specified otherwise, for the purposes of these Rules and Procedures, Required Fund
Deposits shall include Mutual Fund Deposits). In the case of a Member, its Mutual
Fund Deposit shall be a separate and additional component of such Member’s deposit
to the Clearing Fund but shall not constitute part of such Member’s Required Fund
Deposit for purposes of calculating pro rata loss allocations pursuant to Section 4 of this
Rule.
If any Mutual Fund Participant fails to satisfy any obligation to the Corporation
relating to the Mutual Fund Services, notwithstanding the Corporation’s right to reverse
in whole or in part any credit previously given to the contra side to any outstanding
Mutual Fund Services transaction of the Mutual Fund/Insurance Services Member, the
Corporation shall first apply such Mutual Fund Participant’s Mutual Fund Deposit. If
after such application any loss or liability remains and if such Mutual Fund Participant is
a Member that is not otherwise obligated to the Corporation, the Corporation shall apply
such Member’s Actual Deposit in accordance with Section 3 of this Rule. The
Corporation shall next allocate any further remaining loss or liability to the other Mutual
Fund Participants in successive rounds of loss allocations, in each case up to the
aggregate of Mutual Fund Deposits from non-defaulting Mutual Fund Participants and,
after the first such round, Mutual Fund Participants that have not submitted a Loss
Allocation Withdrawal Notice in accordance with Section 6 of this Rule, following the
procedures and subject to the timeframes set forth in Sections 4 and 6 of this Rule as if
such Mutual Fund Participants are Members. If any loss or liability remains thereafter
49
(RULE 4)
and there are no continuing Mutual Fund Participants, the Corporation shall proceed
with loss allocations to Members for a Defaulting Member Event as set forth in Section 4
of this Rule. The application of any participant’s Mutual Fund Deposit shall not affect
any other right or remedy of the Corporation under these Rules and Procedures or
under applicable law.
A Mutual Fund Participant that elects to withdraw from membership shall be

entitled to the return of its Mutual Fund Deposit no later than thirty (30) calendar days
after all of its transactions have settled and all matured and contingent obligations to the
Corporation for which such Mutual Fund Participant was responsible while a Mutual
Fund Participant have been satisfied.
Without limitation of the specific provisions set forth in this section, the
Corporation’s rights, authority and obligations with respect to deposits to the Clearing
Fund that are set forth in this Rule 4, including, without limitation, the treatment of
Clearing Fund Cash, shall apply to Mutual Fund Deposits.
SEC. 14. Insurance Deposits. Each Mutual Fund/Insurance Services Member

that uses the Insurance & Retirement Services and each Insurance Carrier/Retirement
Services Member (collectively, “Insurance Participants”) may be required to make a
cash deposit to the Clearing Fund in the amounts determined in accordance with
Procedure XV and other applicable Rules and Procedures (its “Insurance Deposit” and,
unless specified otherwise, for the purposes of these Rules and Procedures, Required
Fund Deposits shall include Insurance Deposits).
If any Insurance Participant fails to satisfy any obligation to the Corporation

relating to the Insurance & Retirement Services, the Corporation shall first apply such
Insurance Participant’s Insurance Deposit. If after such application any loss or liability
remains, the Corporation shall next allocate such remaining loss or liability to the other
Insurance Participants in successive rounds of loss allocations, in each case up to the
aggregate of Insurance Deposits from non-defaulting Insurance Participants and, after
the first such round, Insurance Participants that have not submitted a Loss Allocation
Withdrawal Notice in accordance with Section 6 of this Rule, following the procedures
and subject to the timeframes set forth in Sections 4 and 6 of this Rule as if such
Insurance Participants are Members. If any loss or liability remains thereafter and there
are no continuing Insurance Participants, the Corporation shall proceed with loss
allocations to Members for a Defaulting Member Event as set forth in Section 4 of this
Rule. The application of any Insurance Participant’s Insurance Deposit shall not affect
any other right or remedy of the Corporation under these Rules and Procedures or
under applicable law.
An Insurance Participant that elects to withdraw from membership shall be

entitled to the return of its Insurance Deposit no later than thirty (30) calendar days after
all of its transactions have settled and all matured and contingent obligations to the
Corporation for which such Insurance Participant was responsible while an Insurance
Participant have been satisfied.
50
(RULE 4)
Without limitation of the specific provisions set forth in this section, the
Corporation’s rights, authority and obligations with respect to deposits to the Clearing
Fund that are set forth in this Rule 4, including, without limitation, the treatment of
Clearing Fund Cash, shall apply to Insurance Deposits.
51
(RULE 4(A))
RULE 4(A). SUPPLEMENTAL LIQUIDITY DEPOSITS
SEC. 1. Overview. The Corporation requires sufficient liquidity to enable it to

effect the settlement of its payment obligations as a central counterparty. The two
principal sources of liquidity for the Corporation currently are deposits to the Clearing
Fund and a committed line of credit. A substantial proportion of the liquidity needed by
the Corporation is attributable to the exposure presented to the Corporation by its
Members who would generate the largest settlement debits during options expiration
activity periods in stressed market conditions. In order to ensure that the Corporation
has sufficient liquidity to meet its payment obligations, it is appropriate that such
Members provide additional liquidity to the Corporation in the form of supplemental
liquidity deposits to the Clearing Fund, offset by (i) commitments under the line of credit
and (ii) any other qualifying liquid resources the Corporation may secure to settle its
payment obligations as a central counterparty. This Rule 4(A) describes how such
additional liquidity in the form of supplemental liquidity deposits to the Clearing Fund
shall be calculated and provided.
SEC. 2. Defined Terms. The following terms shall have the meanings specified:
“Affiliate” means a person that controls or is controlled by or is under common control

with another person. Control of a person means the direct or indirect ownership or
power to vote more than 50% of any class of the voting securities or other voting
interests of any person.
“Affiliated Family” means a group of Members, excluding from the group any Member
that is a securities clearinghouse, depository, exchange or other market infrastructure,
in which each Member in the group is an Affiliate of at least one other Member in the
group.
“Commitment” means a commitment to lend to the Corporation under the Credit Facility.
“Credit Facility” means the committed line of credit maintained by the Corporation to
enable the Corporation to satisfy losses and liabilities incident to the operation of its
clearance and settlement business.
“Options Expiration Activity Period” means the period (i) beginning at the opening of
business on the Friday preceding the Saturday that is the monthly expiration date for
stock options (or the Business Day before that if such Friday is not a Business Day) and
(ii) ending at the close of business on the second Settlement Day following such date. If
the monthly expiration date for stock options is changed to a Friday, the “Options
Expiration Activity Period” shall mean the period (i) beginning at the opening of business
on such Friday (or the Business Day before that if such Friday is not a Business Day)
and (ii) ending at the close of business on the second Settlement Day following such
date.
“Other Qualifying Liquid Resources” means liquid resources, other than the Clearing
Fund and Credit Facility, available to the Corporation to enable the Corporation to settle
its payment obligations as a central counterparty in stressed market conditions.
52
(RULE 4(A))
“Special Activity Business Day” means a Business Day that is included in an Options
Expiration Activity Period.
“Special Activity Calculation Date” has the meaning given to such term in Section 3
below.
“Special Activity Daily Liquidity Need” means, on any Special Activity Business Day, the
amount of liquid resources, as calculated and determined by the Corporation, needed to
effect the settlement of its payment obligations as a central counterparty over a four day
settlement cycle, assuming the default on that Business Day of the Unaffiliated Member
or Affiliated Family that would cause the largest liquidity exposure to the Corporation
over that cycle in stressed market conditions.
“Special Activity Liquidity Call” has the meaning given to such term in Section 7 below.
“Special Activity Liquidity Obligation” has the meaning given to such term in Section 4
below.
“Special Activity Liquidity Provider” has the meaning given to such term in Section 4
below.
“Special Activity Lookback Period” means, with respect to the 24 month period (or
longer period as determined by the Corporation in its discretion) ending on the
applicable Special Activity Calculation Date, each Options Expiration Activity Period that
falls within the same calendar month as the calendar month of the applicable Special
Activity Calculation Date.
“Special Activity Peak Liquidity Exposure” means:
a. with respect to an Unaffiliated Member, the amount by which the largest

Special Activity Supplemental Liquidity Need that the Corporation would
have in the event of the default of such Unaffiliated Member on any Special
Activity Business Day during the applicable Special Activity Lookback
Period exceeds, on the applicable Special Activity Calculation Date, the
sum of (i) all Commitments under the Credit Facility and (ii) all Other
Qualifying Liquid Resources;
b. with respect to a Member of an Affiliated Family, the amount by which the

largest Special Activity Supplemental Liquidity Need that the Corporation
would have in the event of the default of such Member on any Special
Activity Business Day during the applicable Special Activity Lookback
Period exceeds, on the applicable Special Activity Calculation Date, the
sum of (i) all Commitments under the Credit Facility and (ii) all Other
Qualifying Liquid Resources; and
c. with respect to an Affiliated Family, the amount by which the largest Special
Activity Supplemental Liquidity Need that the Corporation would have in the
event of the simultaneous default of all Members of that Affiliated Family on
53
(RULE 4(A))
any Special Activity Business Day during the applicable Special Activity
Lookback Period exceeds, on the applicable Special Activity Calculation
Date, the sum of (i) all Commitments under the Credit Facility and (ii) all
Other Qualifying Liquid Resources.
“Special Activity Peak Liquidity Need” means, on any Special Activity Calculation Date,
the amount by which the largest Special Activity Supplemental Liquidity Need observed
at any time during any Options Expiration Activity Period exceeds, on such Special
Activity Calculation Date, the sum of (i) all Commitments under the Credit Facility and
(ii) all Other Qualifying Liquid Resources.
“Special Activity Peak Liquidity Need Date” means the date of the applicable Special
Activity Peak Liquidity Need.
“Special Activity Prefund Deposit” means a cash deposit of a Member to the Clearing
Fund made by wire transfer to an account designated by the Corporation:
a. that is in excess of the Required Fund Deposit of the Member;
b. that the Member deposits to the Clearing Fund, not later than the time
specified by the Corporation on the first Business Day of an Options
Expiration Activity Period, if the Member anticipates that its Special Activity
Peak Liquidity Exposure at any time during such Options Expiration Activity
Period will be greater than the amount calculated by the Corporation
pursuant to this Rule 4(A);
c. that the Member undertakes to keep on deposit in the Clearing Fund for at
least seven Business Days after the end of the applicable Options
Expiration Activity Period; and
d. that the Member designates as a “Special Activity Prefund Deposit” at the

time of the deposit in a manner specified by the Corporation.
“Special Activity Supplemental Deposit” shall have the meaning given to such term in
Section 5, and shall include any amount deposited to the Clearing Fund in satisfaction
of (i) a Special Activity Liquidity Obligation (pursuant to Section 6 below) or (ii) a Special
Activity Liquidity Call (pursuant to Section 8 below). All Special Activity Supplemental
Deposits shall be made in cash by wire transfer to an account designated by the
Corporation.
“Special Activity Supplemental Liquidity Need” means, on any Special Activity Business
Day, the amount by which the Special Activity Daily Liquidity Need of the Corporation
exceeds the sum of all Required Fund Deposits.
“Unaffiliated Member” means a Member that (i) is not in any Affiliated Family and (ii) is
not a securities clearinghouse, depository, exchange or other market infrastructure.
54
(RULE 4(A))
Capitalized terms that are used but not defined in this Rule 4(A) shall have the
meanings given to such terms elsewhere in these Rules.
Special Activity Liquidity Obligations
SEC. 3. Special Activity Calculation Date Determinations. On a day that is no

later than the fifth Business Day preceding any Options Expiration Activity Period (the
“Special Activity Calculation Date”), the Corporation shall determine:
a. the Special Activity Daily Liquidity Need of the Corporation on each Special
Activity Business Day of the applicable Special Activity Lookback Period;
b. the Special Activity Supplemental Liquidity Need of the Corporation on each

Special Activity Business Day of the applicable Special Activity Lookback
Period;
c. the Special Activity Peak Liquidity Need of the Corporation on the applicable
Special Activity Calculation Date;
d. the Special Activity Peak Liquidity Exposure of each Unaffiliated Member or

Affiliated Family during the applicable Special Activity Lookback Period; and
e. the 30 (or fewer) Unaffiliated Members or Affiliated Families with the largest
Special Activity Peak Liquidity Exposures during the applicable Special
Activity Lookback Period.
SEC. 4. Special Activity Liquidity Obligations and Providers. The 30 (or fewer)
Unaffiliated Members or Affiliated Families with the largest Special Activity Peak
Liquidity Exposures during the applicable Special Activity Lookback Period (each, a
“Special Activity Liquidity Provider”) shall have a supplemental liquidity obligation to the
Corporation (a “Special Activity Liquidity Obligation”), determined for each Special
Activity Liquidity Provider in accordance with the following formula:
A = B multiplied by (C divided by D), where --
A is the Special Activity Liquidity Obligation of such Special Activity Liquidity

Provider;
B is the Special Activity Peak Liquidity Need of the Corporation on the

applicable Special Activity Calculation Date;
C is the Special Activity Peak Liquidity Exposure of such Special Activity

Liquidity Provider during the applicable Special Activity Lookback Period;
and
D is the aggregate amount of the Special Activity Peak Liquidity Exposures of

all Special Activity Liquidity Providers during the applicable Special Activity
Lookback Period.
55
(RULE 4(A))
SEC. 5. Satisfaction of Special Activity Liquidity Obligations. In satisfaction of its

Special Activity Liquidity Obligation to the Corporation, a Special Activity Liquidity
Provider shall make a supplemental liquidity deposit (a “Special Activity Supplemental
Deposit”) to the Clearing Fund in an amount equal to its Supplemental Activity Liquidity
Obligation.
SEC. 6 Notice of Special Activity Liquidity Obligations and Payment of Special

Activity Supplemental Deposits. Promptly after the Special Activity Calculation Date,
the Corporation shall provide each Special Activity Liquidity Provider with the amount of
its Special Activity Liquidity Obligation for that Options Expiration Activity Period. Not
later than the close of business on the second Business Day preceding the applicable
Options Expiration Activity Period, a Special Activity Liquidity Provider shall make its
Special Activity Supplemental Deposit to the Clearing Fund.
Special Activity Liquidity Calls
SEC. 7. Determination of Special Activity Liquidity Calls. If, with respect to any
Special Activity Business Day between Special Activity Calculation Dates, the
Corporation observes an increase in its Special Activity Supplemental Liquidity Need in
excess of such threshold as may be determined by the Corporation from time to time,
the Corporation shall be entitled to call on the Member whose increase in activity levels
caused (or was the primary cause of) such increase in the Special Activity
Supplemental Liquidity Need of the Corporation to deposit to the Clearing Fund, as an
addition to its Special Activity Supplemental Deposit, an amount equal to the difference
between (i) the Special Activity Supplemental Liquidity Need of the Corporation on such
Special Activity Business Day and (ii) the sum, on such Special Activity Business Day,
of (w) all Special Activity Supplemental Deposits, (x) all Commitments under the Credit
Facility, (y) all Other Qualifying Liquid Resources and (z) an amount of Special Activity
Prefund Deposits up to such limit as may be determined by the Corporation from time to
time (a “Special Activity Liquidity Call”).
SEC. 8. Satisfaction of Special Activity Liquidity Calls. On the first Business Day
after receipt of a Special Activity Liquidity Call from the Corporation, or such later time
as the Corporation may specify but not later than 10 a.m. on the second Business Day
after receipt of a Special Activity Liquidity Call from the Corporation, a Member shall
make a Special Activity Supplemental Deposit to the Clearing Fund in the amount of the
Special Activity Liquidity Call.
Returns of Special Activity Supplemental Deposits
SEC. 9. Deposits Made in Satisfaction of a Liquidity Obligation. A Special

Activity Liquidity Provider shall be entitled to a return of the amount of its Special Activity
Supplemental Deposit made in satisfaction of a Supplemental Activity Liquidity
Obligation, payable seven Business Days after the end of the applicable Options
Expiration Activity Period.
56
(RULE 4(A))
SEC. 10. Deposits Made in Satisfaction of a Liquidity Call. A Special Activity

Liquidity Provider shall be entitled to a return of the amount of its Special Activity
Liquidity Deposit made in satisfaction of a Special Activity Liquidity Call, payable 90
days after the date of such deposit.
SEC. 11. Ceasing to be a Participant. Special Activity Supplemental Deposits

shall not be subject to the provisions of Section 7 of Rule 4 relating to the thirty (30)
calendar day deferral of refunds of deposits to the Clearing Fund when a Member
ceases to be a participant.
Miscellaneous Matters
SEC. 12. Obligations of Affiliated Families and Unaffiliated Members.
a. The Special Activity Liquidity Obligations of an Affiliated Family shall be the

several obligations of all of the Members of the Affiliated Family ratably in
proportion to their applicable Special Activity Peak Liquidity Exposures.
b. In the event of any failure of an Unaffiliated Member to satisfy a Special

Activity Liquidity Obligation in full when due, the Corporation may (i) debit
the amount of any such deficiency to the account of such Unaffiliated
Member, (ii) collect such amount in system wide settlement and (iii) credit
such amount as a Special Activity Supplemental Deposit for the account of
such Unaffiliated Member. The Corporation may also exercise any and all
of its other default rights under these Rules.
c. In the event of any failure of a Member of an Affiliated Family to satisfy a

Special Activity Liquidity Obligation in full when due, the Corporation may, (i)
debit the amount of any such deficiency to the account of such Member, (ii)
collect such amount in system wide settlement and (iii) credit such amount
as a Special Activity Supplemental Deposit for the account of such Member.
The Corporation may also exercise any and all of its other default rights
under these Rules.
SEC. 13. Application of Special Activity Supplemental Deposits.
a. A Special Activity Supplemental Deposit of a Member may not be withdrawn

by the Member unless it is entitled to a return of such deposit pursuant to
Sections 9 or 10 above.
b. A Special Activity Supplemental Deposit of a Member shall form a part of

the Actual Deposit of the Member to the Clearing Fund but shall be in
addition to, and separate from, (i) the Required Fund Deposit of the Member
and (ii) any other deposit of the Member to the Clearing Fund.
c. A Special Activity Supplemental Deposit of a Member (i) may be invested,

paid, applied and loaned as provided in Section 2 of Rule 4 and (ii) may be
used to satisfy a loss or liability as provided in Sections 3 or 13 of Rule 4.
57
(RULE 4(A))
d. A Special Activity Supplemental Deposit of a Member may not be used to

calculate or be applied to satisfy any pro rata charge pursuant to Section 4
of Rule 4.
SEC. 14. Information. To enable Members to understand and manage their

obligations to the Corporation:
a. on each Business Day, the Corporation shall make available to each

Member the amount of the liquidity need that the Corporation would have
had in the event of the default of such Member on the preceding Business
Day; and
b. promptly after each Special Activity Calculation Date, the Corporation shall
provide each Special Activity Liquidity Provider with the amount of its
Special Activity Liquidity Obligation for the following Options Expiration
Activity Period.
58
(RULE 5)
RULE 5. GENERAL PROVISIONS
SEC. 1. Receive data covering the buy side and deliver data covering the sell
side of any contract calling for delivery of Cleared Securities may be sent for
comparison by a Member to the Corporation; such contracts shall be compared by the
Corporation to the extent provided for under these Rules and the Procedures. Trade
Data may also be provided to the Corporation on a locked-in basis as provided pursuant
to the Rules and the Procedures. Output made available by the Corporation on: (i)
contracts compared by the Corporation, and (ii) locked-in transactions recorded by the
Corporation from data received from a Member or Self-Regulatory Organization
(collectively, “Compared Contracts”), shall evidence valid, binding and enforceable
compared transactions for purposes of these Rules (notwithstanding with respect to
locked-in transactions that the underlying data is not matched with corresponding data
submitted to the Corporation by the affected contra-Member). Compared Contracts for
CNS Securities and other transactions in respect of CNS Securities submitted to the
Corporation under these Rules (“CNS Contracts”) shall be accounted for in the CNS
System; Compared Contracts for Balance Order Securities and other transactions in
respect of Balance Order Securities submitted to the Corporation under these Rules
(“Balance Order Contracts”) shall be accounted for in the Balance Order System;
Compared Contracts for Foreign Securities and other transactions in respect of Foreign
Securities submitted to the Corporation under these Rules (“Foreign Security
Contracts”) shall be accounted for in the Foreign Security System. Delivery of CNS
Securities to the Corporation, except as specified in Section 9 of Rule 11, shall be made
through the facilities of the Corporation or a Qualified Securities Depository and
payment therefore shall be made through the Corporation or such agent as it may
designate; delivery of Balance Order Securities may be made through the Corporation
in which case payment therefore shall be made through the Corporation or such agent
as it may designate; delivery of Foreign Securities shall be made pursuant to
arrangements mutually agreed upon by the parties, and the Rules of the Corporation
shall not govern such delivery or the failure to deliver such securities. Such
comparison, accounting, and, with respect to CNS Securities and Balance Order
Securities, delivery and payment shall be effected as hereinafter prescribed in these
Rules, in such regulations with respect thereto as the Corporation may from time to time
adopt and in the Procedures.
When issued and when distributed cleared transactions shall be settled and
payment therefor made at such time, in such manner and by the delivery of securities
and/or other property as the Corporation may determine, or shall be canceled and
thereafter shall be null and void if the Corporation determines that the plan or proposal
pursuant to which the securities were to be issued or distributed has been abandoned
or materially changed.
SEC. 2. Every Member, Mutual Fund/Insurance Services Member, Settling Bank

Only Member, Municipal Comparison Only Member, Insurance Carrier/Retirement
Services Member, TPA Member, TPP Member, Investment Manager/Agent Manager,
Fund Member, Data Services Only Member and AIP Member (each hereinafter referred
to as a “participant” for purposes of this Rule 5) shall designate a representative that is
59
(RULE 5)
authorized in the name of the participant to sign all instruments, to correct errors and to
perform such other duties as may be required under these Rules and to transact all
business requisite in connection with the operations of the Corporation which
representative shall be capable of taking such action in a manner consistent with the
daily time schedules and other requirements established by or pursuant to these Rules.
If the representative of the participant is not a general partner or officer of the
participant’s firm, such representative shall, in the case of a firm, be authorized to act by
written power of attorney, or in the case of a corporation, by resolution by the board of
directors of such corporation. Such power of attorney or resolution, as the case may
be, shall be in such form as approved by the Corporation.
Members, Settling Bank Only Members, Municipal Comparison Only Members,

Insurance Carrier/Retirement Services Members, TPA Members, TPP Members,
Investment Manager/Agent Members, Fund Members and Data Services Only Members
shall file with the Corporation the signatures of the members of their firms or the officers
of their corporations and of the representatives of such firms or corporations who are
authorized to sign checks, agreements, receipts, orders and other papers necessary for
conducting business with the Corporation together with the powers of attorney or other
instruments giving such authority.
Each participant will be allotted a number which must be included in all

submissions by him in connection with the operations of the Corporation.
The official date of the Comparison Operation, the Accounting Operation and the
settlement of contracts is the Settlement Date for such contracts and summaries,
security balance orders, security orders, CNS System reports, checks relating thereto,
except as may be otherwise directed by the Corporation, either in general or in
particular instances, shall bear that date even though they may be issued on a
preceding day.
SEC. 3. A participant may appoint one or more persons as its agent(s) with
respect to all data, contracts or transactions, transmitted or received, compared,
confirmed, accounted for, settled, delivered or carried out through or by the Corporation
and all matters relating thereto, provided that such appointment has been consented to
by the Corporation and is evidenced by such appointments, authorizations, certifications
and other agreements in such form as may be required by the Corporation.
SEC. 4. The Corporation may, in its discretion, require a participant to provide

appropriate staff in their offices during specified hours on non-business days when such
is deemed necessary by the Corporation to insure the integrity of its systems and/or for
the protection of the Corporation.
SEC. 5. All reports in electronic format shall be deemed delivered to and

received by each participant when made available for retrieval by the Corporation, and
each such entity shall be obligated to retrieve and review such reports and notify the
Corporation promptly of any error contained in such reports.
60
(RULE 6)
RULE 6. (RULE NUMBER RESERVED FOR FUTURE USE)
61
(RULE 7)
RULE 7. COMPARISON AND TRADE RECORDING OPERATION
(INCLUDING SPECIAL REPRESENTATIVE/INDEX RECEIPT AGENT)
SEC. 1. A Member acting as a Special Representative or Qualified Special

Representative, may submit to the Corporation for trade recording, trade data on any
transaction calling for delivery of Cleared Securities between it and another person. A
Member may also submit to the Corporation for comparison trade data on any
transaction calling for delivery of Cleared Securities that are also debt securities
between it and another person, or for other transactions as otherwise provided through
the Obligation Warehouse service in accordance with Rule 51 and Procedure II A.
SEC. 2. Special Representatives
(a) For the purposes of these Rules, a “Special Representative” shall be either a
Member or a Registered Clearing Agency which applies to the Corporation for such
status and designates those Members for which it will act. The Corporation will not act
upon any instruction received from a Special Representative which applies pursuant to
this paragraph until each Member for which the Special Representative proposes to act
has consented thereto in a writing delivered to the Corporation.
(b) A Special Representative may submit to the Corporation transaction data as

to the rights and obligations of Members which calls for the delivery of Cleared
Securities and is between Members. The obligations of the Member reflected in such
transaction data shall be deemed to have been confirmed and acknowledged by each
Member designated by the Special Representative as a party thereto and to have been
adopted by such Member and, for the purposes of these Rules and determining the
rights and obligations between the Corporation and any such Member under these
Rules shall be valid and binding upon such Member to the same extent as any
Compared Contract under this Rule. A Member which has been so designated by a
Special Representative shall resolve any differences or claims regarding the rights and
obligations reflected in the transaction data submitted by the Special Representative
with the Special Representative, and the Corporation shall have no responsibility in
respect thereof or to adjust its records or the accounts of the Member in any way,
otherwise than pursuant to the instructions of the Special Representative.
SEC. 3. Qualified Special Representatives
(a) For the purposes of these Rules, a Qualified Special Representative is a

Special Representative who:
(1) operates an automated execution system where it is always the contra side to
each transaction; or
(2) has a parent corporation or affiliated corporation that operates an automated

execution system where the Special Representative is always the contra side to each
transaction; or
62
(RULE 7)
(3) clears for a broker/dealer who operates an automated execution system

where the broker/dealer is always the contra side to each transaction, and the
subscribers to the automated execution system enter into an agreement with the
broker/dealer and the Special Representative acknowledging the Special
Representative’s role in the clearance of trades executed on the automated execution
system.
(b) A Qualified Special Representative may submit to the Corporation in

automated form trade data from such automated execution system as locked-in trades.
The obligations of the Member reflected in such trade data as the Qualified Special
Representative’s contra-party shall be deemed to have been confirmed and
acknowledged by each Member designated by the Qualified Special Representative as
the contra party thereto and to have been adopted by such Member and, for the
purposes of these Rules and determining the rights and obligations between the
Corporation and any such Member under these Rules, shall be valid and binding upon
such Member to the same extent as any transaction compared under this Rule. A
Member which has been designated as the contra-party to a trade by a Qualified
Special Representative shall resolve any differences or claims regarding the rights and
obligations reflected in the trade data submitted by the Qualified Special Representative
with the Qualified Special Representative, and the Corporation shall have no
responsibility in respect thereof or to adjust its records or the accounts of the Member in
any way, other than pursuant to the instructions of the Qualified Special Representative.
SEC. 4. Index Receipt Agent
(a) For the purposes of these Rules an Index Receipt Agent shall be a Member
which has entered into an Index Receipt Authorization Agreement as required by the
(b) An Index Receipt Agent may submit to the corporation transaction data, which
may reflect the netted results of other transactions, as to the rights and obligations of
Members which calls for the delivery of cleared securities and is between Members.
The obligations of the Member reflected in such transaction data shall be deemed to
have been confirmed and acknowledged by each Member or designated by the Index
Receipt Agent as a party thereto and to have been adopted by such Member and, for
the purposes of these Rules and determining the rights and obligations between the
Corporation and any such Member under these Rules shall be valid and binding upon
such Member to the same extent as any Compared Contract under this Rule.
SEC. 5. Trade data submitted to the Corporation by a Member pursuant to

Section 1 of this Rule or by a Qualified Special Representative pursuant to Section 3 of
this Rule, and transaction data submitted to the Corporation by a Special
Representative or Index Receipt Agent pursuant to Section 2 or 4 of this Rule, as
applicable, shall be submitted in the form and manner, and in accordance with the time
schedules, prescribed by, or pursuant to, the Procedures.
63
(RULE 7)
The name of a Member, Special Representative, Qualified Special

Representative or Index Receipt Agent printed, stamped or written on any form,
document or other item issued by him or used in a transmission received from him
pursuant to this Rule or the Procedures shall be deemed to have been adopted by him
as his signature and shall be valid and binding upon him in all respects as though he
had manually affixed his signature to such form, document or other item or
transmission.
Each Member, Special Representative, Qualified Special Representative and

Index Receipt Agent shall promptly check all information in any format that is made
available to him by the Corporation pursuant to this Rule or the Procedures.
Any trade data submitted to the Corporation by a Member pursuant to Section 1

of this Rule which is not compared by the Corporation, or any such item compared by
the Corporation which is subsequently deleted as provided in the Procedures and not
later compared, or any transaction data received by the Corporation which is
subsequently deleted as provided in the Procedures shall be adjusted directly between
the parties.
Balance Order Contracts produced in accordance with the Procedures on the

basis of trade data submitted by Members or Qualified Special Representatives
pursuant to Section 1 or 3, as applicable, of this Rule or transaction data submitted by
Special Representatives and Index Receipt Agents pursuant to Section 2 or 4, as
applicable, of this Rule will, as specified in the Procedures, either (i) be entered in the
Balance Order Accounting Operation or (ii) be excluded from the Balance Order
Accounting Operation in which case appropriate receive and deliver security orders will
be issued by the Corporation in connection therewith and such security orders shall
have the same status as security balance orders issued in connection with the Balance
Order Accounting Operation and will be subject to all Rules pertaining to such security
balance orders unless otherwise specified by the Corporation.
CNS Contracts produced in accordance with the Procedures on the basis of

trade data submitted by Members or Qualified Special Representatives pursuant to
Section 1 or 3, as applicable, of this Rule or transaction data submitted by Special
Representatives and Index Receipt Agents pursuant to Section 2 or 4, as applicable, of
this Rule will be entered in the CNS Accounting Operation for settlement as provided in
the Procedures and shall be subject to Rule 11.
Foreign Security Contracts produced in accordance with the Procedures on the

basis of trade data submitted pursuant to this Rule will be entered in the Foreign
Security Accounting Operation as provided in the Procedures.
Notwithstanding the foregoing, Special Trades in Balance Order Securities and

CNS Securities shall not enter the Accounting Operation, but will instead be subject to
the provisions of Section 9 of Rule 11.
64
(RULE 7)
SEC. 6. The Corporation may determine, in its discretion, to accept, from self-
regulatory organizations, as defined in the Securities Exchange Act of l934, and/or
derivatives clearing organizations that are registered or deemed to be registered with
the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act
(either directly or through subsidiary or affiliated organizations1) and/or service bureaus,
initial, or supplemental trade data on behalf of Members for trade recording and input
into the Corporation’s Comparison Operation (with respect to debt securities) or
compared trade data, on behalf of Members for input into the Corporation’s Accounting
Operation provided that a Member is a party to the trade or transaction. In determining
whether to accept trade data from an organization, as described in this Section 6, the
Corporation may require such organization to provide a Cybersecurity Confirmation, as
described in Rule 2B, Section 2A.
Such data shall be in a form acceptable to the Corporation, in its discretion, and
within such time frames as the Corporation may, in its discretion, require. The
Corporation shall deem the report of any such data by any such organization to have
been authorized by the Member on whose behalf the data shall have been reported.
Data reported by any such organization(s) to the Corporation shall not be deemed to be
reported by the Member to the Corporation until such data is accepted by the
Corporation.
A determination by the Corporation to accept data from such organization(s) on

behalf of a Member shall not be deemed to be an approval of such organization(s), or
an assumption by the Corporation of any responsibility or liability for such organization’s
operation or failure to operate, which shall remain solely between the Member and such
organization(s). The Corporation shall be entitled to rely upon any data so submitted
without inquiry into the accuracy or validity of such data. It shall be the responsibility of
the Member to take appropriate corrective action to resolve any differences resulting
from the submission of incorrect data to the Corporation. Acceptance by the
Corporation of data from such organization(s) shall not relieve the Member from, or
alter, amend or modify, any obligations of the Member pursuant to the Corporation’s
Rules.
SEC. 7. All trade data submitted to the Corporation for trade recording pursuant
to Sections 2(b), 3(b) or 6 of this Rule shall be submitted in Real-time, as that term is
defined in Procedure XIII of these Rules, and on a trade-by-trade basis, in the form
executed without any form of “pre-netting” of such trades prior to their submission. The
Corporation shall deem any form of trade summarization, compression, or other form of
netting or practice that combines two or more trades prior to their submission to the
Corporation, or any practice or action designed to contravene this prohibition, as a
violation of this Rule, and this prohibition shall apply to any Member (including any
1
This may include a trade reporting facility that: (i) is affiliated with, and is operated as a facility of, a
self-regulatory organization (SRO), and (ii) the rules and operations of which are the subject of a rule
change of the SRO that has been duly filed with the Securities and Exchange Commission and is
effective.
65
(RULE 7)
Special Representative or Qualified Special Representative) that, directly or indirectly,

engages in such pre-netting.
Trade data submitted to the Corporation for trade recording pursuant to Section
2(b) of this Rule is not subject to the requirements of this Section if (1) the counterparty
to that trade is an Affiliate, as defined in Rule 4A, of the submitting firm on the
Corporation’s records at the time the trade data is submitted; or (2) the trade data is
submitted to facilitate a position movement between two unaffiliated clearing brokers on
behalf of a common client for custody purposes (“Client Custody Movements”).
66
(RULE 8)
RULE 8. BALANCE ORDER AND FOREIGN SECURITY SYSTEMS
SEC. 1. The Corporation will conduct a Balance Order Accounting Operation

based upon Balance Order Contracts as specified in the Procedures pursuant to which
the Corporation will net the deliver and receive obligations of each Member in each
security issue, allot and match the offsetting obligations of Members and prepare and
issue to Members (i) a separate deliver security balance order for each delivery of each
security to be delivered, showing the Settlement Price in respect thereof established by
the Corporation and (ii) a separate receive security balance order offsetting each such
deliver security balance order showing the Settlement Price in respect thereof
established by the Corporation.
SEC. 2. The Corporation will conduct a Foreign Security Accounting Operation

based upon Foreign Security Contracts as specified in the Procedures pursuant to
which the Corporation will issue receive and deliver security orders representing the
daily netted position of each Member with respect to its transactions with another
Member in each Foreign Security.
SEC. 3. The obligation of a Member to receive and pay for securities and the
obligation of a Member to deliver securities pursuant to deliver or receive security
balance orders or security orders shall be fixed at the time such orders are made
available to the Members, although they may not in fact have been received by such
Members.
67
(RULE 9)
RULE 9. ENVELOPE SETTLEMENT SERVICE
SEC. 1. General
The Corporation may, at its facilities (at those locations as it may determine from
time to time as announced via Important Notice) offer a service, to be known as the
Envelope Settlement Service (“ESS”), through which it may receive envelopes, of the
type approved by the Corporation, from Members (each, a “delivering Member”)
addressed to Members (each, a “receiving Member”) on business days. The services
offered by the Corporation through ESS will include the processing and settlement of:
(a) security deliveries and receives and associated charges, (b) money-only settlement-
related charges, and (c) claims for dividends and interest, each of which has been
submitted by Members in accordance with the provisions of these Rules. Such
envelopes will be sorted and made available, at the same facility where received by the
Corporation, to the authorized representatives of the Members to whom they are
addressed as provided in this Section 1. The delivery of envelopes and the related
processing of payments by the Corporation are not guaranteed services of the
Corporation and are subject to reversal as provided in Section 4 of this Rule.
1. Deliveries of envelopes to the Corporation shall be made in accordance with the

schedule from time to time specified by the Corporation.
2. An envelope delivered to the Corporation shall contain only such securities as

permitted by the Corporation from time to time; tickets relating to such securities
contained in the envelope; or such other items as the Corporation may from time
to time permit, including but not limited to, documentation by a delivering Member
necessary for the receiving Member to identify the reason for a money-only
charge, and notices of intent and claim forms associated with claims for
dividends and interest. Envelopes which contain securities other than as
permitted by the Corporation are subject to return by the Corporation to the
delivering Member and the related credit and debit of the payment amount
therefor may be reversed in accordance with Section 4 of this Rule.
3. The envelopes shall be accompanied by a credit list in such form prescribed by

the Corporation. The credit list shall list each of the envelopes delivered with it
and shall show the number of the Member to whom each envelope is addressed
and the total money value, if any, of the items contained in that envelope, and
each credit list shall be totaled. In addition, the envelopes must be accompanied,
in such format as prescribed by the Corporation, with an indicator as to whether
or not the envelope contains a security. Where an envelope contains a security,
the delivering Member must provide the Corporation with identifying information
with respect to the security (including CUSIP or ISIN), and quantity.
Securities may not be comingled in the same envelope with other items permitted
by the Corporation to be processed through ESS. The Corporation may also:
(a) prohibit comingling of any variety of items in a single envelope, and (b) limit
the number of envelopes that may be submitted per credit list, as it determines
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(RULE 9)
from time to time. However, a Member may deliver no more than one security
(defined by CUSIP or ISIN) per envelope. All envelopes delivered through ESS
must also be accompanied with such other information as required by the
Corporation from time to time, including, when applicable, information regarding
OFAC certification.
4. Each separate item in an envelope shall be accompanied by tickets or orders, in

duplicate, containing such information as may be necessary for the receiving
Member to identify the item. An envelope containing more than one item must
also contain an adding machine tape of the money value of the items included in
such envelope. The total shown on such tape must be the same as the total
money value recorded on the credit list for that envelope.
5. All envelopes delivered to the Corporation will be checked against the credit list
which accompanies them to see that each envelope on the credit list has been
received. If the envelopes delivered are properly listed on the accompanying
credit list, the Corporation will stamp the duplicate credit list and make it
immediately available to the delivering Member’s representative making the
delivery. All envelopes listed on a credit list shall be deemed to have been
accepted by the Corporation when the Corporation stamps the duplicate credit
list on which such envelopes are listed, and at the time of such stamping the
envelope shall be deemed for all purposes, subject to the rights of the
Corporation under Section 4 of this Rule and Section 2 of Rule 12, to have been
delivered to the receiving Member, unless any such envelope shall be found by
the Corporation to contain impermissible items, in which case subsection 2 of this
Section 1 shall apply. Prior to the stamping of the credit list, envelopes will be
held by the Corporation for the delivering Member and after stamping for the
receiving Member.
6. The Corporation will sort the envelopes accepted by it and, subject to the rights
of the Corporation under Section 4 of this Rule and Section 2 of Rule 12, will
make such envelopes available to the authorized representatives of the receiving
Members to whom they are addressed through the Corporation’s facilities.
Except as the Corporation may determine to be appropriate or necessary, the
Corporation will not examine the contents of the envelopes nor verify the
payment amounts shown on the credit list, and it shall not be responsible with
respect thereto, except to deliver the envelopes accepted by it to the authorized
representatives of the receiving Members to whom they are addressed.
7. The Corporation when it stamps a credit list is authorized to, and will, credit the
delivering Member’s account with the payment amount shown on such stamped
credit list and debit the receiving Member’s account with the same amount.
8. Each receiving Member shall send to the Corporation at the times on business
days specified by the Corporation and, in addition, at frequent intervals on
business days a representative authorized, pursuant to Rule 27, to receive
envelopes delivered through the Corporation’s facilities.
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(RULE 9)
9. In case of any irregularity or error in an item, the receiving Member may return
such item to the delivering Member outside the Corporation, or through the
service provided under this Rule by putting such item in an envelope and
delivering the envelope in the same manner as provided by this Section 1 for the
delivery by Members, except that the tickets in the envelope and the credit list
accompanying the envelope, which are used in connection therewith, shall bear
the legend “Reclamation”. If such delivery of returned items is to be made
through the Corporation it shall be made on the day received or on the next
business day in accordance with the schedule specified by the Corporation. An
irregularity in an item shall be deemed to exist only when the receiving Member
does not know the delivery, such as deliveries of the wrong securities, deliveries
of the wrong number of shares or units, deliveries for the wrong payment
amount, or deliveries which do not meet the requirements of Rule 44, if
applicable. No irregularity in an item shall be deemed to exist solely by reason of
the delivery having been effected through the Corporation, rather than by another
means, unless the delivering Member and the receiving Member shall have
entered into a prior agreement providing for such delivery by another means or
the rules of a self-regulatory organization, as defined in the Securities Exchange
Act of 1934, require delivery of such item through other means.
10. Payment amounts which the Corporation has agreed to credit to a Member on
account of deliveries made to receiving Members and payment amounts which
the Corporation has agreed to debit to a receiving Member on account of receipts
from delivering Members pursuant to this Section shall be credited or debited
from time to time during each business day and shall be included in the
settlement for that day, pursuant to Rule 12, subject to the rights of the
Corporation pursuant Section 4 of this Rule and Section 2 of Rule 12.
11. The Corporation may enter information relating to ESS securities transactions
into the Obligation Warehouse service where a delivering Member has provided
an OW Control Number (as defined in Procedure IIA).
SEC. 2. The Corporation may provide the services described in Section 1 of this
Rule relating to deliveries and receives of securities in respect of envelopes received by
it from Members at one of its facilities as set forth in Section 1 which envelopes contain
securities and are to be delivered to another Member at a facility other than the facility
at which the envelope is received (an “intercity delivery”). Such services shall be limited
to such securities, tickets and items as specified in subsection 2 of Section 1and any
other Rules or Procedures of the Corporation with respect thereto, and shall be
provided in the same manner as specified in Section 1 of this Rule, except that:
1. Each envelope delivered to the Corporation which involves an intercity delivery

must be sealed.
2. The value of the securities contained in all envelopes which involve intercity
deliveries by a Member on a single day shall not exceed the amount of the
insurance provided by the delivering Member’s blanket bond which covers such
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(RULE 9)
securities, or, in any event, the amount of the insurance provided by the
Corporation’s blanket bond which covers such securities.
3. The provisions of paragraphs 5, 6 and 7 of Section 1 of this Rule to the contrary

notwithstanding, if an envelope which involves an intercity delivery is properly
sealed, the Corporation will stamp the duplicate credit list as received and make
it immediately available to the party making the delivery. When the Corporation’s
facility at which the envelope is to be received (the “receiving facility”) receives
the envelope and the accompanying credit list, it shall stamp such credit list and
make the envelope available to the receiving party. A sealed envelope with its
accompanying credit list shall be deemed to have been accepted by the
Corporation when stamped at the facility at which the Corporation receives it
from the delivering party (the “delivering facility”). An envelope shall be deemed,
subject to subsection 2 of Section 1 and to the rights of the Corporation under
Section 4 of this Rule and Section 2 of Rule 12, to have been delivered to the
receiving party as of the time when the Corporation stamps the credit list at the
receiving facility.
Before the Corporation has stamped the accompanying credit list at the receiving
facility, it will hold the envelope as the property of the delivering party and, after
such stamping, it will hold the envelope as the property of the receiving party.
The Corporation shall be responsible for an envelope up to the amount indicated

on the accompanying credit list between the time the Corporation has stamped a
copy of the credit list attached to the envelope at the delivering facility and the
time at which the envelope is deemed, subject to the rights of the Corporation
under Section 2 of Rule 12 and Section 4 of this Rule, delivered to the receiving
party if:
(a) the seal on the envelope is broken; or
(b) the sealed envelope with its accompanying credit list is lost, stolen,
destroyed or the like; provided, however, that in no event shall the Corporation
be liable for any amount in excess of the value indicated on the accompanying
credit list.
In any event, it shall be the responsibility of the delivering party to furnish the
Corporation with certificate numbers and such other information as the
Corporation shall deem appropriate.
4. The Corporation, after it has stamped a credit list at the receiving facility, will
credit the delivering party’s account with the amount shown on such stamped
credit list and debit the receiving party’s account with the same amount. Such
debits and credits shall be included in the settlement for the day on which such
credits and debits are made.
5. Returned items which are received by the Corporation prior to the final
reclamation or delivery times designated by the Corporation, and appropriate
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(RULE 9)
debits and credits therefor, will be entered on the same day they are received in
the case of a reclamation.
SEC. 3. In the event a Member receives an envelope that contains only part of
the securities described by the accompanying ticket or order and the Member does not
reclaim the envelope within the time frame prescribed by the Corporation, the Member
may request the delivering Member to furnish certificate numbers of the missing
securities.
In the event a receiving Member does not receive an envelope or receives an

envelope that does not contain any securities and the receiving Member determines
that he has been charged for the delivery, the receiving Member may request the
delivering Member to identify the securities and furnish certificate numbers related to
the delivery.
Requests for certificate numbers should be made promptly.
If a request is made on the day of delivery, the delivering Member must furnish
certificate numbers no later than the end of the second business day following delivery.
If a request is made on the day following delivery or any subsequent day, the delivering
Member must furnish certificate numbers no later than the end of the first business day
following the request. If certificate numbers are not furnished to the receiving Member
within the requisite time frame and if the Corporation determines that the receiving
Member’s request was made promptly, the charges related to the delivery will be
subject to reversal.
Sec. 4. Reversal of Payment Amount Credits and Debits.
1. The Corporation may reverse, in whole or in part in its sole discretion, any
payment amount credited to a delivering Member and debited to a respective
receiving Member with respect to any envelope delivery under this Rule 9 if, on
any business day:
(a) An envelope has been found to contain anything other than permitted
securities, tickets relating thereto and other items, as provided pursuant to this
Rule, or that the contents of an envelope are otherwise inappropriate for delivery
through the facilities of the Corporation; or
(b) The Corporation reasonably believes that the respective receiving

Member will not pay or has not paid the payment amount in respect of an
envelope, whether by net settlement or otherwise, and regardless of whether the
receiving party that is, or is acting on behalf of, the receiving Member has taken
delivery of the envelope prior to such reversal; or
(c) If the Corporation ceases to act for the delivering Member, the receiving
Member or both.
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(RULE 9)
2. The delivering Member and the receiving Member shall resolve any disputes or
claims with respect to any such reversal outside the Corporation, including, but
not limited to, any dispute arising because the receiving Member has taken
delivery of the envelope prior to the reversal. If the receiving Member has not, at
the time of a reversal of payment, taken delivery of the envelope, the Corporation
shall return the affected envelope to the appropriate delivering Member.
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(RULE 10)
RULE 10. FAILURE TO DELIVER ON SECURITY BALANCE ORDERS
If a Member shall not make delivery of all the Cleared Securities to be delivered
pursuant to a security balance order by the time on business days specified by the
Corporation, the Member to whom the Cleared Securities are to be delivered may cause
such securities as are not so delivered to be bought-in as provided for in the rules of the
applicable marketplace.
74
(RULE 11)
RULE 11. CNS SYSTEM
SEC. 1. (a) The CNS System is a system for accounting for and settling CNS
Contracts whereby a Member’s Settling Trades in CNS Securities are netted so that
with respect to each issue of CNS Securities in which the Member has activity, the
Member is either obligated to deliver units of that security (a “Short Position”) or is
entitled to receive units of that security (a “Long Position”), the delivery obligation being
to the Corporation and the right to receive being against the Corporation as more
specifically set forth in paragraphs (b) and (c) below; whereby Short Positions or Long
Positions outstanding in respect of prior activity are brought forward on a perpetual
basis and, together with stock dividends or distributions payable or receivable in respect
of Short Positions or Long Positions, miscellaneous entries and CNS Securities
delivered to or by Members, are merged, netted and carried forward, leaving in each
Member’s account all transactions which have failed in delivery or receipt; and whereby
the contract money of all Settling Trades is netted with cash dividends or distributions
receivable and payable and increases and decreases in obligations to the Clearing
Fund, if applicable, and miscellaneous items resulting in the closing CNS System
money balance for each Member which, for the purpose of computing the CNS System
money settlement (including marking any Long or Short Position of a Member at the
close of business to the Current Market Price), is adjusted by the net market value of all
Closing Positions.
(b) Each obligation of any Member (the “Receiving Member”) to pay for
securities delivered to that Member by another Member (the “Delivering Member”)
under a transaction which (i) has been compared or reported by the Corporation and (ii)
will be subject to the CNS Accounting Operation (each a “CNS Transaction”), and each
obligation of any Delivering Member to deliver securities to any Receiving Member
under any such transaction, shall be assumed by the Corporation at the point in the
clearance and settlement process determined as set forth in paragraph (c) below.
Simultaneously with the assumption of any such obligations by the Corporation, the
related rights of the Receiving Member to receive securities from the Delivering Member
and the related rights of the Delivering Member to receive payment from the Receiving
Member for securities delivered shall be assigned to the Corporation. The assumption
of these obligations and the assignment of these rights with respect to any CNS
Transaction places the Corporation between the Delivering Member and the Receiving
Member, creating an obligation on the part of the Delivering Member to deliver
securities to the Corporation and on the part of the Receiving Member to receive and
pay for securities delivered by the Corporation, as well as an obligation on the part of
the Corporation to receive and pay for securities delivered by the Delivering Member
and to deliver securities to the Receiving Member.
(c) The assumptions and assignments referred to in the paragraph (b) of this
Section for any CNS Transaction of any Member shall occur when the Corporation’s
guarantee to complete the transaction becomes effective. For purposes of the
preceding sentence, the Corporation shall be deemed to have guaranteed completion of
a CNS Transaction when the clearance and settlement process for the transaction has
reached the stage at which the Corporation will complete the CNS Accounting
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(RULE 11)
Operation for such transaction notwithstanding that the Corporation may cease to act
for the Member. This stage may be designated in the Corporation’s Rules or
Procedures or in any interpretation or statement of policy relating thereto, and it may be
different for different types of transactions.
(d) Whenever the Corporation shall be required to exit or delete any CNS
Transaction from the CNS System, the obligation to deliver and/or the obligation to pay
for securities delivered, as well as the correlative rights to receive securities and/or to
receive payment for securities delivered, shall be further assumed by and assigned to
such Members as may be designated by the Corporation, in accordance with its Rules
and Procedures, in the appropriate Balance Orders, security orders, reports or as
otherwise may be appropriate.
(e) All rights and liabilities with respect to any CNS Transaction other than those
specifically assigned and assumed by the Corporation as set forth in paragraph (b) of
this subsection shall be retained by the Members who are the original contra-parties to
the transaction as compared or reported by the Corporation. It is specifically
understood that the rights and liabilities retained by such Members shall not include
ownership rights in the securities delivered to the Corporation pursuant to CNS
Transactions (all of which ownership rights shall be in the Corporation) and any other
rights and liabilities that cannot be legally separated from the rights and liabilities
assigned and assumed by the Corporation.
SEC. 2. The Corporation will maintain a position for each Member in each CNS
Security for which the Member has a Short Position (reflecting units which the Member
is obligated to deliver to the Corporation) or a Long Position (reflecting units which the
Member is entitled to receive from the Corporation).
SEC. 3. Pursuant to the instructions of each Member given in the manner

prescribed in the Procedures and on the basis of information provided to the Member by
the Corporation and information otherwise available to the Member, the Corporation will
instruct the Qualified Securities Depository designated by the Member in the manner
prescribed by the Corporation to deliver to the Corporation’s account at the Qualified
Securities Depository on each Settlement Date CNS Securities credited to the
Member’s account for the purpose of reducing or eliminating Short Positions of the
Member; and the Corporation will instruct the Qualified Securities Depository to deliver
from the Corporation’s account at the Qualified Securities Depository, in accordance
with the priorities specified in the Procedures, CNS Securities so received into the
Corporation’s account at the Qualified Securities Depository to the Member necessary
to reduce or eliminate Long Positions of the Member. Notwithstanding the foregoing,
deliveries and receipts of securities may also be effected in such other manner as may
be prescribed in the Procedures.
SEC. 4. On each settlement day the Corporation will issue to each Member
reports which will show each CNS position in each security due to settle that day and on
the next settlement day and such other information as the Corporation may deem
advisable. With respect to obligations due to settle on the next settlement day, the
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(RULE 11)
obligation of a Member to receive and pay for CNS Securities and the obligation of a
Member to deliver CNS Securities pursuant to the CNS Contracts shall be fixed at the
time the applicable report is made available to the Member, although it may not in fact
have been received by such Member. With respect to obligations due to settle that day,
the obligation of a Member to receive and pay for CNS Securities and the obligation of a
Member to deliver CNS Securities shall be fixed at each time a net settling position is
determined for that Member in accordance with the CNS processing and information in
respect of that new net settling position is made available.
SEC. 5. (a) On the morning of each settlement day the Corporation will issue to
each Member a Cash Reconciliation Statement showing the amount receivable or
payable by the Member in respect of the CNS System for that settlement day on the
basis of settlement activity completed prior to the preparation of the Cash Reconciliation
Statement. On the morning of each settlement day the Corporation will also issue to
each Member a statement which will reflect the receipts and deliveries of securities in
settlement of Long or Short Positions for that date which shall have been completed
prior to the preparation of the Cash Reconciliation Statement. Thereafter on such
settlement day the Corporation will issue to each Member a statement or statements of
other receipts and deliveries of securities in settlement of Long or Short Positions which
are completed on that date. The Member, on the basis of such statements, shall
determine the final amount receivable or payable by the Member in respect of the CNS
system for that settlement day in the manner specified in the Procedures.
(b) On each settlement day the Corporation will issue to each Member an
accounting summary which will reflect each CNS Security in which there was activity or
in which the Member had an opening Long or Short Position, the Member’s opening
Long or Short Position, the Member’s activity in such CNS Securities for that day, the
transactions into and out of its Qualified Securities Depository account or receipts and
deliveries otherwise effected as described in Section 3 of this Rule or in the Procedures,
the Closing Position for that day in each CNS Security and the Closing Position valued
at the Current Market Price, resulting in a net long market value or short market value in
CNS Securities. The accounting summary also will show the Member’s money activity
for that settlement day.
SEC. 6. The Corporation may, when it deems it necessary for the protection of
Members in view of the price fluctuations in or volatility or lack of liquidity of any security
require all Members to make additional mark-to-the-market payments on any Long or
Short Position in respect of such security or to make mark-to-the-market payments in
respect of all transactions in such security prior to the Settlement Date for such
transaction.
SEC. 7. In the event a Member has a Long Position in a CNS Security, the
Member (the “originator”) may demand immediate delivery thereof by submitting, at or
before the time specified in the Procedures, to the Corporation a Buy-In Intent, in the
form prescribed by the Procedures. The originator will be given priority for CNS
allocation, in the manner prescribed by the Procedures, in respect of the allocation by
the Corporation of securities covered by the Buy-In Intent, in the settlement on the
77
(RULE 11)
settlement day prior to the expiration of the buy-in and if the securities are not allocated
to the originator in that settlement, in the settlement on the settlement day the buy-in
expires. The processing of a Buy-In Intent through the delivery of CNS Retransmittal
Notices to Members with Short Positions shall be accomplished in accordance with
Section J of Procedure VII, and the subsequent execution of such buy-in by the
originator, as necessary, shall be accomplished in accordance with Procedure X.
With respect to buy-ins of municipal securities, in lieu of receiving priority for CNS
allocation, the filing of a Buy-In Intent will be treated as an instruction to remove the
securities subject to the buy-in from the CNS System, which shall be accomplished in
accordance with the procedures in Section J of Procedure VII.
SEC. 8. After receipt of notice by the Corporation that the issuer of a CNS
Security has declared a stock or cash dividend on such security or has authorized a
stock-split or a distribution of rights or other property with respect to a CNS Security, the
Corporation will issue a Record Date Report which will show each Member’s record
date Long or Short Position in the security at the close of business on the Record Date
(herein called “Record Date Position”).
(a) On the payable date for a cash dividend (or, if the payable date is not a
settlement day, then on the settlement day immediately following such payable date)
each Member shall be obligated to pay an amount equal to the dividend on any Short
Position included in the Member’s Record Date Position and shall be entitled to receive
an amount equal to the dividend on any Long Position included in the Member’s Record
Date Position. Such amounts, when debited or credited, as appropriate, may be
adjusted as provided for under Section G of Procedure VII.
(b) On the payable date for a stock dividend (or, if the payable date is not a
settlement day, then on the settlement day immediately following such payable date),
the securities position of each Member shall be adjusted to reflect the Member’s
obligation to deliver the amount of the stock dividend on any Short Position included in
the Member’s Record Date Position to the Corporation or to reflect the Member’s right
to receive the amount of the stock dividend on any Long Position included in the
Member’s Record Date Position from the Corporation. Fractional shares shall not be
added to any Short or Long Position in respect of any stock dividend or other
distribution. In lieu thereof, the Corporation shall credit or debit, as the case may be, an
amount of cash in respect of fractional shares based on the Current Market Price of the
security.
(c) The procedure set forth in paragraph (b) shall apply to distributions other
than dividends, provided, however, that in the case of stock-splits or distributions in
respect of which a CNS Security is traded with due bills after the record date for such
stock-split or distribution, the securities position of each Member in such CNS Security
shall be adjusted to reflect the Member’s obligation to deliver the amount of the stock
split or distribution on its Short Position at the close of business on the due bill
redemption date (the “Due Bill Redemption Date”) to the Corporation or to reflect the
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(RULE 11)
Member’s right to receive the amount of the stock-split or distribution on its Long
Position at the close of business on the Due Bill Redemption Date from the Corporation.
(d) An “as of” trade entered at least two settlement days prior to the payable
date in respect of a cash or stock dividend or other distribution not trading with due bills
after the record date, provided the original trade date for the trade is before the ex-
dividend date for such dividend, will be subject to the same procedures as those set
forth above; an “as of” trade entered at least one settlement day prior to the Due Bill
Redemption Date in respect of other distributions which trade with due bills after the
record date will be subject to the same procedures as those set forth above. Any such
trades entered less than two settlement days or one business day, as the case may be,
prior to the payable date or the Due Bill Redemption Date shall not be accorded
dividend protection in the CNS System.
(e) When a dividend or distribution in securities which are not CNS Securities is
declared on a CNS Security or rights which are not CNS Securities are issued in
respect of a CNS Security, the items will be reported to each Member having a Long or
Short Position in the CNS Security on the close of business on Record Date. Such
dividends, distributions or rights shall not, however, be settled in the CNS System; the
Corporation shall match the Short and Long Positions in respect thereof in that manner
which the Corporation in its discretion may provide and issue receive and deliver
security orders in respect thereof, which orders shall have the same status as security
balance orders issued in connection with the Balance Order Accounting Operation and
will be subject to those provisions of these Rules pertaining to such security balance
orders unless otherwise specified by the Corporation.
(f) Dividends which may be paid in the form of securities or cash at the election
of the holder will be processed in the manner prescribed in the Procedures.
(g) Notwithstanding the foregoing provisions of this subsection 8, the

Corporation may adopt any procedures deemed appropriate by it in respect of any
transaction to which such provisions are not fully applicable.
SEC. 9. A trade in a CNS Security or Balance Order Security may be designated

a Special Trade in which case it will be cleared and settled on a Member-to-Member
basis; the parties to the Special Trade shall notify the Corporation at the time and in
manner specified in the Procedures, and the Corporation shall issue receive and deliver
security orders in respect thereof, which orders shall be settled by the parties directly.
To the extent such Special Trade is for a security that is eligible for book-entry transfer
on the books of a Qualified Securities Depository, and the deliverer has filed with the
Corporation a standing instruction, the Corporation will issue an instruction on file to a
Qualified Securities Depository specifying the quantity of such security to be delivered
from the deliverer to the receiver and the money settlement amount related thereto.
The Corporation may enter obligations arising from such Special Trades into the
Obligation Warehouse service in accordance with timeframes as determined by the
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(RULE 11)
SEC. 10. In the event a CNS Security is removed from the list of CNS Securities
pursuant to Rule 3, the Corporation shall, on the first settlement day on which such
securities are not deliverable through the facilities of all Qualified Securities
Depositories and on each subsequent settlement day for any CNS Contracts entered in
the CNS Accounting Operation prior to the effective date of removal, or upon such
removal, match with respect to each such settlement day opening Short or Long
Positions in such security in that manner which the Corporation in its discretion may
provide, issue receive and deliver security orders in respect thereof for any such day,
which orders shall have the same status as security balance orders issued in
connection with the Balance Order Accounting Operation and will be subject to those
provisions of these Rules pertaining to such security balance orders unless otherwise
specified by the Corporation and close out such positions in the CNS System.
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(RULE 12)
RULE 12. SETTLEMENT
SEC. 1. Settlement of money payments with respect to transactions or matters

covered by these Rules, shall be made as provided in this Rule or, with respect to
settlement of money payments with respect to the AIP Service (“AIP Settlement”), as
provided in Rule 53. The Corporation shall debit or credit itself, Members, Mutual
Fund/Insurance Services Members, Insurance Carrier/Retirement Services Members,
Fund Members and AIP Members with the amounts payable and receivable in
accordance with the provisions of such Rules. AIP Settlement shall not be subject to
the remaining provisions of this Rule 12 and shall be subject to the provisions of Rule
53.
At such time as determined by the Corporation, the Corporation shall produce,

each business day, a settlement statement which will reflect the debits and credits
which have been entered into a Member’s, Mutual Fund/Insurance Services Member,
Insurance Carrier/Retirement Services Member’s or Fund Member’s (each hereinafter
referred to as a “participant” for purposes of this Rule 12) account with respect to
matters or transactions covered by these Rules, plus debits or credits, if any, reflecting
amounts that the Corporation will pay to or receive from any entity under any Clearing
Agency Cross-Guaranty Agreement, and shall reflect a net amount payable to or
payable by the Corporation. Each such participant shall settle, by such time as
established by the Corporation, through a Settling Bank (unless the Corporation permits
otherwise), by Federal Funds payment in the manner provided in the Procedures, the
net amount reflected on such settlement statement.
A participant will be deemed to have failed to settle when the Corporation

receives a Refusal from such participant’s Settling Bank and the participant has failed to
pay its Net Debit Balance (or it has failed to pay its Net Debit Balance if permitted by the
Corporation to settle otherwise than through a Settling Bank), or when its Settling Bank
has failed to pay the Settling Bank’s net-net debit balance by the time specified by the
If the Corporation does not produce such settlement statement each such
participant shall settle with the Corporation by a Federal Funds wire transfer, by
determining the amount payable to or by such participant as reflected on such
participant’s records. A participant that fails to timely settle may be subject to action by
the Corporation pursuant to Rule 46 or 48. Such participant shall also be subject to
such fines as the Corporation deems appropriate pursuant to these Rules. Any
difference between said amount and the actual net settlement amount which is not
settled on that business day, shall be settled on the next business day by Federal
Funds payment by such time as determined by the Corporation.
Notwithstanding any other provisions of these Rules, the Corporation maintains

the right to require a participant to furnish to the Board of Directors all documents relied
upon by such participant in determining amounts payable to or by the Corporation in
respect of this Rule.
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(RULE 12)
In the event the Board of Directors determines that such books, records and
documents do not appropriately support amounts tendered pursuant to this Rule, such
participant shall be subject to action by the Corporation pursuant to Rule 46 or Rule 48.
At such time as determined by the Corporation, the Corporation shall also

produce, each business day, a settlement statement which shall reflect the information
contained in that business day’s prior settlement statement, any adjustments to those
amounts and the payments made to or by the Corporation.
SEC. 2. Notwithstanding any provision in these Rules to the contrary, until the
effective time (as defined below):
(a) any action taken by the Corporation or a Qualified Securities Depository

pursuant to an instruction given by the Corporation to deliver securities from the
Corporation’s account at a Qualified Securities Depository to the account of a Member
at a Qualified Securities Depository by book- entry on a business day for which payment
is to be made by the Member to the Corporation (a “Depository Instruction”) shall,
notwithstanding the nature of such action, not constitute an appropriate entry on the
books of the Qualified Securities Depository specifically identifying the securities so as
to constitute a delivery thereof or reducing the account of the Corporation and
increasing the account of the Member by the amount of the obligation or the number of
shares or rights subject to the instruction;
(b) any receipt of securities by a Member pursuant to Rule 9 on such business

day for which payment is to be made by the Member to the Corporation (a “physical
receipt”) shall, whether or not the securities subject to the physical receipt remain in the
possession of the Corporation, not constitute a voluntary transfer of possession of such
securities by the Corporation to the Member; and
(c) any action taken by the Corporation pursuant to an instruction given to the
Corporation by a Member to move a position to its Fully-Paid-For Subaccount shall not
constitute an appropriate entry on the Corporation’s books so as to constitute such
movement.
The “effective time” referred to in the foregoing sentence shall be the time that is
(A) the earlier of (i) the time it is finally determined by the Corporation on such business
day that the Member’s Gross Credit Balance for such business day equals or exceeds
his Gross Debit Balance for such business day, or (ii) if the Member’s Gross Debit
Balance exceeds his Gross Credit Balance and the Member settles through a Settling
Bank, the time as finally determined by the Corporation, that the Settling Bank
representing such Member has a net-net credit balance or (iii) if the Member’s Gross
Debit Balance exceeds his Gross Credit Balance, the time as finally determined by the
Corporation that the Member has paid its Net Debit Balance or, if the Member settles
through a Settling Bank, the Settling Bank representing such Member has settled its
net-net debit balance; and (B) when the Corporation has no obligation on account of a
receive or deliver obligation of a Member under the terms of any Clearing Agency Cross
Guaranty Agreement which creates an obligation on the part of the Corporation
82
(RULE 12)
irrespective of whether the Member is in a net credit or net debit position with the
Corporation. In the event the Corporation, prior to the effective time, ceases to act for
the Member with respect to transactions generally pursuant to Rule 46 or Rule 48, the
Corporation shall have the right
(A) in respect of securities subject to a Depository Instruction to take such actions as

permitted under the terms of any Clearing Agency Cross-Guaranty Agreement or
as otherwise specified in these Rules and
(B) in respect of securities subject to a physical receipt, to retain possession of such

securities and sell out such securities in the manner specified in Section 3 of this
Rule provided, however, that if
(i) in the case of a Depository Instruction, any security subject thereto is
(A) transferred out of the Member’s account at the Qualified Securities

Depository by book-entry or
(B) physically withdrawn by the Member from his account at the Qualified
Securities Depository and physically delivered by the Member to a third
party for value, or
(ii) in the case of a physical receipt and physical possession by the Member, any
security is physically delivered by the Member to a third party for value, such
security shall be deemed for all purposes to have been delivered by the
Corporation to the Member; and provided, further, that, to the extent that a
Member shall obtain physical possession of any such security by physical
withdrawal thereof from the Qualified Securities Depository or receipt from the
Corporation or obtain control of any such security, the Member shall hold the
same in trust for the benefit of the Corporation and the Corporation shall have the
right to reclaim possession thereof from the Member and if the Member shall
transfer or pledge the securities to a third party for value by a book-entry
transaction on the books of the Qualified Securities Depository or by a physical
delivery of securities of which it has obtained physical possession, the
Corporation shall have the right to reclaim, and shall be entitled to, any proceeds
obtained by the Member as a result thereof. Notwithstanding the foregoing, the
Corporation shall not have the right to instruct a Qualified Securities Depository
to retain securities pursuant to clause (A) of the foregoing sentence until the
Qualified Securities Depository has effected any retention or sale which the
Qualified Securities Depository elects to effect pursuant to the rules of the
Qualified Securities Depository or the Qualified Securities Depository elects not
to effect any such retention and then the Corporation’s right to instruct the
Qualified Securities Depository to retain securities pursuant to said clause (A)
shall be limited to instructing the Qualified Securities Depository to retain such
amount of securities as shall not reduce the amount of securities of any issue
remaining in the Member’s account below the Minimum Amount (as defined in
the rules of the Qualified Securities Depository). In the event a Settling Bank
83
(RULE 12)
which represents a Member with a Net Debit Balance, which Settling Bank has a
net-net credit balance or has paid its net-net debit balance to the Corporation
prior to such time as the Corporation ceases to act for such Member with respect
to transactions generally pursuant to Rule 46 or Rule 48, the Corporation shall
thereafter (a) instruct the Qualified Securities Depository to transfer the securities
covered by any Depository Instruction from the Corporation’s account at the
Qualified Securities Depository to the Member’s account at the Qualified
Securities Depository by book-entry and such instruction shall constitute an entry
on the books of the Qualified Securities Depository reducing the account of the
Corporation at the Qualified Securities Depository and increasing the account of
the Member at the Qualified Securities Depository by the amount of the
obligation or the number of shares or rights subject to the instruction, and (b)
deliver the securities covered by any physical receipt to the Member and
possession of any securities shall be deemed to have been voluntarily
transferred by the Corporation to the Member, and the Corporation shall make
appropriate adjustments in the accounts of the Members to reflect such
transactions.
SEC. 3. In the event the Corporation shall sell any securities pursuant to any
Clearing Agency Cross-Guaranty Agreement or these Rules, such sale may be made in
any available market or at public auction or by private sale, including the sale to a
Member or Members having Long Positions in the CNS System, and may be made
without further demand or notice to the Member. If the sale is made on any market, or if
the sale is at public auction, the Corporation may purchase the securities sold for its
own account. The Corporation shall retain the Gross Credit Balance of the Member for
the business day on which the instruction to deliver was given and shall, upon receipt of
the proceeds of the sale of such securities, apply the Gross Credit Balance and such
proceeds to the payment of the Member’s Gross Debit Balance for such business day
and any surplus shall be credited to the account of the Member with the Corporation.
SEC. 4. Any action taken by the Corporation or a Qualified Securities Depository

pursuant to an instruction given by the Corporation or a Member to the Qualified
Securities Depository to deliver securities from the Member’s account at the Qualified
Securities Depository to the Corporation’s account at the Qualified Securities Depository
on a business day for which payment is to be made by the Corporation which does not
become effective under the rules of the Qualified Securities Depository shall not result
in a reduction in the Member’s Short Position in the CNS System in the amount of such
securities. If the amount of money to be paid to the Member in respect of such an
attempted delivery shall have been credited to the Member’s money account with the
Corporation, the Corporation may deduct such amount from the Member’s Gross Credit
Balance for such business day (the “withheld amount”) and may apply such withheld
amount to the purchase of equivalent securities for delivery to the Qualified Securities
Depository in order to eliminate any Short Position of the Corporation in its account at
the Qualified Securities Depository and, prior to such purchase, may upon demand of
the Qualified Securities Depository, pay the withheld amount to the Qualified Securities
Depository for its retention subject to return to the Corporation upon the Corporation’s
delivery to the Qualified Securities Depository of the purchased securities. Such
84
(RULE 12)
securities may be purchased by the Corporation in any available market or by private

purchase, including purchase from the Qualified Securities Depository. If the purchase
price of such securities is less than the withheld amount, the difference between the
purchase price and the withheld amount shall be credited to the account of the Member
with the Corporation. If the purchase price of such securities is more than the withheld
amount, the difference between the purchase price and the withheld amount shall be
debited to the account of the Member with the Corporation.
SEC. 5. Notwithstanding any provision in these Rules to the contrary, for so long
as any Clearing Agency Cross-Guaranty Agreement shall be in effect, any net amount
payable or balance due to a Member under this Rule 12 (hereinafter a “Net Payment
Amount”) shall, to the extent and under the circumstances specified in such Clearing
Agency Cross-Guaranty Agreement, take into account amounts owed by such Member
to any Cross-Guaranty Party and the Corporation shall apply against any Net Payment
Amount due to a Member any amounts owed by such Member to such Cross-Guaranty
Party in accordance with the terms of the relevant Clearing Agency Cross-Guaranty
Agreement. A Member’s entitlement to receive any Net Payment Amount from the
Corporation shall be limited to any amount remaining after application of settlement
payment balances in accordance with such Clearing Agency Cross-Guaranty
Agreement and may be satisfied by payment to the Member from the Corporation or a
Cross-Guaranty Party.
SEC. 6. Notwithstanding any agreement between the Corporation and the

participant to the contrary, the Corporation shall have the right at any time and from time
to time to aggregate and net all or any balances due from the Corporation against all or
any balances due to the Corporation.
85
(RULE 13)
RULE 13. EXCEPTION PROCESSING
Notwithstanding any provisions in these Rules and Procedures to the contrary, in

the event that a security may not otherwise be eligible for processing through the CNS,
Balance Order or other system, the Corporation, in its sole discretion, may adopt, from
time to time, procedures deemed appropriate for the processing of such security. Any
such procedures shall be promptly communicated to Members by the Corporation and
the Members shall be bound by the procedures set forth in such notice as fully as
though such procedures were now a part of the Rules and Procedures of the
Corporation. Each such notice shall be effective only for the security covered therein.
86
(RULE 14)
RULE 14. TRANSFER TAXES
SEC. 1. The Corporation may accept New York State Stock Transfer Tax reports
and remittances from Members pursuant to the provisions of the New York State Tax
Law and the regulations promulgated thereunder. Remittances shall be forwarded to
the New York State Stock Tax Commission on behalf of the Member.
SEC. 2. The Corporation shall charge each Member’s settlement account the
amount of the New York State Stock Transfer Tax indicated on reports filed by the
Member on its own behalf.
SEC. 3. New York State Stock Transfer Tax credits received by the Corporation
shall be returned to the Member in accordance with the instructions of the New York
State Tax Commission.
87
(RULE 15)
RULE 15. ASSURANCES OF FINANCIAL RESPONSIBILITY AND

OPERATIONAL CAPABILITY
SEC. 1. The Corporation shall have the authority to examine the financial
responsibility and operational capability of any Member or Limited Member or any
applicant to become such, to determine whether the requisite standards of financial
responsibility and operational capability are met. In conducting such examinations, the
Corporation may require a participant or applicant to furnish such information, to make
its books and records available and to provide sworn or unsworn testimony, as will be
sufficient, in the opinion of the Corporation, to demonstrate the financial responsibility
and operational capability of the participant. In connection with such examinations, the
Corporation may also require testimony from the employees of the participant or
applicant under examination or from any other person and may request and receive
records, reports or other information as may be relevant to the matter under
examination from any other self-regulatory organization (as defined by Section 3(a)(26)
of the Securities Exchange Act of 1934, as amended) or other examining authority or
regulator having authority to examine, regulate or license such participant or applicant.
SEC. 2. (a) Each Member or Limited Member, or any applicant to become such,
shall furnish to the Corporation such adequate assurances of its financial responsibility
and operational capability as the Corporation may at any time or from time to time deem
necessary or advisable in order to protect the Corporation, its participants, creditors or
investors, to safeguard securities and funds in the custody or control of the Corporation
and for which the Corporation is responsible, or to promote the prompt and accurate
clearance, settlement and processing of securities transactions. Upon the request of a
participant or applicant, or otherwise, the Corporation may choose to confer with the
participant or applicant before or after requiring it to furnish adequate assurances
pursuant to this Rule.
(b) Adequate assurances of the financial responsibility or operational capability

of a participant or applicant to become such, as may be required pursuant to these
Rules and Procedures, may include, but shall not be limited to, as appropriate under the
context of the participant’s use of the Corporation’s services:
(i) additional reporting by the participant (or by the entity providing a

guarantee) of its financial or operational condition at such intervals and in
such detail as the Corporation shall determine;
(ii) entering into agreements concerning the provision of operational support

services by an entity acceptable to the Corporation;
(iii) restrictions on the participant’s use of the Corporation’s services;
(iv) increased Clearing Fund deposits (including additional amounts required

in respect of trade activity received by the Corporation after calculation of
the applicable Required Fund Deposit);
88
(RULE 15)
(v) additional payments to the Corporation in such amounts as may be

determined by the Corporation each morning reflecting a percentage of up
to 100 percent of the participant’s (i) average amount of total daily net
debit positions or (ii) morning gross debit activity;
(vi) delivering securities to the Member only against immediate payment by

the Member to the Corporation; and
(vii) assurances as may be required pursuant to the Corporation’s Guidelines

and/or Procedures.
SEC. 3. Any information furnished to the Corporation pursuant to this Rule shall
be held in the same degree of confidence as may be required by law or the rules and
regulations of the appropriate regulatory body having jurisdiction over the participant or
applicant or which relate to the confidentiality of records, to the extent permitted by law,
rule or regulation.
SEC. 4. A participant’s failure to furnish information and otherwise comply with

the requirements of this Rule may subject the participant to the imposition of a fine
pursuant to Rule 17, restriction on access to the Corporation’s services pursuant to Rule
46 or disciplinary proceedings pursuant to Rule 48, amongst other rights of the
Corporation as provided under these Rules.
89
(RULE 16)
90
(RULE 17)
RULE 17. FINE PAYMENTS
The Corporation may impose a fine on a Member or Limited Member pursuant to

these Rules. Fines shall be payable in the manner and at such time as determined by
the Corporation from time to time.
91
(RULE 18)
RULE 18. PROCEDURES FOR WHEN THE CORPORATION

DECLINES OR CEASES TO ACT
SEC. 1. When the Corporation has declined or ceased to act for a Member,
Mutual Fund/Insurance Services Member, Municipal Comparison Only Member,
Insurance Carrier/Retirement Services Member, TPA Member, TPP Member,
Investment Manager/Agent Member, Fund Member, Data Services Only Member or AIP
Member (each hereinafter referred to as a “participant” for purposes of this Rule 18)
pursuant to Rule 46, it shall provide participants with notice pursuant to the provisions of
Section 3 of Rule 45.
SEC. 2. (a) Except as otherwise may be determined by the Board of Directors

the following transactions of a Member for which the Corporation has declined or
ceased to act shall be excluded from all operations of the Corporation applicable to
such transactions:
(i) any CNS trade which, at the time the Corporation declined or ceased to act
for such Member, was not guaranteed by the Corporation pursuant to Addendum
K;
(ii) any Balance Order trade which, at the time the Corporation declined or
ceased to act for such Member, was not guaranteed by the Corporation pursuant
to Addendum K;
(iii) any security orders issued in respect of Special Trades and transactions in
Foreign Securities;
(iv) any Long and Short Positions resulting from OW Obligations of the Member,
in whole or in part, that were entered into the CNS Accounting Operation;
(v) any cash adjustment relating to OW Obligations of the Member forwarded to

settlement in accordance with the Obligation Warehouse procedure; and
(vi) any uncompleted ACATS transaction in accordance with Rule 50.
Any transactions so excluded shall be settled between the parties and not
through the Corporation.
(b) All CNS transactions and Balance Order transactions not excluded pursuant
to paragraph (a) of this Section shall be handled as provided for in this Rule, or, if
applicable, as may otherwise be provided for in these Rules and Procedures.
SEC. 3. (a) Notwithstanding any other provision of this Rule, promptly after the
Corporation has declined or ceased to act for a Member, the Corporation shall attempt
to complete, in accordance with the provisions of this Section, the open RVP/DVP
Transactions of such Member. The Corporation shall notify the relevant RVP/DVP
Customer and the trustee or receiver of the Member (if one has been appointed) of the
Corporation’s intent to attempt to complete such RVP/DVP Transactions. Such notice
92
(RULE 18)
shall also contain a statement notifying RVP/DVP Customers of the presumed waiver
stated in paragraph (f) of this Section. Such notice shall be given by any commercially
reasonable means, which shall not be limited to those means specified in Rule 45, and
include, but are not limited to, important notice or notification to the RVP/DVP
Customer’s depository agent or its depository agent’s depository.
(b) For purposes of this Rule 18, (i) the “CNS Position” shall be equal to the net
of the Member’s Long Positions and Short Positions in a CNS Security (which includes,
without limitation, any position not excluded by the Corporation pursuant to Section 2),
and (ii) the “Net Close Out Position” with respect to a CNS Security shall be equal to the
sum of the (X) Long Position or Short Position in such CNS Security plus (Y) the
quantity of each RVP/DVP Transaction pertaining to that CNS Security that the
Corporation has completed pursuant to this Rule. In determining a CNS Position, the
Corporation shall consider Long Positions to be positive numbers and Short Positions to
be negative numbers. In determining the Net Close Out Position, the Corporation shall
consider any quantity of securities it receives upon completion of an RVP/DVP
transaction to be a positive number, and any quantity of securities it delivers upon
completion of an RVP/DVP Transaction, to be a negative number.
(c)(i) Subject to paragraph (d) below, the Corporation shall be obligated to

attempt to complete all RVP/DVP Transactions in a CNS Security of which the
Corporation is aware prior to declining or ceasing to act, but only to the extent that the
completion of such RVP/DVP Transactions would not cause the absolute value of the
Net Close Out Position in such CNS Security to be greater than the absolute value of
the CNS Position in such CNS Security. To the extent that this paragraph requires the
Corporation to attempt to complete some but not all of the RVP/DVP Transactions in a
particular CNS Security, the Corporation shall determine which of those RVP/DVP
Transactions it shall attempt to complete in the same manner that it may, pursuant to
subparagraph (ii), determine to attempt to complete any additional RVP/DVP
Transactions.
(ii) In determining whether to attempt to complete any additional RVP/DVP

Transaction beyond those RVP/DVP Transactions that the Corporation is required to
attempt to complete pursuant to subparagraph (c)(i), the Board of Directors may
consider any factor it, in its sole discretion, deems appropriate, including the willingness
of an RVP/DVP Customer to guaranty fulfillment of its obligation to receive or deliver
securities from or to the Corporation, but shall not consider the expected profit or loss
arising from any individual RVP/DVP Transaction.
(d) Notwithstanding the provisions of paragraph (c), the Corporation may

determine not to complete any open RVP/DVP Transaction pertaining to a particular
CNS Security if (i) the Corporation reasonably believes that it cannot complete all
RVP/DVP transactions in such CNS Security that it would be obligated to attempt to
complete pursuant to paragraph (c)(i), whether due to the inability of the Corporation or
the RVP/DVP Customer to make delivery or payment, the unwillingness of the
RVP/DVP Customer to make delivery or payment, or otherwise, (ii) there exists
allegations of fraud or otherwise questionable activities with respect to such CNS
93
(RULE 18)
Security, or (iii) the Corporation believes that the completion of an RVP/DVP

Transaction in such CNS Security can not be consummated on a timely basis. If the
Corporation makes such a determination, then it shall have no further obligations with
respect to completing such RVP/DVP Transactions, and shall notify the RVP/DVP
Customer (or its depository agent or its depository agent’s depository) and the trustee or
receiver of the Member (if any) of such determination.
(e) The Corporation will apply the same procedures to open positions arising
from security Balance Orders1 with respect to which there are RVP/DVP Transactions,
to the extent to do so is practicable.
(f) All notices to RVP/DVP Customers (or the RVP/DVP Customer’s depository
agent or its depository agent’s depository) shall include language to the effect that the
RVP/DVP Customer, by completing the RVP/DVP Transaction, shall be conclusively
presumed to have waived any claim with respect to such completed RVP/DVP
Transaction, including, but not limited to, any net equity claim, against (i) the Member,
(ii) the Member’s appointed trustee or receiver (or any successor trustee or receiver), if
any, or (iii) the Securities Investor Protection Corporation (SIPC), if the Member is
subject to a SIPC liquidation order.
(g) The Net Close Out Positions shall be closed out by the Corporation as
provided in Section 6.
SEC. 4. (a)(i) After the Corporation has declined or ceased to act for a Member
generally, the Corporation may accept from him envelopes to be delivered to other
Members (whether such deliveries are pursuant to security balance orders issued by
the Corporation or are otherwise provided for in these Rules) or it may decline to accept
any such deliveries, in which case such Member shall make such deliveries and obtain
payment therefor otherwise than through the Corporation.
(ii) After the Corporation has declined or ceased to act for a Member generally, it
shall decline to accept from other Members envelopes or orders to be delivered to such
Member, in which case such other Members shall make such deliveries to such
Member and obtain payment therefor otherwise than through the Corporation; provided,
however, that the Corporation may accept such envelopes in order to complete open
RVP/DVP Transactions pursuant to paragraph (e) of Section 3.
SEC. 5 After the Corporation has declined or ceased to act for a Member
generally, the Corporation may, in respect of the CNS System, take any of the following
actions:
1
The definitions contained in subsection (c)(ii) shall be deemed modified as follows when used in
connection with Balance Orders: the term “CNS Position” shall refer to the Member’s net Balance
Order position, the term “Long Position” shall refer to such Member’s net Balance Order receive
obligations and the term “Short Position” shall refer to such Member’s net Balance Order deliver
obligations.
94
(RULE 18)
(i) accept from such Member deliveries through the facilities of a Qualified
Securities Depository;
(ii) continue to instruct the Qualified Securities Depository designated by such

Member to deliver CNS Securities from such Member’s account at the Qualified
Securities Depository to the Corporation’s account in respect of such Member’s
Short Positions; or
(iii) continue to instruct the Qualified Securities Depository designated by such

Member to deliver from the Corporation’s account at the Qualified Securities
Depository CNS Securities received into the Corporation’s account to the
Member in respect of his Long Positions and may in connection therewith accord
the Member priority, as provided in the Procedures, in respect of all other
Members;
provided however, in the event insolvency proceedings have commenced against such
Member, the actions contemplated by subparagraphs (ii) and (iii) may be taken to the
extent permitted by the applicable rules of the relevant insolvency regime. In the event
the Corporation declines to take the actions permitted by the foregoing subparagraphs,
the open positions of such Member shall be closed out as provided in paragraph (a) of
Section 6.
SEC. 6. (a) Promptly after the Corporation has given notice that it has declined or
ceased to act for the Member, and in a manner consistent with the provisions of Section
3, the Net Close Out Position with respect to each CNS Security shall be closed out
(whether it be by buying in, selling out or otherwise liquidating the position) by the
Corporation; provided however, if, in the opinion of the Corporation, the close out of a
position in a specific security would create a disorderly market in that security, then the
completion of such close-out shall be in the discretion of the Corporation.
If, in the aggregate, the closing out of CNS securities deliverable to or deliverable
by such Member results in a profit, said profit shall be credited to the account of such
Member with the Corporation. If, in the aggregate, the selling out and buying in of CNS
securities deliverable to or deliverable by such Member results in a loss, said loss shall
be debited to the account of such Member with the Corporation.
(b) Except as otherwise may be determined by the Board of Directors:
(i) securities deliverable to or by the Member for whom the Corporation has
declined or ceased to act pursuant to security balance orders (except such
securities as shall at the time the Corporation so declined or ceased to act have
been delivered pursuant to such orders) relating to Balance Order transactions
not excluded pursuant to paragraph (a) of Section 2 shall be sold out or bought in
by the Members named in such security balance orders without unnecessary
delay in the best available market, subject to such terms and conditions as the
Corporation may require, and the delivery of and payment for securities
95
(RULE 18)
deliverable pursuant to such balance orders shall be governed by the provisions

of this paragraph (b);
(ii) Separate accountings as to each business day, as hereinafter provided, shall

be had with respect to the profits and losses of other Members (computed on the
basis of the Settlement Prices shown on the security balance orders) resulting
from the buying in or selling out of Balance Order Securities deliverable to or by
the Member for whom the Corporation has declined or ceased to act under
security balance orders calling for such delivery on such day; provided, however,
in the event that the Corporation instructs a Member that the buy in or sell out of
an open Balance Order position must be for cash or guaranteed delivery, as the
case may be, then any loss relating to such a buy in or sell out shall only be
included in such accountings if such Member complied with such instructions.
(iii) With respect to each separate accounting for the close outs of Balance Order
transactions directed by the Corporation:
(A) If a profit results from the selling out or the buying in of Balance Order
Securities deliverable to or deliverable by the Member for whom the
Corporation has declined or ceased to act under a security balance order,
the Member realizing such profit shall at once send a statement of the
transaction to the Corporation and shall pay over such profit to it. Such
profit shall be applied by the Corporation to the payment of losses incurred
by such Member or by other Members in selling out or buying in Balance
Order Securities deliverable to or deliverable by the Member, for whom
the Corporation has declined or ceased to act, under other security
balance orders calling for delivery on the same day.
(B) If a loss results from the selling out or buying in of Balance Order
Securities deliverable by the Member for whom the Corporation has
declined or ceased to act, under a security balance order the Member
sustaining such loss shall at once send a statement of the transaction to
the Corporation, which shall pay him the amount of the loss in the manner
and to the extent hereinafter provided.
(C)(i) If, in the aggregate, the selling out and buying in of Balance Order
Corporation has declined or ceased to act under security balance
orders calling for delivery on the same day results in a profit, said
profit shall be credited to the account with the Corporation of the
Member for whom the Corporation has declined or ceased to act.
(ii) If, in the aggregate, the selling out and buying in of Balance Order
Corporation has declined or ceased to act under security balance
orders calling for delivery on the same day results in a loss, the
Corporation shall pay the same to the Members sustaining such
96
(RULE 18)
losses, and debit the net amount to the account with the
Corporation of the Member for whom the Corporation has declined
or ceased to act.
SEC 7. After the Corporation has declined or ceased to act for a Member, the
Corporation shall exclude any OW Obligations of that Member from further processing
in the OW service.
SEC. 8. (a) After the Corporation has declined or ceased to act for a participant
either in respect to a particular transaction or transactions generally, the Corporation
shall nevertheless have the same rights and remedies in respect to any debit balance
due from such participant or any liability incurred on his behalf as though it had not
ceased to act for him.
(b) As security for any and all liabilities now existing, or hereafter arising, of a
Member or Mutual Fund/Insurance Services Member to the Corporation, the
Corporation shall maintain a lien on all property placed by such participant in its
possession, including but not limited to, securities and cash in the process of clearance
or on deposit with, or pledged to, the Corporation in satisfaction and/or in excess of
such participant’s Clearing Fund deposit pursuant to Rule 4, Section 1, and Rule 12,
Section 1; provided, however, that in no event shall the Corporation have any lien on
securities carried by a Member or Mutual Fund/Insurance Services Member for the
account of its customers where: (i) such lien would be prohibited under Commission
Rules 8c-1 and 15c2-1, or (ii) such securities have been delivered from the
Corporation’s account at a Qualified Securities Depository pursuant to the ACATS
Settlement Accounting Operation, and received into a Receiving Member’s account at
a Qualified Securities Depository.
97
(RULE 19)
RULE 19. MISCELLANEOUS RIGHTS OF THE CORPORATION
In connection with any sale of securities by the Corporation required pursuant to

these Rules or the Procedures (including, without limitation, any sale of securities
pursuant to Rule 12 or Rule 18), the Corporation may pledge, hypothecate, transfer,
create a security interest in, or assign any or all of such securities for the purpose of
securing loans to, or other financing for, the Corporation, such loans or other financing
to be on terms and conditions deemed necessary or advisable by the Corporation
(including, without limitation, loans or other financing obtained for the purpose of
facilitating the disposition of securities and/or financing any settlement obligation of the
Corporation). The purpose of this Rule is to clarify that provisions in the Rules or
Procedures requiring the Corporation to sell securities do not prevent the Corporation
from taking other actions with respect to those securities that are consistent with the
required sale. Consequently, this Rule shall not be construed to limit the Corporation’s
right to pledge, hypothecate, transfer, create a security interest in, or assign any
securities or instruments in any other situation, whether or not there is a provision of the
Rules or Procedures specifically authorizing any such action.
98
(RULE 20)
RULE 20. INSOLVENCY
SEC. 1. A Member, Mutual Fund/Insurance Services Member, Municipal

Comparison Only Member, Insurance Carrier/Retirement Services Member, TPA
Member, TPP Member, Investment Manager/Agent Member, Fund Member, Data
Services Only Member or AIP Member (each hereinafter referred to as a “participant”
for purposes of this Rule 20) who fails to perform his contracts or obligations or
determines that he is unable to do so or is insolvent shall immediately notify the
Corporation pursuant to Section 4 of Rule 45.
SEC. 2. A participant shall be treated by the Corporation in all respects as

insolvent:
(a) upon receipt of oral or written notice, pursuant to Section 1 of this Rule,
or
(b) if the participant shall be a member of Securities Investor Protection

Corporation, in the event that a court finds that the participant meets any one of
the conditions set forth in clauses (i), (ii), (iii), (iv) or (v) of Section 5(b)(1)(A) of
the Securities Investor Protection Act of 1970, or
(c) in the event that the participant is determined by the Corporation to be

insolvent or in the event of the entry of a decree or order by a court having
jurisdiction in the premises adjudging the participant bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the participant under the Federal
Bankruptcy Code or any other applicable Federal or State law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the
participant or of any substantial part of his property, or ordering the winding up or
liquidation of his affairs or the institution by the participant of proceedings to be
adjudicated a bankrupt or insolvent or the consent by him to the institution of
bankruptcy or insolvency proceedings against him, or the filing by him of a
petition or answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable Federal or State law, or the consent by
him to the filing of any such petition, or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
participant or of any substantial part of his property, or the making by him of an
assignment for the benefit of creditors, or the admission by him in writing of his
inability to pay his debts generally as they become due, or the taking of corporate
action by the participant in furtherance of any such action.
SEC. 3. The Corporation shall notify participants pursuant to the provisions of

Section 4 of Rule 45, of actions taken by the Corporation pursuant to Rule 46.
99
(RULE 21)
RULE 21. HONEST BROKER
Any Member who activates The Depository Trust Company’s “Honest Broker”
procedures authorizes the Corporation to submit to The Depository Trust Company, on
such Member’s behalf, for each open CNS short position, such data as is necessary to
identify the Corporation as The Depository Trust Company participant account to which
a redelivery of released pledged securities is to be made. Such authorization shall
continue for the entire time period the Member utilizes the Honest Broker procedure.
Any CNS credit for a delivery which is completed through this procedure shall not be
included with the Member’s other CNS daily credits as provided in Rule 12, but shall be
payable by the Corporation to The Depository Trust Company on the day such delivery
is completed.
100
(RULE 22)
RULE 22. SUSPENSION OF RULES
The time fixed by these Rules, the Procedures or any regulations issued by the
Corporation for the doing of any act or acts may be extended or the doing of any act or
acts required by these Rules, the Procedures or any regulations issued by the
Corporation may be waived or any provision of these Rules, the Procedures or any
regulations issued by the Corporation may be suspended by the Board of Directors or
by the Chairman of the Board, the President, the General Counsel or such other officers
of the Corporation having a rank of Managing Director or higher whenever, in its or his
judgment, such extension, waiver or suspension is necessary or expedient.
A written report of any such extension, waiver or suspension (other than an

extension of time of less than eight hours), stating the pertinent facts, the identity of the
person or persons who authorized such extension, waiver or suspension and the reason
such extension, waiver or suspension was deemed necessary or expedient, shall be
promptly made and filed with the Corporation’s records and shall be available for
inspection by any Member, Mutual Fund/Insurance Services Member, Municipal
Services Only Member or AIP Member during regular business hours on business days.
Any such extension or waiver may continue in effect after the event or events giving rise
thereto but shall not continue in effect for more than 60 calendar days after the date
thereof unless it shall be approved the Board of Directors within such period of 60
calendar days.
101
(RULE 23)
RULE 23. ACTION BY THE CORPORATION
Where action by the Board of Directors is required by these Rules, the

Corporation may act, to the full extent permitted by law, by the Chairman of the Board,
the President, or any Managing Director or Vice President, or by such other Person or
Persons, whether or not employed by the Corporation, as may be designated by the
Board of Directors from time to time.
102
(RULE 24)
RULE 24. CHARGES FOR SERVICES RENDERED
SEC. 1. Each Member, Mutual Fund/Insurance Services Member, Municipal

Services Only Member and AIP Member (each hereinafter referred to as a “participant”
for purposes of this Rule 24) shall pay such fees and charges to the Corporation as
shall be specified by the Corporation or in the Procedures and approved by the Board of
Directors on a reasonable and non-discriminatory basis.
SEC. 2. A participant may be charged for any unusual expenses caused directly
or indirectly by such participant including, but without limitation, the cost of producing
records pursuant to a court order or other legal process in any litigation or other legal
proceeding to which such participant is a party or in which such records relating to such
participant are so required to be produced, whether such production is required at the
instance of such, or of any other party other than the Corporation.
103
(RULE 25)
RULE 25. CROSS-GUARANTY OBLIGATION
The Corporation may, from time to time, enter into one or more Clearing Agency
Cross-Guaranty Agreements. In addition to a Member’s or Mutual Fund/Insurance
Services Member’s other obligations to the Corporation under these Rules, each
Member and Mutual Fund/Insurance Services Member is obligated to the Corporation
for an amount equal to any guaranty payment the Corporation is required to make to a
Cross-Guaranty Party pursuant to the terms of any Clearing Agency Cross-Guaranty
Agreement.
104
(RULE 26)
RULE 26. BILLS RENDERED
The Corporation will render bills to Members, Mutual Fund/Insurance Services

Members, Insurance Carrier/Retirement Services Members, TPA Members, TPP
Members, Investment Manager/Agent Members, Fund Members and AIP Members for
charges on account of the business of any month and will charge their respective
accounts with the amounts thereof on or before such date as determined by the
The Corporation will render bills to Data Services Only Members monthly for
charges, if any, in connection with the use of the Corporation’s services, and such bills
shall be paid immediately.
The Corporation will render bills to Municipal Comparison Only Members monthly
for charges in connection with the comparison of municipal securities transactions and
such bills shall be paid immediately.
105
(RULE 27)
RULE 27. ADMISSION TO PREMISES OF THE CORPORATION –

POWERS OF ATTORNEY, ETC.
No Person will be permitted to enter the premises of the Corporation as the

representative of any Member, Mutual Fund/Insurance Services Member, Municipal
Services Only Member or AIP Member (each hereinafter referred to as a “participant”
for purposes of this Rule 27) unless he has first been approved by the Corporation and
has been issued such credentials as the Corporation may from time to time prescribe
and such credentials have not been canceled or revoked. Such credentials must be
shown on demand, and may limit the portions of the premises to which access is
permitted thereunder. Any credentials issued pursuant to this Rule may be revoked at
any time by the Corporation in its discretion, and prompt notice of such revocation shall
be given to the employer of the person whose credentials have been so revoked.
Every Person to whom, as a representative of a Member credentials have been

or may hereafter be issued by the Corporation authorizing such person to have access,
during the hours when securities or envelopes are to be received and delivered, to the
portion of the Corporation’s premises in which such activity occurs, shall be deemed to
have been authorized by such Member to receive and deliver securities or envelopes on
behalf of such Member.
Any participant or AIP Member shall, if any person in its employ to whom any
credentials have been issued pursuant to this Rule or to whom a power of attorney or
other authorization has been given to act for it in connection with the work of the
Corporation shall for any reason cease to be so employed, give to the Corporation
immediate notice in writing of such termination of employment and if any such power of
attorney or other authorization is otherwise revoked or canceled, shall likewise give to
the Corporation immediate notice in writing of such revocation or cancellation. All
credentials issued pursuant to this Rule shall be immediately surrendered to the
Corporation upon their revocation by the Corporation or by the employer or upon the
termination of the employment of the holder thereof.
Unless revoked by the Corporation, all credentials, authorizations, and powers of

attorney issued pursuant to this Rule or in connection with the work of the Corporation
shall remain in full force and effect until the Corporation shall have received written
notice of the revocation thereof or of the termination of the holder’s employment.
106
(RULE 28)
RULE 28. FORMS
In connection with any transactions or matters handled through, with or by the

Corporation under or pursuant to the Rules, such forms of tickets, lists, notices and
other documents shall be used as the Corporation may from time to time prescribe, and
additions to, changes in and elimination of any such forms may be made by the
Corporation at any time in its discretion. In addition, any information required to be
delivered to the Corporation by use of any such forms may be delivered by the use of
any media as shall be prescribed in the Procedures or by the Corporation from time to
time.
107
(RULE 29)
RULE 29. QUALIFIED SECURITIES DEPOSITORIES
Each Member shall be a participant in a Qualified Securities Depository. If any

such Member shall not at any time be a participant in a Qualified Securities Depository,
the Corporation may cease to act for such Member pursuant to Rule 46. Unless
permitted to take summary action pursuant to Rule 46 the Corporation shall promptly
hold a hearing prior to ceasing to act. During the interim between the time that such
Member is no longer a participant in a Qualified Securities Depository and the time that
the Corporation ceases to act for such Member, such Member shall be required to effect
securities settlement by physical delivery or in the discretion of the Corporation through
a Sponsored Account.
108
(RULE 30)
109
(RULE 31)
110
(RULE 32)
RULE 32. SIGNATURES
The Corporation may, at its option, in lieu of relying on an original signature, rely
on a signature as if it were (and the signature shall be considered and have the same
effect as) a valid and binding original signature in the following circumstances:
If such signature is transmitted, recorded or stored by any electronic, optical, or

similar means (including but not limited to telecopy, imaging, xeroxing, electronic mail,
electronic data interchange, telegram, or telex) deemed acceptable by the Corporation.
111
(RULE 33)
RULE 33. PROCEDURES
The Board of Directors shall, pursuant to these Rules, prescribe from time to time
Procedures and other regulations in respect of the business of the Corporation. The
Board of Directors may, by resolution, delegate to the Chairman of the Board, the
President, any Senior Managing Director, Managing Director or any other officer of the
Corporation the power to prescribe Procedures and regulations. Each Member and
Limited Member (each hereinafter referred to as a “participant” for purposes of this Rule
33) will be bound by such Procedures and regulations and any amendment thereto in
the same manner as it is bound by the provisions of these Rules. Participants shall be
given 10 business days’ notice of any proposed amendment to the Procedures.
112
(RULE 34)
RULE 34. INSURANCE
The Corporation shall use its best efforts to maintain, or arrange for the
maintenance of, such insurance, including fidelity bonds, in such amounts and having
such coverage regarding the business of the Corporation as the Board of Directors shall
deem appropriate. The insurance policies or contracts pursuant to which such
insurance is provided shall be open to the inspection of the Members, Mutual
Fund/Insurance Services Members, Municipal Comparison Only Members, Insurance
Carrier/Retirement Services Members, TPA Members, TPP Members, Investment
Manager/Agent Members, Fund Members, Data Services Only Members and AIP
Members (each hereinafter referred to as a “participant” for purposes of this Rule 34) at
the offices of the Corporation during regular business hours on business days. If the
Corporation shall materially reduce the amount or coverage of any such insurance or
the persons providing such insurance shall notify the Corporation of a material reduction
in the amount of coverage thereof, the Corporation shall promptly notify each participant
and the Securities and Exchange Commission thereof stating the effective date of such
reduction.
113
(RULE 35)
RULE 35. FINANCIAL REPORTS
As soon as practicable after the end of each calendar year, the Corporation shall
make available to each Member, Mutual Fund/Insurance Services Member, Municipal
Services Only Member and AIP Member (each hereinafter referred to as a “participant”
for purposes of this Rule 35) financial statements of the Corporation audited and
covered by a report prepared by independent public accountants for such calendar
year. The Corporation shall undertake to make available such financial statements and
report to participants within 60 days following the close of the Corporation’s fiscal year.
The Corporation shall also undertake to make available to participants unaudited

financial statements of the Corporation within 30 days following the close of the
Corporation’s fiscal quarter for each of the first three fiscal quarters of each year.
114
(RULE 36)
RULE 36. RULE CHANGES
The Corporation shall immediately notify all Members, Limited Members and
Registered Clearing Agencies of any proposal it has made to change, revise, add or
repeal any Rule, and of the text or a brief description of the proposed Rule and its
purpose and effect. Members, Limited Members and Registered Clearing Agencies
may submit to the Corporation for its consideration their comments with respect to any
such proposal, and such comments shall be filed with the Corporation’s records and
copies thereof delivered to the Securities and Exchange Commission.
115
(RULE 37)
RULE 37. HEARING PROCEDURES
SEC. 1. A Member, a Mutual Fund/Insurance Services Member, Settling Bank

Only Member, Municipal Comparison Only Member, Insurance Carrier/Retirement
Services Member, TPA Member, TPP Member, Investment Manager/Agent Member,
Fund Member, a Data Services Only Member, AIP Member or AIP Settling Bank Only
Member or applicant (each hereinafter in this Rule referred to as the “Interested
Person”) may, when permitted by these Rules, request a hearing by filing with the
Secretary of the Corporation within five business days from the date on which the
Corporation informed it of an action or proposed action of the Corporation with respect
to the Interested Person, or 2 business days in the case of summary action taken
against the Interested Person pursuant to Rule 46 (or such other applicable time period
specified by these Rules), a written request for a hearing setting forth (i) the action or
proposed action of the Corporation with respect to which the hearing is requested and
(ii) the name of the representative of the Interested Person who may be contacted with
respect to the hearing. Within 7 business days after the Interested Person files such
written request with the Corporation, or 3 business days in the case of summary action
taken against the Interested Person pursuant to Rule 46, the Interested Person shall
submit to the Corporation a clear and concise written statement setting forth with
particularity the action or proposed action of the Corporation with respect to which the
hearing is requested, the basis for objection to such action, whether the Interested
Person intends to attend the hearing and whether the Interested Person chooses to be
represented by counsel at the hearing. If the written statement contests the
Corporation’s determination that the Interested Person has violated a Rule or
procedure, the statement must specifically admit or deny each violation alleged and
detail the reasons why the Rules or procedures alleged to have been violated are being
contested. Any alleged violation not specifically denied shall constitute an admission to
that violation. The Corporation may deny the statement if it fails to set forth a prima
facie basis for contesting the violation. The failure of the Interested Person to file the
written request referred to above within the time period required by these Rules and/or
the failure of the Interested Person to submit the written statement within the time period
specified above will be deemed to be an election to waive the right to a hearing. The
Corporation shall notify the Interested Person in writing of the date, place and hour of
the hearing at least 5 business days prior to the hearing (unless the parties agree to
waive the 5 business day requirement).
SEC. 2. If the Corporation has assessed a fine and an Interested Person desires
to dispute the fine and complies with the requirements described above regarding filing
a written request for a hearing and a written statement, the Corporation shall
automatically conduct a review of the disputed fine. The Corporation may examine the
written statement submitted by the Interested Person and/or arrange a meeting with the
Interested Person to discuss the disputed fine. If the Corporation determines to waive
the fine, it shall inform the Board of its determination and its reasons thereof. The
Board may, in its discretion, determine to reinstate any fine waived by the Corporation.
If the Corporation determines not to waive the fine as a result of the review process, the
Interested Person shall be entitled to a hearing before a panel pursuant to Section 3 or
116
(RULE 37)
Section 4 of this Rule 37. The Corporation shall advise the Interested Person of the
result of the review process.
SEC. 3. Minor Rule Violations.
A hearing requested in connection with a violation of the Rules of the Corporation

for which a fine may be assessed against the Interested Person in an amount not to
exceed $5,000 (a “Minor Rule Violation”), shall be held before a panel of three officers
of the Corporation (a “Minor Violation Panel”). The members of the Minor Violation
Panel shall select one of their numbers to be the chairman, and the chairman shall be
the person in charge of the conduct of the hearing. At the hearing, an officer of the
Corporation shall present the case against the Interested Person. The Interested
Person shall have an opportunity to be heard and may be represented by counsel. A
record shall be kept of the hearing and the costs associated with the hearing may, in the
discretion of the Corporation, be charged in whole or in part to the Interested Person if
the decision is adverse to the Interested Person. The Minor Violation Panel shall
provide the Interested Person with a written statement of its decision no later than 10
business days after the conclusion of the hearing. If the decision of the Minor Violation
Panel is adverse to the Interested Person, the Interested Person may request a further
hearing under Section 4 of this Rule by filing a written request with the Secretary of the
Corporation within five Business Days of receipt of such written statement. The
Corporation shall notify the Interested Person of the date, time and place of the hearing
at least five business days prior to the hearing. The failure of the Interested Person to
submit the written request within the required time period shall be deemed an election to
waive the right to any further hearing.
A Minor Rule Violation as defined in this Rule shall be deemed a minor rule
violation within the meaning of Rule 19d-1(c)(2) under the Securities Exchange Act of
1934, as amended (the “Act”), and this Rule shall be deemed a “plan” within the
meaning thereof. The action imposed by the Corporation shall not be considered “final”
for purposes of paragraph (c) (1) of Rule 19d - 1 of the Act in any instance in which the
fine is in an amount that does not exceed $2,500, imposed against an Interested Person
that is not a Member and with respect to which the Interested Person does not seek an
adjudication pursuant to Section 4 of this Rule 37.
SEC. 4. A hearing on any matter not covered by Section 2 of this rule, or a

further hearing requested pursuant to Section 2 shall be before a panel (hereinafter the
“Panel”) of three individuals drawn from members of the Board of Directors or their
designees. The members of the Panel shall be selected by the Chairman of the Board.
Notwithstanding the above, the Panel shall not include any individual
representing the Interested Person against which the proposed action is to be taken,
nor any person who had responsibility for the action or proposed action of the
Corporation as to which the hearing relates.
At the hearing, the Interested Person shall be afforded an opportunity to be heard

and may be represented by counsel if the Interested Person has so elected pursuant to
117
(RULE 37)
Section 1 of this Rule. A record shall be kept of the hearing, and the cost associated
with the hearing may, in the discretion of the Panel, be charged in whole or in part to the
Interested Person in the event that the decision at the hearing is adverse to the
Interested Person.
SEC 5. The Panel shall advise the Interested Person of its decision within 10
business days after the conclusion of the hearing. If the decision of the Panel shall
have been to deny the Interested Person’s application to become a Member, a Mutual
Fund/Insurance Services Member, a Settling Bank Only Member, a Municipal
Comparison Only Member, an Insurance Carrier/Retirement Services Member, a TPA
Member, a TPP Member, an Investment Manager/Agent Member, a Fund Member, a
Data Services Only Member or an AIP Member or to prohibit or limit the Interested
Person’s access to the services offered by the Corporation in accordance with Rule 46,
a notice of decision setting forth the specific grounds upon which the decision is based
shall be furnished to the Interested Person. If the decision of the Panel shall have been
to impose a disciplinary sanction on the Interested Person in accordance with Rule 48
or to affirm any summary action previously taken against the Interested Person
pursuant to Section 3 of Rule 46, a notice of decision setting forth (i) any act or practice
in which the Interested Person has been found to have engaged, or which the
Interested Person has been found to have omitted, (ii) the specific provision(s) of the
Rules or Procedures of the Corporation or of the applicable agreements with the
Corporation which any such act or practice or omission to act has been deemed to
violate, and (iii) the sanction imposed and the reasons therefor shall be furnished to the
Interested Person. A copy of the Panel’s notice of decision shall also be furnished to
the Chairman of the Board.
Decisions of the Panel are final, but the Board of Directors may in its discretion
modify any sanction or reverse any decision of the Panel that is adverse to the
Interested Person.
SEC. 6. The reversal or modification at the hearing or subsequently by the Board

of Directors of any action previously taken against the Interested Person pursuant to
these Rules shall not invalidate the acts of the Corporation or its officers or directors
taken prior to such reversal or modification.
SEC. 7. Any action or proposed action of the Corporation as to which an

Interested Person has the right to request a hearing pursuant to Rule 37 shall be
deemed final (i) when the Interested Person stipulates to the taking of such action by
the Corporation, at which time the Corporation shall furnish the Interested Person with a
statement containing the information referred to in Section 4 of this Rule, or (ii) upon the
expiration of the applicable time period provided in these Rules for the filing of a written
request for a hearing or a written statement pursuant to Section 1 of this Rule, at which
time any such proposed action of the Corporation shall become effective and at which
time the Corporation shall furnish the Interested Person with a statement containing the
information referred to in Section 4 of this Rule, or (iii) if a hearing has been held
pursuant to Section 4 of this Rule 37, when the Corporation gives notice to the
Interested Person of the Panel’s.
118
(RULE 37)
SEC. 8. The Corporation may at any time establish procedures for a hearing not
otherwise provided for by these Rules with respect to any action or proposed action of
the Corporation.
119
(RULE 38)
RULE 38. GOVERNING LAW AND CAPTIONS
SEC. 1 Governing Law
The Rules, Procedures and the rights and obligations under the Rules and
Procedures, shall be governed by, and construed in accordance with, the laws of the
State of New York applicable to contracts executed and performed therein.
SEC. 2 Captions
Captions to any Rules are for information and guidance only, are not part of any
Rule and are to be given no consideration in applying or construing any Rules.
120
(RULE 39)
RULE 39. RELIANCE ON INSTRUCTIONS
The Corporation may accept or rely upon any instruction given to the Corporation
by a Member, Mutual Fund/Insurance Services Member, Municipal Comparison Only
Member, Fund Member, Insurance Carrier/Retirement Services Member, TPA Member,
TPP Member, Data Services Only Member, AIP Member or Special Representative or
Index Receipt Agent (each hereinafter referred to as a “participant” for purposes of this
Rule 39), including wire transmission, physical delivery or delivery by other means of
instructions recorded on magnetic tape or other media or of facsimile copies of
instructions, in form acceptable to the Corporation and in accordance with the
Procedures, which reasonably is understood by the Corporation to have been delivered
to the Corporation by such participant. In the case of instructions given by a Special
Representative or Index Receipt Agent, Investment Manager/Agent Member, TPP
Member, or TPA Member, the Corporation shall be entitled to act pursuant to any such
instruction as though such instruction had been received from the Member for which the
Special Representative or Index Receipt Agent or TPP Member, TPA Member or
Investment Manager/Agent Member is acting.
Any participant delivering instructions as provided above, or on whose behalf a

Special Representative, TPA Member, TPP Member, or Investment Manager/Agent
Member, shall deliver instructions as provided above, shall indemnify the Corporation,
and any of its employees, officers, directors, shareholders, agents, and participants who
may sustain any loss, liability or expense as a result of (a) any act done in reliance upon
the authenticity of any instruction received by the Corporation, (b) the inaccuracy of the
information contained therein or (c) effecting transactions in reliance upon such
information or instruction against any such loss, liability or expense so long as such
transactions are effected in accordance with such information and instructions even
though they are inaccurate or not authentic and so long as the person asserting a right
to indemnification shall not have knowledge of such inaccuracy or lack of authenticity at
the time of the event or events giving rise to such loss, liability or expense.
Notwithstanding the foregoing, the Corporation will not act upon any instruction
purporting to have been given by a participant which is received by wire transmission or
in the form of facsimile copies or magnetic tape or media other than written instructions
or from a Special Representative, TPA Member, TPP Member, or Investment
Manager/Agent Member, commencing one business day after the Corporation receives
written notice from the participant that the Corporation shall not accept such instructions
until such time as the participant shall withdraw such notice.
121
(RULE 40)
RULE 40. (WIND-DOWN OF A MEMBER, FUND MEMBER OR INSURANCE

CARRIER/RETIREMENT SERVICES MEMBER)
When a Member, Mutual Fund/Insurance Services Member, Fund Member,

Insurance Carrier/Retirement Services Member or AIP Member notifies the Corporation
that it intends to wind down its activities, the Corporation may, in its sole discretion, in
order to protect itself and its participants, determine that such Member, Mutual
Fund/Insurance Services Member, Fund Member, Insurance Carrier/Retirement
Services Member or AIP Member is a “Wind-Down Member”. In that event and, without
limiting any other rights of the Corporation under these Rules and Procedures, the
Corporation may impose conditions on, or take actions with respect to, the Wind-Down
Member as provided below.
As soon as practicable after the Corporation determines that a Member, Mutual

Fund/Insurance Services Member, Fund Member, Insurance Carrier/Retirement
Services Member or AIP Member is a Wind-Down Member, the Corporation shall notify
the Wind-Down Member, all other participants and the SEC of such determination.
The Corporation may, in its discretion, impose conditions on, or take actions with
respect to, the Wind-Down Member as appropriate to mitigate risk the Corporation
perceives may be presented by the Wind-Down Member, including but not limited to,
the following:
(i) Permitting the Wind-Down Member to submit to the Corporation only

transactions that serve to support the wind-down;
(ii) Permitting the Wind-Down Member to continue use of one or more of the
Corporation’s services, notwithstanding that it may not meet some or all of the
financial or operational requirements for continuance as a Member or Limited
Member, as applicable;
(iii) Restricting or modifying the Wind-Down Member’s use of any or all of the
Corporation’s services (whether generally, or with respect to certain
transactions);
(iv) Requiring additional assurances of the financial responsibility or operational

capability of the Wind-Down Member through, for example, submission of a
guaranty of the Wind-Down Member’s obligations to the Corporation by an
entity acceptable to the Corporation and/or additional reporting by the Wind-
Down Member;
(v) Agreeing to complete one or more trades to which the Wind-Down Member is
a party prior to the time the Corporation’s guaranty otherwise would become
effective pursuant to these Rules and Procedures;
(vi) Requiring the Wind-Down Member to post increased Clearing Fund deposits
and/or to post its Required Fund Deposit all in cash or in proportions of cash,
122
(RULE 40)
qualifying bonds and Eligible Letters of Credit different from those permitted
under Rule 4;
(vii) Prohibiting the Wind-Down Member from withdrawing Clearing Fund on

deposit in excess of its Required Fund Deposit;
(viii) Calculating the Required Fund Deposit of the Wind-Down Member in a

manner different from the applicable formulae provided in the Procedures, in
order to more appropriately reflect the risk presented by the Wind-Down
Member to the Corporation, such as for example, not applying certain
components of such calculation; or
(ix) Liquidating by buying-in or selling-out, as applicable, any open positions of

the Wind-Down Member, for the benefit of such Wind-Down Member with any
profit or loss resulting therefrom being debited or credited, as applicable, to
the settlement account of the Wind-Down Member.
If the Corporation takes, or mandates, any action pursuant to this Rule, the
Corporation shall, as soon as practicable thereafter, notify the SEC and such other
participants as it deems proper due to the nature of such action.
Notwithstanding the foregoing, the Corporation shall not be restricted from

exercising any of its rights in these Rules or in any agreements between itself and the
Wind-Down Member at any time, including the Corporation’s right at any time to cease
to act for the Wind-Down Member pursuant to Rule 46.
123
(RULE 41)
RULE 41. (CORPORATION DEFAULT)
SEC. 1. If a “Corporation Default” occurs pursuant to Section 2 below, all CNS

Transactions which have been guaranteed but have not yet settled, and all obligations
and related rights arising thereunder which have been assigned to and assumed by the
Corporation pursuant to these Rules, shall be immediately terminated, and the Board
shall determine a single net amount owed by or to each Member with respect to such
CNS Transactions by applying the valuation and netting procedures set forth in Section
3 of this Rule 41 below. Notwithstanding the foregoing, (a) the occurrence of a
Corporation Default shall not affect the rights and obligations of Members party to
Balance Orders that they would otherwise have on account of such transactions under
these Rules and applicable law; and (b) the treatment of any pending non-guaranteed
transactions shall be determined in accordance with the provisions of Rule 42 (Wind-
down of the Corporation).
SEC. 2. Certain Definitions. For purposes of this Rule 41:
(a) Notwithstanding anything to the contrary in the Rules, the following events
shall constitute a “Corporation Default”:
(i) Failure by the Corporation to make, when due, any undisputed

payment or delivery to a Member required to be made by it under
and in accordance with these Rules and such failure is not
remedied within 7 days after notice of such failure is given to the
Corporation by the affected Member; provided that this clause (i)
shall not apply to (A) obligations of the Corporation to Wind-Down
Members, or Members for whom the Corporation has otherwise
ceased to act pursuant to Rule 46 (including an insolvent Member),
(B) any payment or delivery which the Corporation satisfies by
alternate means as provided in these Rules, or (C) any obligation of
the Corporation that is not a payment or delivery obligation of the
Corporation to a Member under these Rules; or
(ii) The Corporation (A) is dissolved (other than pursuant to a

consolidation, amalgamation or merger); (B) institutes a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors’ rights, or presents a petition for its winding-up or
liquidation or makes a general assignment for the benefit of
creditors; (C) has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors’
rights, or a petition is presented for its winding-up or liquidation and,
in each case, such proceeding or petition results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation; or (D) seeks or
becomes subject to the appointment of a receiver, trustee, or other
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(RULE 41)
similar official pursuant to the federal securities laws or Title II of

the Dodd-Frank Wall Street Reform and Consumer Protection Act
for it or for all or substantially all its assets.
(b) the “CNS Position” of a Member in any CNS Security shall be equal to the
net of the Member’s unsettled Long Positions and Short Positions in such security as of
the close of Business on the Default Date (and, for the avoidance of doubt, this shall
include both CNS positions that have not yet passed Settlement Date and fail positions);
(c) “Default Date” means the date on which the event that constitutes the
Corporation Default occurs; and
(d) “Net Contract Value” means, for each Member’s CNS Position in a given
CNS Security, the net of the Member’s (x) contract price for such net position that, as of
the Default Date, has not yet passed Settlement Date, and (y) the Current Market Price
in the CNS System on the Default Date for its fail positions, in each case as shown on
the applicable reports issued by the Corporation to the Member in accordance with the
Procedures applicable to the CNS System.
SEC. 3 Valuation and Calculation of Claims.
(a) As promptly as practicable, but in any event within 45 days after the
Default Date, the Corporation shall fix a dollar amount to be paid or received by each
Member to or from the Corporation in connection with the termination of a CNS
Transaction, after taking into account all of the applicable following netting and
offsetting:
(i) The Corporation shall value all CNS Positions by using the Current
Market Price, as determined for the CNS System, as of the close of
business on the next Business Day immediately following the
Default Date, so that each Member shall have the same per share
price for a given security in which it had an open CNS Position (the
resulting value referred to as the “CNS Market Value”);
(ii) For each Member, the Net Contract Value of its terminated CNS
Positions shall be determined as provided in subsection 2(d) above;
which amount shall be positive or negative, as applicable;
(iii) To determine each Member’s CNS Close-out Value, (x) the Net
Contract Value for each CUSIP shall be subtracted from the CNS
Market Value for such CUSIP, and (y) the resulting difference for
all CUSIPS in which the Member had a CNS Position shall be
summed, and the resulting amount shall be positive or negative, as
applicable.
(iv) The CNS Close-out Value shall be further netted and offset against
any other amounts, or the value of any property, as valued by the
Corporation, that may be due to, or owing from, the Member under
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(RULE 41)
these Rules, taking into account the application of any provisions of

Rule 4 relating to loss allocation, including in the event that the
Member is in default of its obligations to deliver funds to the
Corporation, or the Corporation has prior to the Default Date
Ceased to Act for the Member.
(b) The Board shall notify each Member of the CNS Close-out Value, taking
into account the netting and offsetting provided for in subsections 3(a)(i) to (iv) above.
Members who have been notified that they owe an amount to the Corporation shall pay
that amount on or prior to the date specified by the Board, subject to any applicable
setoff rights. Members who have a net claim against the Corporation shall be entitled to
payment thereof along with other Members’ and any other creditors’ claims pursuant to
the underlying contracts with respect thereto, these Rules and applicable law. For the
avoidance of doubt, nothing herein shall limit the rights of the Corporation upon a
Member default (including following a Corporation Default), including any rights under
any Clearing Agency Cross-Guaranty Agreement or otherwise.
SEC. 4. Interpretation in Relation to the Federal Deposit Insurance Corporation

Act of 1991:
The Corporation and the Members intend that these Rules be interpreted in
relation to certain terms (identified below) that are defined in the Federal Deposit
Insurance Corporation Act of 1991 (“FDICIA”), as amended, as follows:
The Corporation is a “clearing organization”;
Any obligation of a Member or the Corporation to make any payments to the

other is a “covered clearing obligation” and a “covered contractual payment obligation”;
An entitlement of a Member or the Corporation to receive a payment from the

other is a “covered contractual payment entitlement”;
The Corporation and each Member is a “member” of the “clearing organization”;
The amount by which the covered contractual payment entitlements of a Member

or the Corporation exceed the covered contractual payment obligations of such Member
or the Corporation after netting pursuant to Rule 18 or this Rule 41 is its “net
entitlement”;
The amount by which the covered contractual payment obligations of a Member

or the Corporation exceed the covered contractual payment entitlements of such
Member or the Corporation after netting under a netting pursuant to Rule 18 or this Rule
41 is its “net obligation”; and
These Rules, together with all other agreements between the Corporation and a
Clearing Member, are a “netting contract”, the margin, Clearing Fund and other
provisions of these Rules granting an interest in any funds or property of a member to
the Corporation constitute a “security agreement or arrangement or other credit
126
(RULE 41)
enhancement” relating to such netting contract and the close-out process in Rule 18 or
this Rule 41 constitutes the “terminat[ion], liquidat[ion], accelerat[ion], and nett[ing]” of
obligations.
127
(RULE 42)
RULE 42. WIND-DOWN OF THE CORPORATION
Section 1. Defined Terms
(a) For purposes of this Rule 42:
“Bridge Entity” has the meaning given to such term in the definition of
“Transferee” in this Section 1(a).
“Business” means the Critical Services and any Non-Critical Services of the
Corporation included in a Transfer.
“Comparability Period” means a period of time following the Transfer, to be

agreed between the Corporation and a Transferee, during which the Business
transferred from the Corporation to the Transferee shall be operated by the Transferee
in a manner comparable to the manner in which the Business was previously operated
by the Corporation, as more specifically set forth in Section 9 of this Rule 42.
“Corporation Default Rule” means Rule 41 of the Corporation.
“Critical Services” means the services of the Corporation described in the Rules
and Procedures of the Corporation that have been identified as critical services in the
Recovery and Wind-down Plan.
“Delinquent Limited Member” means a Limited Member of the Corporation that is

delinquent in the performance of any of its obligations to the Corporation (as determined
by the Corporation).
“Delinquent Member” means a Member of the Corporation that is delinquent in

the performance of any of its obligations to the Corporation (as determined by the
Corporation).
“DTCC” means The Depository Trust & Clearing Corporation.
“Eligible Limited Member” means a Limited Member of the Corporation other than
a Non-Eligible Limited Member.
“Eligible Member” means a Member of the Corporation other than a Non-Eligible

Member.
“Failover Entity” has the meaning given to such term in the definition of
“Guaranteed Transaction” means a transaction in CNS Securities or Balance

Order Securities that is processed through the facilities of the Corporation and
guaranteed by the Corporation.
128
(RULE 42)
“Last Settlement Date” has the meaning given to such term in Section 2(c)(3) of
this Rule 42.
“Last Transaction Acceptance Date” has the meaning given to such term in
Section 2(c)(2) of this Rule 42.
“Limited Member” means a Limited Member of the Corporation (other than a

Settling Bank Only Member or an AIP Settling Bank Only Member) or a Limited Member
of the Transferee (other than a Settling Bank Only Member or an AIP Settling Bank Only
Member), as the context requires.
“Limited Member Agreement” means the form of agreement between a Limited

Member and the Corporation or between a Limited Member and the Transferee, as the
context requires, providing, inter alia, for the Limited Member to be bound by the Rules
and Procedures of the Corporation or the Rules and Procedures of the Transferee, as
applicable to such Limited Member.
“Member” means a Member of the Corporation (other than a Settling Bank or AIP
Settling Bank) or a Member of the Transferee (other than a Settling Bank or AIP Settling
Bank), as the context requires.
“Member Agreement” means the form of agreement between a Member and the
Corporation or between a Member and the Transferee, as the context requires,
providing, inter alia, for the Member to be bound by the Rules and Procedures of the
Corporation or the Rules and Procedures of the Transferee, as applicable to such
Member.
“Non-Critical Services” means the services of the Corporation described in the

Rules and Procedures of the Corporation other than the Critical Services.
“Non-Eligible Limited Member” means a Limited Member of the Corporation that

is a Delinquent Limited Member or Withdrawing Limited Member.
“Non-Eligible Member” means a Member of the Corporation that is a Delinquent

Member or Withdrawing Member.
“Non-Guaranteed Transaction” means any transaction that is processed through

the facilities of the Corporation other than a Guaranteed Transaction.
“Recovery and Wind-down Plan” means the plan for the recovery and orderly
wind-down of the Corporation necessitated by credit losses, liquidity shortfalls, losses
from general business risk or any other losses, adopted by the Corporation pursuant to
Rule 17Ad-22(e)(3)(ii) under the Securities Exchange Act of 1934, as amended.
“Recovery Plan” means the portion of the Recovery and Wind-down Plan
addressing recovery.
129
(RULE 42)
“Risk Reducing Transaction” means a Guaranteed Transaction that offsets one

or more other Guaranteed Transactions, and thereby reduces the potential exposure of
the Corporation with respect to such Guaranteed Transactions.
“Rules and Procedures” means the Rules and Procedures of the Corporation or
the Rules and Procedures of the Transferee, as the context requires.
“Settling Bank” means a Settling Bank, Settling Bank Only Member, AIP Settling
Bank or AIP Settling Bank Only Member for Members and Limited Members of the
Corporation or a Settling Bank, Settling Bank Only Member, AIP Settling Bank or AIP
Settling Bank Only Member for Members and Limited Members of the Transferee, as
the context requires.
“Settling Bank Agreement” means the form of agreement between a Settling

Bank and the Corporation or between a Settling Bank and the Transferee, as the
context requires, providing, inter alia, for the Settling Bank to be bound by the Rules and
Procedures of the Corporation or the Rules and Procedures of the Transferee, as
applicable to such Settling Bank.
“Third Party Entity” has the meaning given to such term in the definition of
“Transfer” means a transfer of the Business of the Corporation pursuant to the

Wind-down Plan.
“Transferee” means an entity to which the Business of the Corporation is

transferred pursuant to the Wind-down Plan, and may include (i) a failover entity
established by DTCC (a “Failover Entity”), (ii) a then-existing or newly-established third
party entity (a “Third Party Entity”) or (iii) a bridge entity formed to operate the Business
on an interim basis (a “Bridge Entity”). The Transferee shall be an entity that is legally,
financially and operationally qualified to continue to operate the Business that is to be
transferred from the Corporation to the Transferee.
“Transferee Documents” means the Rules and Procedures, Member Agreement,

Limited Member Agreement and Settling Bank Agreement of the Transferee.
“Transfer Notice” has the meaning given to such term in Section 3 of this
Rule 42.
“Transfer Time” has the meaning given to such term in Section 2(c)(1) of this
Rule 42.
“Wind-down Plan” means the portion of the Recovery and Wind-down Plan
addressing wind-down.
“Withdrawing Limited Member” means a Limited Member of the Corporation that

has given notice to the Corporation of its election to withdraw as a Limited Member but
130
(RULE 42)
that, at the Transfer Time, has not yet ceased to be a Limited Member (as determined
by the Corporation).
“Withdrawing Member” means a Member of the Corporation that has given notice
to the Corporation of its election to withdraw as a Member but that, at the Transfer
Time, has not yet ceased to be a Member (as determined by the Corporation).
(b) Capitalized terms that are used in this Rule 42 but not defined in Section
1(a) above shall have the meanings given to such terms in other Rules and Procedures
of the Corporation.
Section 2. Initiation of Wind-down Plan
(a) The Board of Directors may authorize the initiation of the Wind-down Plan
and a transfer of the Business from the Corporation to a Transferee if the Board of
Directors determines, in the exercise of its business judgment and subject to its
fiduciary duties:
(1) that the application of some or all of the recovery tools set forth in
the Recovery Plan, necessitated by credit losses, liquidity shortfalls,
losses from general business risk or any other losses:
A. has not restored the Corporation to viability as a going

concern, able to continue to provide its Critical Services to
Members and Limited Members of the Corporation in a safe
and efficient manner; or
B. will not likely restore the Corporation to viability as a going

concern, able to continue to provide its Critical Services to
Members and Limited Members of the Corporation in a safe
and efficient manner; and
(2) that the implementation of the Wind-down Plan and a Transfer of

the Business from the Corporation to a Transferee is in the best
interests of the Corporation, its shareholders and creditors,
Members and Limited Members and the US financial markets.
(b) The Board of Directors shall identify:
(1) the Critical Services and any Non-Critical Services that shall be
transferred from the Corporation to the Transferee at the Transfer
Time; and
(2) any Non-Critical Services that shall not be transferred from the
Corporation to the Transferee.
The Critical Services and any Non-Critical Services that are transferred from the
Corporation to the Transferee at the Transfer Time shall be provided by the Transferee
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(RULE 42)
following the Transfer Time. Any Non-Critical Services that are not transferred from the
Corporation to the Transferee shall be terminated at the Transfer Time.
(c) The Board of Directors shall establish:
(1) the date and time (the “Transfer Time”) of the Transfer;
(2) the last day that transactions may be submitted to the Corporation
for processing (the “Last Transaction Acceptance Date”); and
(3) the last day that transactions submitted to the Corporation for
processing will be settled (the “Last Settlement Date”).
The Corporation shall not accept any transactions (i) for processing after the Last
Transaction Acceptance Date or (ii) which have a designated Settlement Date that
occurs after the Last Settlement Date. All transactions to be processed and/or settled
after the Transfer Time shall be submitted to the Transferee in accordance with the
Rules and Procedures of the Transferee, and the Corporation shall have no
responsibility for such transactions.
(d) To the extent that the Board of Directors deems it to be practicable based
on the available resources of the Corporation, the Board of Directors may provide for
pending transactions to be run off and settled prior to the Transfer Time, with the
objective of facilitating the settlement of transactions in the ordinary course. In
furtherance of this objective, so long as a Corporation Default has not occurred, the
Board of Directors may provide for how such transactions accepted by the Corporation
on or prior to the Last Transaction Acceptance Date shall be processed and settled,
including:
(1) whether such transactions must be Risk Reducing Transactions;

and
(2) whether such transactions will be processed (i) in the ordinary

course or (ii) in accordance with any special or exception
processing procedures that will apply through the close of business
on the Last Settlement Date.
Section 3. Notice of Transfer of the Business
If the Board of Directors determines to implement a Transfer of the Business

from the Corporation to a Transferee in accordance with this Rule 42 and the terms and
conditions of the Wind-down Plan, the Corporation shall, in such manner as may be
provided by the Rules and Procedures of the Corporation and subject to any required
regulatory or judicial approval or consent:
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(RULE 42)
(a) provide Members, Limited Members and Settling Banks with a notice (a
“Transfer Notice”) setting forth:
(1) the decision taken by the Board of Directors to Transfer the

Business from the Corporation to the Transferee and a brief
statement of the reasons therefor;
(2) the name of the Transferee and basic information about the
Transferee;
(3) a description of the material financial and operational terms of the

Transfer;
(4) the (i) Transfer Time, (ii) Last Transaction Acceptance Date and (iii)
Last Settlement Date;
(5) a summary of the matters described in Sections 4 through 8 of this

Rule 42;
(6) a list setting forth (i) which Members and Limited Members of the
Corporation are Eligible Members and Limited Members and (ii)
which Members and Limited Members of the Corporation are Non-
Eligible Members and Limited Members; and
(7) a list setting forth (i) the Critical Services and any Non-Critical
Services that will be transferred from the Corporation to the
Transferee at the Transfer Time and (ii) any Non-Critical Services
that will not be transferred from the Corporation to the Transferee;
and
(b) make available to Members, Limited Members and Settling Banks a copy
of the Transferee Documents.
No delay or failure on the part of the Corporation to provide a Transfer Notice or

make available a copy of the Transferee Documents to any Member, Limited Member or
Settling Bank shall alter the timing or effectiveness of the Transfer. The Corporation
shall also furnish the Transfer Notice and a copy of the Transferee Documents to its
regulators.
Section 4. Transfer of Members, Limited Members and Settling Banks
Prior to the Transfer Time, the Corporation shall enter into arrangements with a
Transferee that is a Failover Entity, or shall use commercially reasonable efforts to enter
into arrangements with a Transferee that is a Third Party Entity or Bridge Entity,
providing in either case that, at the Transfer Time, by operation of this Rule 42 and with
no further action required by any party:
133
(RULE 42)
(a) each Eligible Member of the Corporation shall become (i) a Member of the
Transferee and (ii) a party to a Member Agreement with the Transferee;
(b) each Eligible Limited Member of the Corporation shall become (i) a
Limited Member of the Transferee and (ii) a party to a Limited Member Agreement with
the Transferee; and
(c) each Settling Bank for Members and Limited Members of the Corporation
shall become (i) a Settling Bank for Members and Limited Members of the Transferee
and (ii) a party to a Settling Bank Agreement with the Transferee.
Section 5. Status of Members, Limited Members and Settling Banks
providing in either case that, from and after the Transfer Time:
(a) An Eligible Member of the Corporation that has become a Member of the
Transferee shall have all of the rights and be subject to all of the obligations of a
Member set forth in the Rules and Procedures of the Transferee, including the legal,
financial, operational and collateral requirements of the Transferee applicable to such
Member.
(b) An Eligible Limited Member of the Corporation that has become a Limited
Member of the Transferee shall have all of the rights and be subject to all of the
obligations of a Limited Member set forth in the Rules and Procedures of the
Transferee, including the legal, financial and operational requirements of the Transferee
applicable to such Limited Member.
(c) A Settling Bank for Members and Limited Members of the Corporation that
has become a Settling Bank for Members and Limited Members of the Transferee shall
have all of the rights and be subject to all of the obligations of a Settling Bank set forth
in the Rules and Procedures of the Transferee, including the operational requirements
of the Transferee applicable to such Settling Bank.
Section 6. Right of Non-Eligible Members and Limited Members to Apply to

the Transferee
Nothing contained in this Rule 42 shall:
(a) preclude a Non-Eligible Member of the Corporation from applying after the
Transfer Time to become a Member of the Transferee in accordance with such eligibility
requirements and procedures as may be prescribed by the Transferee, but such Non-
Eligible Member shall not have the benefit of the automatic admission arrangements
provided in Section 4(a) of this Rule 42; or
134
(RULE 42)
(b) preclude a Non-Eligible Limited Member of the Corporation from applying

after the Transfer Time to become a Limited Member of the Transferee in accordance
with such eligibility requirements and procedures as may be prescribed by the
Transferee, but such Non-Eligible Limited Member shall not have the benefit of the
automatic admission arrangements set forth in Section 4(b) of this Rule 42.
Section 7. Right to Withdraw from the Transferee
Nothing contained in this Rule 42 shall:
(a) preclude an Eligible Member of the Corporation that has become a

Member of the Transferee pursuant to Section 4(a) of this Rule 42 from electing to
withdraw as a Member from the Transferee at any time after the Transfer Time, subject
to the Rules and Procedures of the Transferee;
(b) preclude an Eligible Limited Member of the Corporation that has become a
Limited Member of the Transferee pursuant to Section 4(b) of this Rule 42 from electing
to withdraw as a Limited Member from the Transferee at any time after the Transfer
Time, subject to the Rules and Procedures of the Transferee; or
(c) preclude a Settling Bank for Members and Limited Members of the
Corporation that has become a Settling Bank for Members and Limited Members of the
Transferee pursuant to Section 4(c) of this Rule 42 from electing to withdraw as a
Settling Bank from the Transferee at any time after the Transfer Time, subject to the
Rules and Procedures of the Transferee.
Section 8. Disposition of Pending Transactions
At the Transfer Time:
(a) any pending transactions that are Guaranteed Transactions shall be

treated as provided in the Corporation Default Rule; and
(b) any pending transactions that are Non-Guaranteed Transactions shall be

settled by the parties outside the facilities of the Corporation, including, if agreed by the
Transferee, through the facilities of the Transferee.
Section 9. Certain Ex Ante Matters
providing in either case that, with respect to the Critical Services and any Non-Critical
Services that are transferred from the Corporation to the Transferee, for at least the
duration of the Comparability Period, in order to facilitate a smooth Transfer of the
Business from the Corporation to the Transferee:
135
(RULE 42)
(a) the Rules and Procedures, Member Agreement, Limited Member

Agreement and Settling Bank Agreement of the Transferee shall be comparable in
substance and effect to the Rules and Procedures, Member Agreement, Limited
Member Agreement and Settling Bank Agreement of the Corporation;
(b) the rights and obligations of Members, Limited Members and Settling
Banks of the Transferee under the Rules and Procedures of the Transferee shall be
comparable in substance and effect to the rights and obligations of Members, Limited
Members and Settling Banks of the Corporation under the Rules and Procedures of the
Corporation; and
(c) the Critical Services and any Non-Critical Services provided by the
Transferee shall be provided in a manner that is comparable in substance and effect to
the manner in which such Critical Services and Non-Critical Services were provided by
the Corporation.
Section 10. Subordination of Claims
In the event of any insolvency of the Corporation following the commencement of

any Event Period (as defined in Rule 4), the unsecured claims (if any) of Members and
Limited Members of the Corporation that failed to pay or perform any obligation to the
Corporation or elected to withdraw as Members or Limited Members from and after
such time shall (i) rank pari passu with each other and (ii) be subordinate to the claims
of other unsecured creditors of the Corporation.
Section 11. Further Assurances; Additional Powers; Miscellaneous Matters
(a) Members, Limited Members and Settling Banks of the Corporation shall
assist and cooperate with the Corporation to effectuate any Transfer of the Business
from the Corporation to a Transferee, including without limitation (i) by complying with
the terms and conditions of this Rule 42 and their obligations hereunder and (ii) by
providing the Corporation and the Transferee with such financial and operational
information as they may request. The Corporation may provide to a Transferee any
financial and operational information it has with respect to Members, Limited Members
and Settling Banks of the Corporation as may be necessary and appropriate to
effectuate an orderly Transfer of the Business from the Corporation to the Transferee.
(b) The Corporation may take such other actions and enter into such other
arrangements (on behalf of itself and its Members, Limited Members and Settling
Banks) as may be necessary and appropriate to effectuate an orderly Transfer of the
Business from the Corporation to a Transferee, and otherwise accomplish the purposes
of the Wind-down Plan.
(c) As a condition to receiving, and by virtue of accepting, the continuing

benefits of being Members, Limited Members and Settling Banks of the Corporation,
such Members, Limited Members and Settling Banks (i) hereby expressly agree to the
arrangements set forth in this Rule 42 relating to their becoming Members, Limited
Members and Settling Banks, as the case may be, of the Transferee in the
136
(RULE 42)
circumstances described herein and (ii) hereby expressly grant to the Corporation an
irrevocable power of attorney to execute and deliver on their behalf such documents
and instruments as the Transferee may request for this purpose. As Members, Limited
Members and Settling Banks of the Corporation, such Members, Limited Members and
Settling Banks are subject to the Rules and Procedures of the Corporation.
(d) No actions taken or omitted to be taken by the Corporation pursuant to

this Rule 42 shall be deemed to constitute a default by the Corporation in the
performance of any of its other obligations to Members, Limited Members and Settling
Banks of the Corporation pursuant to any other Rules and Procedures of the
Corporation.
(e) The Corporation shall have no liability to any Members, Limited Members,
or Settling Banks of the Corporation for any actions taken or omitted to be taken by the
Corporation pursuant to this Rule 42.
(f) The Corporation shall have no liability to any third parties, including any
customers or clients of any Members, Limited Members or Settling Banks of the
Corporation, for any actions taken or omitted to be taken by the Corporation pursuant to
this Rule 42.
(g) In connection with the Transfer of the Business from the Corporation to
the Transferee, (i) the Corporation shall assign all of its Member Agreements, Limited
Member Agreements and Settling Bank Agreements to the Transferee and (ii) the
Transferee shall assume such Member Agreements, Limited Member Agreements and
Settling Bank Agreements.
(h) All rights of the Corporation that are not assigned to the Transferee in
connection with the Transfer of the Business from the Corporation to the Transferee,
including any claims of the Corporation against Members, Limited Members and Settling
Banks arising at any time prior to the Transfer Time, shall remain rights of the
Corporation, enforceable by the Corporation in accordance with their terms and subject
to applicable law (including insolvency law).
(i) All obligations and liabilities of the Corporation that are not assigned to
and assumed by the Transferee in connection with the Transfer of the Business from
the Corporation to the Transferee shall remain obligations and liabilities of the
Corporation, enforceable against the Corporation in accordance with their terms and
subject to applicable law (including insolvency law).
(j) In the event of any conflict between the provisions of this Rule 42 and any
other Rules and Procedures of the Corporation, the provisions of this Rule 42 shall
prevail.
137
(RULE 43)
138
(RULE 44)
RULE 44. DELIVERIES PURSUANT TO BALANCE ORDERS
1. All deliveries of securities pursuant to a deliver balance order produced in the

Balance Order System or as the consequence of the pairing of Long and Short
Positions in the CNS System (Order), other than security orders relating to Special
Trades, shall be subject to the provisions of this Rule.
2. Deliveries must be made at the receiver’s Specified Location.
3. The receiver shall accept a partial delivery on any Order provided the portion
remaining undelivered is not an amount which includes an odd-lot.
4. Without limiting the rights of any receiver that has designated a Specified
Location other than New York City, to the extent a deliver balance order is for a security
that is eligible for book-entry transfer on the books of DTC, and the deliverer has filed
with the Corporation a standing instruction, the Corporation will issue an instruction on
file to DTC specifying the quantity of each security to be delivered from the deliverer to
the receiver and the money settlement related thereto.
5. Each delivery of certificates evidencing equity securities:
(l) in which the Order is for l00 shares may be in one certificate for the exact
number of shares or certificates totaling l00 shares,
(2) in which the Order is greater than l00 shares and a multiple of l00 shall be in
the exact amount of the contract, or in multiples of l00 shares, or in amounts from
which units of l00 shares can be made, or a combination thereof equaling the
amount of the contract,
(3) in which the Order is for more than l00 shares but not in a multiple of l00
shall be in multiples of l00 shares, or in amounts from which units of l00 shares
can be made, or a combination thereof, plus either the exact amount for the odd
lot or smaller amounts equaling the odd lot, or
(4) in which the Order is for less than l00 shares shall be in the exact amount of
the contract or for smaller units aggregating the amount of the contract.
6. (a) Each delivery of bonds or similar evidences of indebtedness in coupon

bearer form shall be made in denominations of $l,000 or in denominations of $l00 or
multiples thereof aggregating $l,000.
(b) Each delivery of bonds or similar evidences of indebtedness in fully

registered bond issues shall be made in denominations of $l,000 or multiples thereof or
in amount of $l00 or multiples aggregating $l,000, but in no event in denominations
larger than $l00,000.
7. The units of delivery for certificates of deposit for bonds shall be the same as
prescribed for bonds in Section 6 of this Rule.
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(RULE 44)
8. Each delivery must also meet the good delivery requirements set forth in the
rules of the primary market place where the securities are traded notwithstanding that
such requirements would not otherwise apply to a transaction compared, cleared or
settled through the Corporation.
140
(RULE 45)
RULE 45. NOTICES
SEC. 1. Any notice pursuant to these Rules from the Corporation to an

Interested Person as defined in Rule 37 shall be sufficiently served on such Interested
Person if the notice is in writing, is delivered to the Interested Person’s box, if any,
maintained by the Corporation on its premises, is mailed to the Interested Person’s
office address or e-mailed to the Interested Person’s e-mail address. Any notice to an
Interested Person, if mailed to the person’s address, shall be deemed to have been
given when deposited in the United States Postal Service, with postage thereon
prepaid, directed to the Interested Person at its office address, if e-mailed, shall be
deemed to have been given when routed to the e-mail address of the Interested Person
and, if delivered to the Interested Person’s box, shall be deemed to have been given
when deposited in the Interested Person’s box.
SEC. 2. Any notice from an Interested Person to the Corporation shall be

sufficiently served on the Corporation if the notice is in writing and is delivered or mailed
to the Corporation at its principal place of business, Attention: Secretary, or such other
place as it designates. Any such notice to the Corporation shall be deemed to have
been given when received.
SEC. 3. Any notice required to be given to participants by the Corporation

pursuant to Rule 18 shall state the Corporation’s decision to decline or cease to act for
a participant. The Corporation may provide in such notice or a subsequent notice the
steps to be taken in the Comparison Operation, Accounting Operation, Settlement or
other activities as well as how pending transactions shall be affected.
SEC. 4. Any notice required to be given to the Corporation by a participant

pursuant to Rule 20 shall be given both orally and in writing as soon as possible after
the Time of Insolvency. Notice by the Corporation pursuant to Rule 20 to all participants
shall be given as soon as possible after the Time of Insolvency and shall state whether
the Corporation has ceased to act for the insolvent participant as well as how pending
matters will be affected and what steps will be taken in connection therewith.
SEC. 5. Any notice required to be given by the Corporation pursuant to Section

2 of Rule 46 shall set forth the specific grounds under consideration upon which any
suspension, prohibition or limitation of access may be based and shall contain notice to
the participant of its right to request a hearing, such request to be filed by such
participant with the Corporation pursuant to Rule 37.
SEC. 6. Any notice required to be given by the Corporation to a participant

pursuant to Section 2 of Rule 48 shall set forth the charges against the participant and
shall contain notice to such participant of its right to request a hearing, such request to
be filed by it with the Corporation pursuant to Rule 37.
SEC. 7. Notwithstanding anything in these rules to the contrary, and other than
with respect to notices covered by Sec. 5 or 6 of this Rule, the Corporation may
distribute notices to participants by posting such notices on its website (“NSCC
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(RULE 45)
Website”). The Corporation shall deem a notice sufficiently served once the notice is
posted on NSCC’s Website, and it is the responsibility of the participants to retrieve
notices daily from the NSCC Website
142
(RULE 46)
RULE 46. RESTRICTIONS ON ACCESS TO SERVICES
SEC. 1. The Board of Directors may suspend a Member, Mutual Fund/Insurance

Services Member, Municipal Comparison Only Member, Insurance Carrier/Retirement
Services Member, TPA Member, TPP Member, Investment Manager/Agent Member,
Fund Member, Data Services Only Member or AIP Member (each hereinafter referred
to as a “participant” for purposes of this Rule 46) or prohibit or limit such participant’s
access to services offered by the Corporation in the event that (a) the participant has
been and is expelled or suspended from any regulatory or self-regulatory organization,
or (b) the participant is in default of any delivery of funds or securities to the
Corporation, (c) the participant is in such financial or operating difficulty, that the
Corporation determined, in its discretion, that such action is necessary for the protection
of the Corporation, the participants, creditors, or investors; with respect to a bank or
trust company Member or Mutual Fund/Insurance Services Member (and, in the case of
a bank Member electing entry under Section 1.B.2.(a)(ii) of Addendum B, its parent
bank holding company) such difficulty shall include but not be limited to impaired capital
or the appointment by the primary Federal or State bank supervisor of a receiver to take
control of the bank, (d) the Corporation has reasonable grounds to believe that such
participant is subject to a Statutory Disqualification, (e) the Corporation determines that
such participant does not meet the applicable qualifications for membership or limited
access set forth in Rule 2A, Rule 2B and Addendum B, (f) such participant has failed to
comply with any financial or operational requirement of the Corporation, or (g) in any
circumstances in which, in the discretion of the Corporation, adequate cause exists to
do so.
SEC. 2. Before suspending a participant or prohibiting or limiting such

participant’s access to services offered by the Corporation pursuant to this Rule, the
Corporation shall notify such participant pursuant to Section 5 of Rule 45.
SEC. 3. Notwithstanding Section 2 of this Rule, the Board of Directors may

summarily suspend a participant’s access to services offered by the Corporation in the
event that either one or more of conditions (a), (b) or (c) of Section 1 of this Rule apply
to such participant. In the event that any such participant has been summarily
suspended, the Corporation shall cease to act for such participant in accordance with
Rule 18, except as otherwise provided in the Rules. Any summary action which may be
taken by the Board of Directors pursuant to this Section of Rule 46 may instead be
taken by one or more designees of the Board of Directors in the event that a quorum of
the Board of Directors is unable to meet, provided that any summary action taken by
one or more designees must be confirmed by the Board of Directors within 3 business
days. Any participant that has been summarily suspended or whose access has been
summarily prohibited or limited pursuant to this Section of Rule 46 shall be promptly
furnished a written statement of the grounds for the decision and shall be notified of its
right to request a hearing, pursuant to Rule 37. A request for a hearing must be in
writing and filed within 2 business days of receipt from the Corporation of such
statement. Any such hearing requested pursuant to Rule 37 shall be held as promptly
as possible after the Corporation has taken summary action against the participant
pursuant to this Rule.
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(RULE 46)
SEC. 4. Any action taken by the Corporation pursuant to this Rule may include,
but shall not be limited to, any one or more of the following actions:
(a) ceasing to act for the participant pursuant to Rule 18;
(b) limiting or excluding the participant’s participation in one or more classes of

transactions or services which are, depending on membership type, available to the
participant, including but not limited to (i) envelope “receive” transactions, (ii) CNS
positions or Balance Order obligations of the Member, or (iii) transactions involving
ancillary services of the Corporation;
(c) requiring the participant to effect securities settlement through a Sponsored

Account of National Securities Clearing Corporation at The Depository Trust Company,
rather than through its own depository account.
144
(RULE 47)
RULE 47. INTERPRETATION OF RULES
The Board of Directors of the Corporation or their designee(s) shall have the
authority to interpret the Rules of the Corporation. Interpretations of the Board of
Directors or their designee(s) shall be final and conclusive.
145
(RULE 48)
RULE 48. DISCIPLINARY PROCEEDINGS
SEC. 1. The Corporation may discipline any Member or Limited Member (each
hereinafter referred to as a “participant” for purposes of this Rule 48) for a violation of
any provision of the Rules or the Procedures of the Corporation, such participant’s
agreements with the Corporation, or for any error, delay or other conduct detrimental to
the operations of the Corporation, or for not providing adequate facilities for such
participant’s business with the Corporation, by expulsion, suspension, limitation of or
restriction on activities, functions and operations, fine or censure or any other fitting
sanction; provided, however, that the fine for any single offense shall not exceed the
sum of $20,000.
SEC. 2. Before imposing any disciplinary sanction on a participant pursuant to

this Rule, the Corporation shall notify such participant pursuant to Section 6 of Rule 45
of the charges against such participant and its right to a hearing.
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(RULE 49)
RULE 49. RELEASE OF CLEARING DATA AND CLEARING FUND DATA
(a) Absent valid legal process or as provided in paragraph (b) hereof, the
Corporation will only release Clearing Data relating to transactions of a particular
participant and Clearing Fund Data to such participant upon his written request.
(b) The Corporation, in its sole discretion, may release Clearing Data relating to
transactions of participants and/or the Clearing Fund Data of participants to (i)
regulatory organizations and self-regulatory organizations, as defined in the Securities
Exchange Act of 1934, as amended, or other comparable Federal or State statutes, (ii)
clearing agencies registered with the SEC of which the participant is a member, and (iii)
to any clearing organization that is affiliated with or has been designated by a futures
contract market under the oversight of the Commodities Futures Trading Commission,
of which the participant is a member. Provided, however, that nothing in this Rule shall
prevent the Corporation from releasing Clearing Data to others, provided that such data
shall be in a form as to prevent the disclosure, whether patently or in easily discernible
format, of proprietary and/or confidential financial, operational or trading data of a
particular participant or inappropriately arranged groups of participants.
(c) With respect to the foregoing, the release of any Clearing Data and/or
Clearing Fund Data shall be conditioned upon either (i) a written request, or (ii) the
execution of a written agreement with the Corporation, whichever appropriate in the
Corporation’s discretion and the Corporation, in its discretion, shall establish the
conditions under which such data shall be released and the fees, if any, to be paid for
such data.
(d) The term “Clearing Data” shall mean, for the purposes of this Rule,
transaction data which is received by the Corporation for inclusion in the clearance
and/or settlement process of the Corporation, or such data, reports or summaries
thereof, which may be produced as a result of processing such transaction data. The
term “Clearing Fund Data” shall mean, for the purposes of this Rule, information
regarding a participant’s clearing fund, margin and other similar requirements and
deposits at the Corporation, or such data, reports or summaries thereof, which may be
produced by the Corporation from time to time.
(e) The foregoing notwithstanding, this Rule is not intended to, nor shall it be
deemed to be in contravention, or a limitation, of the Corporation’s obligations, as a self-
regulatory organization, to cooperate and share data with other regulatory and self-
regulatory organizations for regulatory purposes.
147
(RULE 50)
RULE 50. AUTOMATED CUSTOMER ACCOUNT TRANSFER SERVICE
SEC. 1. The Corporation may provide a service to enable Members and

Qualified Securities Depositories, on behalf of their participants (hereinafter referred to
as the “QSD”), to transfer accounts of their customers between themselves on an
automated basis. Such automated transfer of customer accounts will be known as the
Automated Customer Account Transfer Service (hereinafter referred to as “ACATS”)
and will be processed in accordance with the provisions of this Rule.
SEC. 2. A Member or QSD to whom a customer’s full account is to be

transferred (hereinafter referred to as the “Receiving Member”) may initiate the
procedure by submitting to the Corporation, within such time frame as established by
the Corporation from time to time, a transfer initiation request in such automated format
as the Corporation may establish from time to time.
SEC. 3. The Corporation will review the transfer initiation request received for
such data which the Corporation determines from time to time to be necessary.
Notwithstanding the foregoing, the Corporation will not be responsible for the
completeness or accuracy of any information contained in the transfer initiation request.
If the request does not contain the required data, the Corporation will reject the request.
If the Corporation rejects the request, the Receiving Member must reinitiate the request
as if it had never been previously submitted. The Receiving Member may submit,
through the facilities of the Corporation, such documentation as the Member or QSD
who currently has the account (hereinafter referred to as the “Delivering Member”)
requires to transfer the account, and any such delivery shall be made pursuant to the
procedures of the Corporation as the Corporation may provide from time to time. The
Corporation assumes no responsibility for the completeness or accuracy of any such
form or documentation submitted through the facilities of the Corporation or otherwise.
SEC. 4. Each day the Corporation will produce a report, in such form as
determined by the Corporation from time to time, indicating all customer account
transfer requests received by the Corporation that day. On a daily basis, Members and
QSDs must compare the list of customer account transfer requests as reported by the
Corporation that were initiated throughout that day with any transfer initiation requests
delivered to or received from the Corporation or from another Member or QSD. Any
discrepancies between the report and the transfer initiation requests received or
delivered must be immediately reported to the Corporation. To the extent necessary or
appropriate, the Corporation will cause an adjustment to be made to such report within
such time as the Corporation determines to be necessary.
SEC. 5. Within the time frame established by the Corporation or, to the extent
applicable, the Delivering Member’s Designated Examining Authority (“DEA”), and, to
the extent applicable, pursuant to reasons permitted by the Delivering Member’s DEA,
the Delivering Member must either reject a customer account transfer request by
submitting a rejection to the Corporation in such form as determined by the Corporation
from time to time, or submit to the Corporation detailed customer account asset data in
such format as established by the Corporation from time to time; provided, however,
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(RULE 50)
that if Fund/SERV Eligible Fund assets are to be transferred through Mutual Fund
Services, the Delivering Member must specify the quantity of each Fund/SERV Eligible
Fund asset to be processed and indicate whether each such transfer shall be a full or a
partial transfer1. A Delivering Member who rejects a transfer request must indicate the
reason for the rejection. Any transfer request that is not responded to by a Delivering
Member within such time frame as established by the Corporation from time to time will
be deleted from ACATS by the Corporation and the Receiving and Delivering Member’s
will be notified accordingly. A Receiving Member who desires to resubmit a transfer
request that is deleted will be required to reinitiate the request as if one had never been
previously submitted.
SEC. 6. The Corporation will notify a Receiving Member, in such manner as

determined by the Corporation from time to time, of customer account transfer requests
that have been rejected by the Delivering Member and the Corporation will cause such
requests to be deleted from ACATS unless a correction is submitted by the Receiving
Member as set forth below. To the extent the rejection is for enumerated categories, as
specified by the Corporation from time to time, within one (1) business day after
notification of a Delivering Member’s rejection, a Receiving Member may adjust a
customer account transfer request by submitting corrections to the Corporation in such
manner as determined by the Corporation from time to time. A Delivering Member must
either reject the adjusted transfer request by submitting a rejection to the Corporation or
submit to the Corporation detailed customer account asset data, in such manner and by
such time as determined by the Corporation from time to time. If the Delivering Member
fails to respond to the adjusted transfer request within such time frame as established
by the Corporation from time to time, the Corporation will delete such request from
ACATS and the Receiving and Delivering Members will be notified accordingly. A
Receiving Member who desires to resubmit a transfer request that is deleted will be
required to reinitiate the request as if one had never been previously submitted.
SEC. 7. Upon receipt by the Corporation from the Delivering Member of

customer account asset data, the Corporation will use its best efforts to validate the
data for edit errors. However, the Corporation will not assume the responsibility for
such validation process. If no edit errors or format errors are discovered by the
Corporation in the asset data, details of the account will be reported to both the
Delivering Member and the Receiving Member in such manner and by such time as
established by the Corporation from time to time. If the Corporation discovers that
customer account asset data contains one or more edit errors or, format errors, the
Corporation will notify the Receiving Member in such manner and by such time as
determined by the Corporation from time to time that customer account asset data has
been received from the Delivering Member but that it contains edit errors or format
errors. The Corporation will notify the Delivering Member in such manner and by such
time as determined by the Corporation from time to time of all customer account asset
1
A full transfer will cause all Fund/SERV Eligible Fund account assets, whether greater or lesser than
the quantity specified, to be transferred. A partial transfer will cause only the Fund/SERV Eligible
Fund account asset quantity specified or such lesser amount to be transferred.
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(RULE 50)
data reported, indicating that which contains errors. The Delivering Member will be
required to correct those items that contain edit errors or format errors in order to permit
delivery of the customer’s account to occur within the time frame as established by the
Delivering Member’s DEA. If the Delivering Member fails to correct edit errors or format
errors within such time frame established by the Corporation, the Corporation will delete
the transfer request from ACATS. A Receiving Member who desires to resubmit a
transfer request that is deleted will be required to reinitiate the request as if one had
never been previously submitted.
SEC. 8. A Receiving Member will have one (1) business day after receipt from
the Corporation of the report detailing the customer account asset data to review the
account and accept all assets, or, to the extent permitted by the Receiving Member’s
DEA, if applicable, reject one or more assets within a DEA determined asset category,
request the Delivering Member to make adjustments to it or, as permitted by the
Corporation or, to the extent applicable, the Receiving Member's DEA, reject the
account. No action is required by the Receiving Member if it determines to accept all
assets in an account. A Receiving Member may accelerate the transfer of the customer
account by either (i) providing an acceleration instruction to the Corporation upon
receipt of the customer account asset data list from the Corporation and accepting all
assets or (ii) deleting MF/I&RS Products (as defined below) and accepting the
remaining assets. Once a Receiving Member has accelerated the transfer, the transfer
will be in accelerated status. During the one (1) business day time period, only the
Delivering Member will be able to add, delete or change an item, provided that the
Receiving Member did not accelerate the transfer, by delivering to the Corporation such
information in such form and by such time as established by the Corporation from time
to time, other than with respect to MF/I&RS Products, which can also be deleted by the
Receiving Member. Once the Receiving Member accelerates the transfer, the
Delivering Member will be prohibited from making any adjustments to the account. If
the transfer is not in an accelerated status, each business day that a Delivering Member
causes an adjustment to be made to an account will give the Receiving Member an
additional one (1) business day to review the account. If Fund/SERV Eligible Fund
assets and/or I&RS Eligible Products (“MF/I&RS Products”) are to be transferred the
Receiving Member shall also, within one (1) business day after receipt from the
Corporation of the report detailing the MF/I&RS Products data or simultaneous with the
submission of an acceleration instruction, submit to the Corporation detailed transfer
instructions in such format as established by the Corporation from time to time, which
instructions shall be processed through Mutual Fund Services in accordance with
Section 16 of Subsection A of Rule 52 or through I&RS in accordance with Section 6 of
Rule 57, as applicable. If a Receiving Member submits instructions and determines that
a modification must be made to such instruction, such modifications must be submitted
within the same deadline. Modifications to an already submitted instruction will not be
permitted if the transfer is in accelerated status. Each business day that the Delivering
Member causes an adjustment to be made to an account will give the Receiving
Member an additional one (1) business day to submit such transfer information. With
respect to Fund/SERV Eligible Fund assets, if the Receiving Member fails to properly
submit such transfer information within the required time period, the Corporation shall
transmit through Mutual Fund Services such standing transfer information as the
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(RULE 50)
Corporation shall determine. Each day the Corporation will produce a report indicating
the transfer instructions that have been received by the Corporation, if any, and, with
respect to Fund/SERV Eligible Fund assets, if no instructions have been received, the
standing instructions which will be submitted to the Mutual Fund Processor or Fund
Member. Each day the Corporation will produce a report to the Receiving and
Delivering Member, indicating the Fund/SERV Eligible Fund customer account asset
transfers which have been confirmed or rejected by the Mutual Fund Processor or Fund
Member in accordance with Section 16 of Subsection A of Rule 52. Such report will
also indicate those transfers which the Mutual Fund Processor or Fund Member has not
confirmed or rejected or which have been deleted. Each day the Corporation will
produce a report to the Receiving and Delivering Member, indicating the I&RS Eligible
Products transfers which have been confirmed or rejected by the Insurance
Carrier/Retirement Services Member in accordance with Section 6 of Rule 57, or which
have been deleted.
SEC. 9. Once a customer account has been accepted by the Receiving

Member:
(i) To the extent a transfer is between a Member and another Member:
(1) The Corporation will cause relevant items deemed by it to be eligible

pursuant to Procedure XVIII to be entered into the ACATS Settlement
Accounting Operation.
(2) The Corporation will issue an instruction file to DTC specifying the
assets to be delivered/received for all items that are not eligible for the
ACATS Settlement Accounting Operation that are otherwise eligible at
DTC, in each case pursuant to the standing instructions filed with the
Corporation by the Delivering Member.
(3) The Corporation will produce ACATS Receive and Deliver Instructions
for items that are not eligible for the ACATS Settlement Accounting
Operation or for inclusion in the file sent to DTC per (2) above.
To the extent that a value is specified on an ACATS Receive and Deliver

Instruction, other than for those asset types or asset settling locations designated by the
Corporation from time to time, the value for settlement purposes pursuant to Section 10
will be in U.S. dollars and, in the case of items not eligible for the ACATS Settlement
Accounting Operation, will be based upon (i) the price obtained from a pricing source, if
available or, if not available, (ii) the value of that asset provided to the Corporation by
the Delivering Member2, and will also specify such other information as the Corporation
may determine from time to time and shall otherwise, to the extent applicable, be
2
Members who are also members of FINRA are expected to adhere to FINRA rules regarding
valuation of assets in connection with transfer instructions.
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(RULE 50)
subject to the rules of the Members’ DEAs, including, but not limited to, their close-out
provisions and shall not be subject to the Rules of the Corporation.
(ii) To the extent a transfer is between QSD participants or between a QSD

participant and a Member:
(1) For all DTC eligible assets, other than (a) U.S. dollar cash balances (“Cash”),
(b) assets covered by a standing instruction filed by the Delivering Member with
the Corporation, and (c) assets for which a special receive/deliver instruction
request was received from the Delivering Member at the time asset details were
submitted, the Corporation will issue an instruction file to DTC specifying the
quantity of each asset to be delivered with a deliver value of zero. 3
(2) The Corporation will produce ACAT Receive and Deliver Instructions for all
assets to be transferred and, upon request, will also produce special
receive/deliver instructions naming the Receiving Member and Delivering
Member. All such special receive/deliver instructions will specify no value.
(3) For all Cash assets, the Corporation will issue payment instructions to DTC
naming the paying/receiving entity.
All assets to be transferred through DTC shall be subject to the rules and
procedures of DTC.
SEC. 10. To the extent a transfer is between a Member and another Member:
(i) On Settlement Date as indicated on the ACATS Receive and Deliver

Instructions, the Corporation will debit and credit the appropriate Member’s settlement
account for the value of the applicable items (excluding items included within the
ACATS Settlement Accounting Operation). The actual delivery and corresponding
money settlement of the underlying assets, regardless of whether a Member’s account
has been debited pursuant to this subsection, shall be the responsibility of the
appropriate Member and, to the extent applicable, shall be pursuant to the rules of the
Member’s DEA. If a Member fails to make a delivery, such failure, to the extent
applicable, shall be subject to the rules of the Member’s DEA and not the Rules of the
Corporation.
(ii) The actual delivery and corresponding money settlement, if any, of

Fund/SERV Eligible Fund assets which have been rejected or deleted in accordance
with Section 16 of Subsection A of Rule 52 for which ACAT Receive and Deliver
Instructions have been issued shall be the responsibility of the appropriate Member and,
to the extent applicable, shall be pursuant to the rules of the Member’s DEA. If a
3
The special receive/deliver instruction referenced in this Section has the same legal effect as an
ACAT Receive and Deliver instruction.
152
(RULE 50)
Member fails to make a delivery, such failure shall be, to the extent applicable, subject
to the rules of the Member’s DEA and not the Rules of the Corporation.
(iii) On Settlement Date, as indicated on the ACAT Settlement Report, the

Corporation will debit and credit the Member’s settlement account for the value of the
Fund/SERV Eligible Fund assets which were specified by the Delivering Member to be
processed through Mutual Fund Services in accordance with Section 16 of Subsection
A of Rule 52. The Corporation will credit the settlement account of the Member whose
settlement account was debited and debit the settlement account of the Member whose
settlement account was credited, for the value of the Fund/SERV Eligible Fund assets
within such time frame as specified by the Corporation from time to time following
receipt from the Mutual Fund Processor or Fund Member of the transfer data
confirmation.
SEC. 11. On each business day, the Corporation will issue to each Member and
QSD such reports, in such forms and containing such information as established by the
Corporation from time to time, indicating the status and details of requested customer
account transfers. On each business day, Members and QSDs must compare the
reports received against their records and any discrepancies between the two must be
immediately reported to the Corporation. To the extent necessary or appropriate, the
Corporation will cause an adjustment to be made to the report.
In addition to the foregoing, to the extent that a Receiving Member determines

that information as reported on the transfer initiation request is inaccurate, he may
cause an adjustment to be made by submitting corrected data to the Corporation. If a
Delivering Member determines that the account number of his customer as reported on
the transfer initiation request is inaccurate, he may cause an adjustment to be made by
submitting corrected data to the Corporation. In both such cases, corrected data must
be submitted to the Corporation within such time as established by the Corporation from
time to time.
SEC. 12. The Corporation may also provide services to enable Delivering
Members to initiate the transfer of:
(i) residual credit positions, which are received for the benefit of a customer’s
account by the Delivering Member after the ACAT process is completed or which, due
to a restriction, were not included in the original asset transfer (hereinafter collectively
referred to as “Residual Credits”);
(ii) a partial account held by a Delivering Member (in the form of cash or
securities), (hereinafter collectively referred to as “Partial Accounts”);
(iii) cash in respect of fail positions for which delivery is unable to be completed,
provided, however, that this transfer may only be initiated to the extent that the fail is
between a Member and another Member (hereinafter collectively referred to as “Fail
Reversals”); and
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(RULE 50)
(iv) cash or securities mistakenly delivered as part of ACATS (hereinafter

collectively referred to as “Reclaims”), other than Fund/SERV Eligible Fund assets and
positions eligible for processing at a Registered Clearing Agency with whom the
Corporation has entered into an agreement relating to ACATS (hereinafter referred to
as an “ACAT RCA”).
Such transfers shall be processed as follows:
1. Transfers may be initiated by a Delivering Member by submitting to the

Corporation such details as required by the Corporation from time to time within such
time frame as established by the Corporation from time to time. The Corporation will
reject a transfer if the details contain an edit or format error. The Corporation will notify
the Delivering Member if a transfer is rejected and the Delivering Member must reinitiate
the transfer as if it had never been previously submitted. If no edit errors or format
errors are discovered by the Corporation in the asset data, details of the account will be
reported to both the Delivering Member and the Receiving Member in such manner and
by such time as established by the Corporation from time to time.
2. A Receiving Member may reject the transfer by submitting such information

as determined by the Corporation by the time and in the manner specified by the
Corporation on the same day as the transfer request is received or, in respect of
Reclaim transfers, no later than two business days following the day the Reclaim
transfer request is received. No action is required by the Receiving Member if it
determines to accept the transfer. A Receiving Member may not submit corrections and
a Delivering Member may not make adjustments to such transfer request, except a
Receiving Member may delete Fund/Serv Eligible Fund assets for Partial Accounts and
Residual Credits.
3. Settlement Date for all transfers covered by this section shall be one business
day following the day the Corporation receives the transfer request unless:
(i) the request is Reclaim transfer, in which case Settlement Date shall
be one business day following the day the Receiving Member accepts the
request or the Corporation deems the request accepted, or
(ii) the request includes either options assets which are eligible for
processing an ACAT RCA, or Fund/SERV Eligible Fund assets, whereby
the settlement date for all assets included in the transfer shall be two
business days following the day the Corporation receives the transfer
request.
SEC. 13. A Receiving Member may submit a request to a Delivering Member to

initiate the transfer of a partial customer account, in such form as determined by the
Corporation from time to time. Such request shall be delivered by the Corporation to the
Delivering Member on the same day as received by the Corporation. Each day for a
period not to exceed two days, the Corporation will produce a report, in such form as
determined by the Corporation from time to time, indicating all such requests received
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(RULE 50)
by the Corporation. A Delivering Member must either reject a customer account

transfer request by submitting a rejection to the Corporation in such form as determined
by the Corporation from time to time, or submit to the Corporation detailed customer
account asset data in such format as established by the Corporation from time to time.
If a request is rejected, the Delivering Member must indicate the reason for the
rejection. If the Delivering Member submits detailed account asset data, and the
transfer is not rejected by the Receiving Member, Settlement Date for this transfer
request will be one business day after the Delivering Member has submitted the asset
account data unless the transfer contains options assets or Fund/SERV Eligible Fund
assets, in which case the settlement date for all assets will be two business days.
SEC. 14. Notwithstanding the forgoing, to the extent a transfer involves an asset
position eligible for delivery at an ACAT RCA (other than the DTC), and both the
Receiving Member and the Delivering Member have an account at the ACAT RCA, the
Corporation will either: issue an instruction file to the applicable ACAT RCA indicating
the quantity of assets to be delivered and received and the delivering/receiving
participant, or produce ACAT Receive and Deliver Instructions if requested by the
Delivering Member at the time the asset details are submitted or pursuant to a standing
instruction filed by the Delivering Member with the Corporation. Such ACAT Receive
and Deliver Instructions and instruction files shall not specify a value, unless the transfer
is between two Members and the assets to be transferred are government securities
(where a nominal value shall be specified) and mortgage-backed securities. In the case
of mortgage-backed securities, the ACAT Receive and Deliver Instructions and
instruction files shall specify a value for each item (in accordance with the pricing
provisions of Section 9 of this Rule for non-CNS eligible items) and, on Settlement Date
as indicated on the ACAT Receive and Deliver Instructions and instruction files, the
Corporation will debit and credit the appropriate Members’ settlement accounts for the
specified value of such items.
SEC. 15. The Corporation may report to the Delivering and Receiving Members’
DEA, to the extent applicable, such information regarding customer account transfers as
may be requested of the Corporation from time to time by the DEA.
SEC. 16. Settlement of money payments between Members arising out of

account transfers covered by this Rule shall be made in accordance with Rule 12 and
other provisions of these Rules.
SEC. 17. Each Member or participant of a QSD that requests a transfer through
ACATS (the “Requesting Firm”) agrees to (i) indemnify and hold harmless the Member
or participant of a QSD that accepts such transfer request (the “Accepting Firm”) from
and against any and all losses, claims, damages or liabilities (or actions in respect
thereof) to which the Accepting Firm may become subject, under any provision of law,
to the Accepting Firm’s customer or to any other person, insofar as such losses, claims,
damages or liabilities arise out of or are based upon an unauthorized or allegedly
unauthorized transfer request or any inaccurate or allegedly inaccurate documentation
or information, in any format, transmitted by the Requesting Firm through NSCC or
ACATS and (ii) reimburse the Accepting Firm for any legal or other expenses
155
(RULE 50)
reasonably incurred by the Accepting Firm in connection with defending any such action
or claim as such expenses are incurred. Each Requesting Firm agrees that an
Accepting Firm accepting its transfer request through ACATS shall be a third-party
beneficiary of the above indemnification and reimbursement obligations in respect of
such request, and that such an Accepting Firm may assert any claim under these
indemnification and reimbursement obligations as a third-party beneficiary directly
against such Requesting Firm.
Each Accepting Firm agrees, promptly after receipt of written notice from any
customer of the Accepting Firm or any other person, or after any action is brought
against the Accepting Firm by such a customer or other person in respect of a loss,
claim, damage or liability that may give rise to the indemnification obligations under the
preceding paragraph, to notify the Requesting Firm in writing of the receipt of such
notice or action. The Requesting Firm agrees that any failure by the Accepting Firm to
give such notice does not relieve the Requesting Firm of any liability to the Accepting
Firm under the preceding paragraph. If any action shall be brought against the
Accepting Firm that may give rise to the indemnification provisions of the preceding
paragraph, the Accepting Firm further agrees that the Requesting Firm shall be entitled
to participate therein and/or assume the defense thereof (with counsel satisfactory to
the Accepting Firm), without the prejudice to the continuing rights of the Accepting Firm.
Each Requesting Firm and Accepting Firm agrees that any Requesting Firm or
Accepting Firm benefiting from the notification and participation obligations in this
paragraph is intended to be a third-party beneficiary of such obligations and may
enforce such obligations as a third-party beneficiary against the promisor thereof.
Each Requesting Firm and Accepting Firm agrees that any dispute between
them arising under this section shall be resolved directly between them, and that the
Corporation shall not be made a party to any such dispute and shall have no
responsibility with respect to the enforcement or satisfaction of any indemnification,
reimbursement, notification and participation obligations contained in this section.
SEC. 18. The Corporation does not guaranty completion of ACATS transactions.
In the event a Member fails to meet its settlement obligation to the Corporation:
(1) For any transaction that entered the ACATS Settlement Accounting
Operation but was subsequently exited from the ACATS Settlement
Accounting Operation on ACATS settlement date, the transaction will be
considered uncompleted and will be reversed against the original debit or
credit value applied to their settlement account upon exit.4
4
The ACATS reversal for this transaction would be processed in the same way as a transaction that
did not enter the ACATS Settlement Accounting Operation. The exception would be for a
Fund/SERV Eligible Fund asset, as NSCC tracks the completion of this asset on settlement date and
would only reverse an uncompleted transaction.
156
(RULE 50)
(2) Any transaction or, if partially completed, the uncompleted portion of a

transaction of the Member in the ACATS Settlement Accounting
Operation, will be reversed if it remains outstanding (or uncompleted)
upon the Member’s failure to settle, and:
a. If the timing of that reversal on settlement date is before such

transaction would have either entered the CNS General Accounting
System or issued as a Member to Member instruction for a DTC-
eligible transaction, the transaction will be reversed without a
settlement debit or credit (as there was no debit or credit value
originally applied to the Member’s settlement account), or
b. If the reversal occurred on settlement date after such transaction

either entered the CNS General Accounting System or was issued
as a Member to Member instruction for a DTC-eligible transaction,
the transaction will be reversed against the debit or credit value that
was originally applied to the Member’s settlement account.
(3) For all other uncompleted ACATS transactions not applicable to (1) and
(2) of this Section, such transactions and any related debits or credits will
be reversed.
157
(RULE 51)
RULE 51. OBLIGATION WAREHOUSE
SEC. 1. General
The Corporation may offer a service to Members for: (i) the comparison of
securities transactions that are not otherwise submitted by or on behalf of Members for
trade comparison or recording through other NSCC systems or services, (ii) tracking,
storage and maintenance of obligations either compared through the service, or
forwarded to it from other NSCC accounting operations or services in accordance with
the Rules and Procedures through the time of settlement of such obligations (such
obligations shall collectively be referred to as “OW Obligations”), (iii) the repricing and
updating of fail obligations, (iv) the pair off of certain eligible open obligations. As
regards to tracking and maintenance, the Corporation will cause CNS-eligible OW
Obligations to be entered into the CNS Accounting Operation on a regular basis.1 This
service shall be known as the “Obligation Warehouse” service. In addition, in
accordance with this Rule and the Obligation Warehouse Procedure, a Member shall
submit to the Obligation Warehouse for repricing, netting and allotting, fail data with
respect to transactions already compared through the facilities of the Corporation or
other facilities.
SEC. 2. Eligible Obligations
The Obligation Warehouse shall be available for use by Members for the
tracking, records storage and maintenance of transactions in such securities or classes
of securities as the Corporation shall determine from time to time.
SEC. 3. Non-Guaranteed Service and Settlement
The Obligation Warehouse shall not be a guaranteed service of the Corporation.

Except with respect to: (i) OW Obligations that have been forwarded to the CNS
Accounting Operation in accordance with Procedure II A. and Procedure VII, and (ii) any
cash adjustment forwarded to the settlement system of the Corporation in accordance
with the Obligation Warehouse Procedure, the settlement of OW Obligations shall occur
between the parties themselves. Any obligations (settlement or otherwise) arising from
OW Obligations shall be the sole responsibility of the Members that are parties to the
obligation. In the event of the default of a Member, the Corporation within such time
frames as determined from time to time and whether before or after settlement on any
business day, may: (i) exit all OW Obligations of such Member, (ii) reverse all credits
and debits for the Member relating to OW Obligations that have entered the CNS
Accounting Operation, and (iii) reverse any cash adjustment of the Member forwarded
to settlement pursuant to the Obligation Warehouse Procedures.
1
This functionality will be made available to Members at a date no less than 10 business days
following announcement of its implementation by Important Notice.
158
(RULE 51)
SEC. 4. Limitations on Liability
(a) Notwithstanding any other provision in the Rules of the Corporation;

the Corporation will not be liable for any action taken, or any delay or failure to
take any action, hereunder or otherwise to fulfill the Corporation’s obligations to
users of the Obligation Warehouse service, other than for losses caused directly
by the Corporation’s gross negligence, willful misconduct, or violation of federal
securities laws for which there is a private right of action.
(b) Under no circumstances will the Corporation be liable for any

indirect, consequential, incidental, special, punitive or exemplary loss or damage
(including, but not limited to, loss of business, loss of profits, trading losses, loss
of opportunity and loss of use) howsoever suffered or incurred, regardless of
whether the Corporation has been advised of the possibility of such damages or
whether such damages otherwise could have been foreseen or prevented.
159
(RULE 52)
RULE 52. MUTUAL FUND SERVICES
A. Fund/SERV®
SEC. 1. The Corporation may provide a service to enable Members, Mutual

Fund/Insurance Services Members, TPA Members, TPP Members, Investment
Manager/Agent Members, and Fund Members to process and/or settle, as the case
may be, on an automated basis purchase and redemption orders and transactions in
interests in Fund/SERV Eligible Funds (such interests, whether structured as shares,
units, or other denominations shall be referred to as “shares” for purposes of these
Rules), transmit registration instructions and/or to enable, as the case may be, the
transfer on an automated basis of the value of Fund/SERV Eligible Fund shares. Such
automated processing of Fund/SERV Eligible Fund shares shall be known as
Fund/SERV and will be accomplished in accordance with the provisions of this Rule.
SEC. 2. A Member, Mutual Fund/Insurance Services Member, TPA Member,

TPP Member or Investment Manager/Agent Member who desires to submit a
Fund/SERV Eligible Fund order (e.g. purchase, redemption, exchange) or transaction to
another Member (referred to as a Mutual Fund Processor) or Fund Member may do so
by submitting order data to the Corporation on the day the order is intended to take
place (“Trade Date”) or, to the extent established by each Fund Member, any day
thereafter (hereinafter referred to as “As-Of” orders) in such form and by such times as
established by the Corporation from time to time.1 An order submitted by a Member,
Mutual Fund/Insurance Services Member, Investment Manager/Agent Member, TPP
Member or TPA Member that does not indicate otherwise shall be settled through the
facilities of the Corporation. An order processed through Fund/SERV but not settled
through the Corporation’s facilities is referred to hereinafter as a “Fund/SERV
Processing Only Transaction,” and the settlement of such transactions is the
responsibility of the parties thereto.
SEC. 3. Upon receipt of the order data, the Corporation will review the order
data for such information which the Corporation determines from time to time to be
necessary (including applicable Fund Member or Mutual Fund Processor parameters).
If such order data does not contain the information required by the Corporation, the
Corporation will reject the order data and will advise the Member, Mutual
Fund/Insurance Services Member, Investment Manager/Agent Member, TPP Member
or the TPA Member, as the case may be, of such rejection in such form and by such
times as established by the Corporation from time to time. If the order data appears to
contain the information required by the Corporation, subject to any rights the
Corporation may have as provided in the Rules generally, the Corporation will transmit
the order data to the Mutual Fund Processor or Fund Member and, if submitted by a
TPP Member, TPA Member or Investment Manager/Agent Member, to the
corresponding Member or Mutual Fund/Insurance Services Member with the obligation
1
A Fund Member or Mutual Fund Processor may indicate to the Corporation the parameters and types
of orders it is willing to process through the Fund/SERV service.
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(RULE 52)
to settle the order (hereinafter referred to as the TTP/TPA/IMA Settling Entity), in such
form and by such times as established by the Corporation from time to time. To the
extent the Corporation has knowledge that it is unable to transmit the order data to the
Mutual Fund Processor or Fund Member, the Corporation will use its best efforts to
contact the Mutual Fund Processor or Fund Member and so advise. Notwithstanding
the foregoing, to the extent a Mutual Fund Processor or Fund Member fails to receive
the order data, the Mutual Fund Processor or Fund Member, as soon as practicable,
must contact the Corporation. Upon request by the Mutual Fund Processor or Fund
Member, the Corporation may make summary order data available to the Mutual Fund
Processor or Fund Member to the extent the Corporation has such data available. A
Member, Mutual Fund/Insurance Services Member, Investment Manager/Agent
Member, TPP Member or a TPA Member who desires to resubmit an order that has
been rejected must resubmit the order as if it had never been submitted and such order
shall be submitted within the time frames established by the Corporation from time to
time.
SEC. 4. A Mutual Fund Processor or Fund Member may confirm or reject an

order received from a Member, Mutual Fund/Insurance Services Member, Investment
Manager/Agent Member, TPP Member or a TPA Member by transmitting such
confirmation or rejection to the Corporation in such form and by such time as
established by the Corporation from time to time. If the order was submitted by a TPP
Member, TPA Member or Investment Manager/Agent Member, the corresponding
TPP/TPA/IMA Settlement Entity will be notified of the action taken by the Mutual Fund
Processor or Fund Member. All orders (except money market purchase orders) not
confirmed or rejected within such time will be deleted from the Fund/SERV system.
Upon receipt of a rejection from a Mutual Fund Processor or Fund Member, the
Corporation will delete the unsettled order from Fund/SERV. Responsibility for
adjusting any orders which are deleted from Fund/SERV is between the Member,
Member or the TPA Member, as the case may be, and the Mutual Fund Processor or
Fund Member. In addition to the foregoing, if a Mutual Fund Processor or Fund
Member recognizes that he has incorrectly priced orders, other than exchange orders,
that were confirmed through Fund/SERV, in order to adjust the price for all such orders
(other than money market orders) he may, until the day prior to settlement day, submit a
reconfirmation in such form and by such time as established by the Corporation from
time to time and with respect to money market orders settling on a same day basis he
may on settlement day submit a reconfirmation in such form and by such time as
established by the Corporation from time to time; provided, however, that no
reconfirmation may be submitted if a Member, Mutual Fund/Insurance Services
Member, Investment Manager/Agent Member, TPP Member or a TPA Member has
submitted a correction, as provided for in Section 7 of this Rule; instead, the procedures
set forth in Section 7 of this Rule shall apply.
SEC. 5. A Mutual Fund Processor or Fund Member who desires to originate a

confirmed order (including an As-Of order) to a Member, Mutual Fund/Insurance
Services Member, Investment Manager/Agent Member, TPP Member or a TPA Member
(other than for money market and exchange orders) may do so by submitting such
161
(RULE 52)
confirmed order data to the Corporation in such form and by such time as established
by the Corporation from time to time (any such confirmed order originated by a Mutual
Fund Processor or Fund Member will hereinafter be referred to as a “Fund Originated
Order”).
SEC. 6. Upon receipt of a Fund Originated Order, the Corporation will review the
order data for such information as the Corporation determines from time to time to be
necessary. If the order data does not contain the information required by the
Corporation, the Corporation will reject the order data and will advise the Mutual Fund
Processor or Fund Member of such rejection in such form and by such time as
established by the Corporation from time to time. A Fund Member or Mutual Fund
Processor who desires to resubmit a Fund Originated Order that has been rejected
must resubmit the order as if it never had been submitted and such order must be
submitted within the time frames established by the Corporation from time to time. If the
order data appears to contain the information required by the Corporation, subject to
any rights which the Corporation may have as provided in the Rules generally, the
Corporation will report such confirmed Fund Originated Order to the Member, Mutual
or the TPA Member and the corresponding TPP/TPA/IMA Settling Entity, as the case
may be, in such form and by such time as established by the Corporation from time to
time.
SEC. 7. A Member, Mutual Fund/Insurance Services Member, Investment

Manager/Agent Member, TPP Member or a TPA Member who does not agree with the
terms of an order (including confirmed, reconfirmed and As-Of orders), other than an
exchange order or a money market order, may submit a correction. A Member, Mutual
Fund/Insurance Services Member, Investment Manager/Agent Member, TPP Member,
TPA Member or TPP/TPA/IMA Settling Entity who does not agree with the terms of a
Fund Originated Order (including As-Of Fund Originated Orders) may submit a deletion.
Corrections and deletions must be submitted in such form and by such time as
established by the Corporation from time to time. In the case of exchanges and money
market orders, corrections and deletions are not accepted. Exchange and money
market orders will settle as confirmed by the Mutual Fund Processor or Fund Member.
Money Market purchase orders will settle as submitted by the Member, Mutual
or the TPA Member if not rejected by the Fund Member or Mutual Fund Processor. A
deletion of a Fund Originated Order pursuant to this subsection will cause the Fund
Originated Order to be deleted from Fund/SERV, and such order must be adjusted
directly between the Member, Mutual Fund/Insurance Services Member, TPP Member,
TPA Member or Investment Manager/Agent Member, as the case may be, and the
Mutual Fund Processor or Fund Member.
SEC. 8. A Mutual Fund Processor or Fund Member may either accept or reject a
correction in such form and by such time as established by the Corporation from time to
time. A Mutual Fund Processor or Fund Member must submit a correction confirmation
in order to accept a correction. Corrections which are not confirmed or rejected within
such time will be deleted from the Fund/SERV system. Upon receipt of a rejection, the
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(RULE 52)
Corporation will delete the order from Fund/SERV. Any orders which are deleted from
Fund/SERV must be adjusted directly between the Member, Mutual Fund/Insurance
Services Member, Investment Manager/Agent Member, TPP Member or the TPA
Member, as the case may be, and the Mutual Fund Processor or Fund Member.

Manager/Agent Member, TPP Member or a TPA Member may submit a money only
related charge against a Mutual Fund Processor or Fund Member, and a Mutual Fund
Processor or Fund Member may submit a money only related charge against a
Member, Mutual Fund/Insurance Services Member or another Mutual Fund Processor
or Fund Member in such form and by such time as established by the Corporation from
time to time. Upon receipt of a money only related charge, the Corporation will review
the data for such information as the Corporation determines from time to time to be
necessary (including applicable Fund Member or Mutual Fund Processor parameters).
If the data does not contain the information required by the Corporation, the Corporation
will reject the money only related charge and will advise the Member, Mutual
TPA Member, Mutual Fund Processor or Fund Member as the case may be in such
form and by such time, as established by the Corporation from time to time. If the
money only related charge appears to contain the information required by the
Corporation, subject to any rights which the Corporation may have as provided in the
Rules generally, the Corporation will report such money only related charge to the
appropriate contra party in such form and by such time, as established by the
Corporation from time to time. A Member, Mutual Fund/Insurance Services Member,
Investment Manager/Agent Member, TPP Member, TPA Member or TPP/TPA/IMA
Settling Entity, Mutual Fund Processor or Fund Member who does not agree with the
terms of a money only related charge may submit a deletion in such form and by such
time, as established by the Corporation from time to time.

Manager/Agent Member, TPP Member, TPA Member or TPP/TPA/IMA Settling Entity
who does not want an order (including an exchange order) to settle within the
Fund/SERV Service, may submit an exit instruction in such form and by such time as
established by the Corporation from time to time. Upon receipt of an exit instruction the
Corporation will review the data for such information as the Corporation determines
from time to time to be necessary. If the data does not contain the information required
by the Corporation, the Corporation will reject the exit and advise the Member, Mutual
TPA Member or TPP/TPA/IMA Settling Entity, as the case may be, in such form and by
such time as established by the Corporation from time to time. If the exit instruction
appears to contain the information required by the Corporation, the Corporation will
report such exit to a Fund Member, Mutual Fund Processor, Investment Manager/Agent
Member, TPP Member or TPA Member and corresponding TPP/TPA/IMA Settling
Entity, as the case may be, within such time as established by the Corporation from
time to time. A properly submitted exit instruction will cause such order to be deleted
from the Fund/SERV Service and such order must be adjusted directly between the
Member, Mutual Fund/Insurance Services Member and Fund Member or Mutual Fund
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(RULE 52)
Processor. If a TPP/TPA/IMA Settling Entity does not submit an exit instruction in such
form and by such time as established by the Corporation from time to time, the
TPP/TPA/IMA Settling Entity shall be responsible for the settlement of such order in
accordance with the provisions of these Rules.
SEC. 11. (a) All money market purchase orders and all other confirmed or
reconfirmed orders and money only related charges for which settlement is to take
place through the facilities of the Corporation, except for orders that have been deleted,
rejected or exited, or for which releases to settlement have not been submitted by the
Fund Member or Mutual Fund Processor, will settle in accordance with the time frames
as established by the Corporation from time to time, or in such extended or shortened
time frame as established by agreement of the submitting parties; provided however,
that such modified time frame shall be no shorter than T and no longer than T+7. On
settlement date, the Corporation will debit and credit the appropriate Members’, Mutual
Fund/Insurance Services Members’, Mutual Fund Processors’ or Fund Members’
account for the value of such orders and money only related charges.
(b) Settlement of money payments between Fund Members, Mutual Fund

Processors and Members and Mutual Fund/Insurance Services Members arising out of
orders and money only related charges for Mutual Fund Services transactions
submitted through Fund/SERV for which settlement is to take place through the facilities
of the Corporation, shall be made in accordance with Rule 12 and other provisions of
these Rules. Settlement of all other transactions and charges shall be made directly
between, and are the responsibility of, the parties thereto.
SEC. 12. If a Member, Mutual Fund/Insurance Services Member, Investment

Manager/Agent Member, TPP Member or a TPA Member (hereinafter referred to as the
“Firm Initiating Party”) determines that data transmitted to a Fund Member or Mutual
Fund Processor (hereinafter referred to as the “Fund Responding Party”) in respect of a
settled order is incorrect or if a Fund Member or Mutual Fund Processor (hereinafter
referred to as the “Fund Initiating Party”) determines that data transmitted to a Member,
Member or a TPA Member (hereinafter referred to as the “Firm Responding Party”) in
respect of a settled order is incorrect, the respective Firm or Fund Initiating Party may
submit an extended correction instruction to the Corporation within such time as
established by the Corporation from time to time. Upon receipt of the extended
correction instruction, the Corporation will review the data for such information as the
Corporation determines from time to time to be necessary. If the data does not contain
the information required by the Corporation, the Corporation will reject the extended
correction instruction and advise the respective Firm or Fund Initiating Party in such
form and by such time as established by the Corporation from time to time. If the
extended correction instruction appears to contain the information required by the
Corporation, the Corporation will report the extended correction instruction to the
respective Firm or Fund Responding Party and, if submitted by a Firm Initiating Party
that is a TPP Member, TPA Member or Investment Manager/Agent Member, to the
corresponding TPP/TPA/IMA Settling Entity within such time as established by the
Corporation from time to time. A Fund Responding Party must reject or confirm the
164
(RULE 52)
extended correction instruction in such form and within such time as established by the
Corporation from time to time. Extended correction instructions not confirmed or
rejected by a Fund Responding Party within such time as established by the
Corporation from time to time will be deleted from the Fund/SERV system by the
Corporation. Extended correction instructions will settle as submitted by the Fund
Responding Party if not rejected by a Firm Responding Party or a TPP/TPA/IMA
Settling Entity.
SEC. 13 -14. (Section numbers reserved for future use.)

Manager/Agent Member, TPP Member or a TPA Member may submit registration data
for orders and transactions processed and/or settled through Fund/SERV by
transmitting such data to the Corporation in such form and by such time as established
by the Corporation from time to time. Upon receipt of the registration data, the
Corporation will review the data for such information which the Corporation determines
from time to time to be necessary (including applicable Fund Member or Mutual Fund
Processor parameters). If such data does not contain the information required by the
Corporation, the Corporation will reject the data and report such rejection to the
Member, Mutual Fund/Insurance Services Member, Investment Manager/Agent
Member, TPP Member and the TPA Member, as the case may be, in such form and by
such time as established by the Corporation from time to time. A Member, Mutual
or a TPA Member who desires to resubmit registration data that has been rejected must
resubmit the registration data as if it had never been submitted. If the registration data
appears to contain the information required by the Corporation, the Corporation will
transmit the data to the Mutual Fund Processor or Fund Member in such form and by
such time as established by the Corporation from time to time. The Mutual Fund
Processor or Fund Member must accept or reject the registration data in such form and
by such time as established by the Corporation.
SEC. 16. ACAT/TRANSFERS
(a) Within the time frame established by the Corporation, the Corporation may
transmit, to a Mutual Fund Processor or Fund Member, Fund/SERV Eligible Fund
customer account transfer data in such form and by such time as established by the
Corporation from time to time. The Mutual Fund Processor or Fund Member must reject
or confirm the transfer in such format and by such time as established by the
Corporation. Transfers not confirmed or rejected within such time frame will be deleted
from the Fund/SERV system by the Corporation.
(b) The Corporation may permit a Member to designate another Member or

Mutual Fund/Insurance Services Member as its ACATS-Fund/SERV Agent with regard
to the re-registration of eligible book share mutual fund assets. Members and ACATS-
Fund/SERV Agents must notify the Corporation of such designation in such form and
within such timeframe as determined by the Corporation from time to time.
165
(RULE 52)
If such designation is made, the ACATS-Fund/SERV Agent (and not the ACAT
Receiving or Delivering Member, as the case may be) will be identified on reports and
output transmitted to a Mutual Fund Processor or Fund Member. Notwithstanding such
designation, the Member shall at all times be responsible for all provisions of these
Rules.
The processing of orders during an underwriting or tender offer will be the same
as specified in this Rule except as modified below in Section 17.
SEC. 17. Underwritings/Tender Offers
(a) A Mutual Fund Processor or Fund Member who desires orders to be

processed as part of an underwriting or tender offer (hereinafter called “Event”) shall, in
such form and by such time as established by the Corporation from time to time, submit
to the Corporation such details of the Event as the Corporation may require or permit,
including but not limited to the Members, Mutual Fund/Insurance Services Members,
Investment Manager/Agent Members, TPP Members or the TPA Members and
corresponding TPP/TPA/IMA Settling Entities entitled to participate in the Event as
established by the Mutual Fund Processor or Fund Member, duration of the Event
(hereinafter called the “Acceptance Period”), the type of order data that may be
accepted and, the settlement date of the Event. Order data received by the Corporation
for Fund/SERV Eligible Funds undergoing an Event for which the Corporation has not
received details of the Event will not be processed in accordance with this Section.
(b) Upon receipt of the details, the Corporation will review the details for such
information as the Corporation determines from time to time to be necessary. If the
details do not include the required data the Corporation will reject the details. If the
settlement date provided is not a business day, the data shall not be rejected but the
next valid business day will be assigned by the Corporation as the settlement date.
(c) It shall be the obligation of a Mutual Fund Processor or Fund Member to

determine the appropriateness of any order submitted during an Event and to take such
action necessary to reject any invalid orders.
(d) A Member, Mutual Fund/Insurance Services Member, Investment

may submit, during the Acceptance Period, a deletion of an underwriting order in such
form and by such time as established by the Corporation.
(e) A Mutual Fund Processor or Fund Member may submit a reconfirmation

beginning two days after the first day of the Acceptance Period until three days prior to
settlement date.
(f) Settlement will occur in accordance with the time frames as established by
the Corporation from time to time based upon data provided by a Mutual Fund
Processor or Fund Member provided, however, that in no event shall settlement occur
earlier than three (3) business days after the date the Corporation receives notice of the
settlement date from the Mutual Fund Processor or Fund Member.
166
(RULE 52)
(g) If notice of cancellation of an Event is not received by the Corporation in such

form and by such time as established by the Corporation and in no event later than
three (3) business days prior to settlement date, settlement shall occur as previously
established and it shall be the responsibility of the Member, Mutual Fund/Insurance
Services Member or TPP/TPA/IMA Settling Entity and Mutual Fund Processor or Fund
Member to adjust the item directly.
SEC. 18. Transfer of Registration
(a) The Corporation may provide a service to enable the transfer of instructions
relating to the registration of Fund/SERV Eligible Fund Shares between a Member and
a Fund Member or Mutual Fund Processor (each, a “participant”). For purposes of this
Section 18, the participant to which the registration is to be transferred is referred to as
the “Receiving Participant” and the participant that initially holds the registration that is
subject to transfer is referred to as the “Delivering Participant”.
(b) In accordance with procedures established by the Corporation, a request for

a registration transfer may be initiated by a Member in its capacity as a Delivering
Participant or Receiving Participant, by submission of an instruction in such form and
within such time frames as established by the Corporation from time to time. The
Corporation will reject an instruction that does not conform to the requirements set forth
in the Corporation’s procedures and will notify the Member of such rejection. Details of
all requests for a transfer of registration made in accordance with the procedures of the
Corporation shall be reported to the Delivering and Receiving Participants.
(c) The Fund Member or Mutual Fund Processor to which the transfer request is
directed must reject or confirm the request in such form and within the time period
established by the Corporation. A request that is not responded to in a timely manner,
or one that is rejected by the Fund Member or Mutual Fund Processor, will be deleted
within the time periods established by the Corporation. Details of rejections or
confirmations of all requests made in accordance with the procedures of the
Corporation, and all requests which have been deleted in accordance with such
procedures, shall be reported to the Member that initiated the request.
(d) The Corporation will not be responsible for the completeness or accuracy of
any information contained in a transfer request or any other instruction transmitted by a
participant relating to the transaction. The submission of a transaction or instruction
through the Corporation shall not otherwise relinquish, extinguish or affect any legal
rights, remedies or obligations of the participant arising out of such transaction or
instruction.
(e) Unless otherwise agreed between the participants that are a party to a
transfer request transaction subject to this Section 18, each participant that submits a
transfer request through the Corporation (the “Requesting Participant”) agrees as
follows:
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(RULE 52)
(i) to indemnify and hold harmless the participant that accepts such
request, the affiliated companies of such participant and the respective directors,
officers, employees and agents of each of such (collectively, the “Accepting
Participant”) from and against any and all demands, damages, liabilities, and
losses, or any pending or completed actions, proceedings or investigations
(including reasonable attorney fees and other costs, including all expenses of
litigation or arbitration, judgments, fines or amounts paid in settlement consented
to by the Requesting Participant, whose consent shall not be unreasonably
withheld) (collectively, “Losses”) to which any of them may be or become subject
as a result of or arising out of (A) the Accepting Participant receiving and acting
upon such request, or (B) any negligent act, omission, or willful misconduct by
the Requesting Participant or its agents relating to such request; provided,
however, that the Requesting Participant shall not be liable for any Losses to the
extent that they arise from the negligence or misconduct of the Accepting
Participant. Each Requesting Participant agrees that an Accepting Participant
shall be a third-party beneficiary of the above indemnification and reimbursement
obligations in respect of such request, and that the Accepting Participant may
assert any claim under these indemnification and reimbursement obligations as a
third-party beneficiary directly against such Requesting Participant: and
(ii) That it will have obtained from the holder(s) of the account(s) to which
the request relates (the “Accountholder(s)”), written authorization, signed by the
Accountholder(s), for the request in compliance with applicable law, and to
furnish a copy of such authorization to the Accepting Participant upon request;
and
(iii) With respect to a transfer request relating to an Individual Retirement

Account (“IRA”), Roth IRA, SIMPLE IRA, Profit Sharing and Money Purchase
Plan Account and other types of tax-deferred or tax-advantaged accounts
(“Accounts”) for which the Accepting Participant acted as trustee or custodian (or
an agent or affiliate thereof) and with respect to which the Requesting Participant
makes the Fund Transfer Request in the capacity as a successor trustee or
custodian (or an agent or affiliate thereof), that (A) the Requesting Participant (or,
if the Requesting Participant is acting in the capacity as an agent or affiliate, the
entity on whose behalf it acts) is qualified to act as successor trustee or
custodian pursuant to applicable provisions of the Internal Revenue Code; (B) in
all cases, the transfer is a trustee-to-trustee transfer and as such is a non-taxable
and non-reportable transaction for federal income tax withholding and reporting
purposes, (C) that for purposes of effecting the transfer of such Accounts, the
Accepting Participant appoints the Requesting Participant as the Accepting
Participant’s agent to act on its behalf solely to receive and accept the
instructions from an accountholder with respect to the Account transfer, and the
Requesting Participant hereby accepts such appointment.
(f) Each Requesting Participant and Accepting Participant agrees that any
dispute between them arising under this section shall be resolved directly between
them, and that the Corporation shall not be made a party to any such dispute and shall
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(RULE 52)
have no responsibility with respect to the enforcement or satisfaction of any

indemnification, reimbursement, notification or other obligation contained in this section.
SEC. 19-20 (Section numbers reserved for future use.)
SEC. 21. Transfers of Fund/SERV Eligible Fund Shares.
(a) A Fund Member or Mutual Fund Processor to whom the value of Fund/SERV
Eligible Fund shares is to be transferred (hereinafter referred to as the “Receiving Fund
Member”) may initiate the process by submitting a transfer request to the Corporation in
such form and by such time on the submission date as established by the Corporation
from time to time.
(b) The Fund Member or Mutual Fund Processor indicated by the Receiving
Fund Member (hereinafter referred to as the “Delivering Fund Member”) must
acknowledge or reject a transfer request by submitting either an acknowledgment
containing such information and in such form as established by the Corporation from
time to time or a rejection instruction containing such information and in such form as
established by the Corporation from time to time. The Delivering Fund Member will have
up to two (2) business days after the submission of a transfer request to acknowledge
or reject the transfer request. A transfer request that is not responded to timely by a
Delivering Fund Member, and a transfer request that is rejected by a Delivering Fund
Member, will be deleted from Fund/SERV.
(c) A Delivering Fund Member that has acknowledged a transfer request must
confirm the value of the Fund/SERV Eligible Fund shares to be transferred by
submitting a confirmation to the Corporation in such form as established by the
Corporation from time to time. The Delivering Fund Member must submit the
confirmation no earlier than one (1) business day and no later than ten (10) business
days after the submission of an acknowledgment. Failure to timely submit a
confirmation will cause the transfer request to be deleted from Fund/SERV.
(d) A Delivering Fund Member that has confirmed a transfer request may submit
a reconfirmation to change any information submitted in the confirmation by transmitting
such reconfirmation to the Corporation in such form as established by the Corporation
from time to time prior to the inclusion of the value of the transfer in the settlement cycle
of the Corporation as provided in paragraph (h) below.
(e) A Receiving Fund Member may cancel a transfer request by submitting an

exit instruction in such form as established by the Corporation from time to time prior to
the inclusion of the value of the transfer in the settlement cycle of the Corporation as
provided in paragraph (h) below. A properly submitted exit instruction will cause such
transfer to be deleted from Fund/SERV.
(f) The Corporation will review transmissions received from Receiving Fund
Members and Delivering Fund Members for such information as the Corporation
determines from time to time to be necessary. If the transmission does not contain the
information required by the Corporation, the Corporation will reject the transmission and
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(RULE 52)
will advise the appropriate Receiving Fund Member or Delivering Fund Member. If the
transmission appears to contain the information required by the Corporation, subject to
any rights the Corporation may have as provided in the Rules generally, the Corporation
will send the transmission to the appropriate Receiving Fund Member or Delivering
Fund Member.
(g) A Receiving Fund Member who desires to resubmit a transfer request that
has been rejected, deleted or exited, or an exit instruction that has been rejected by the
Corporation, must resubmit such transfer request or exit instruction as if it had never
been submitted. A Delivering Fund Member who has an acknowledgment, rejection,
confirmation or reconfirmation rejected by the Corporation must resubmit such
acknowledgment, rejection, confirmation or reconfirmation.
(h) All confirmed and reconfirmed transfer requests, except for transfer requests
that have been rejected, deleted or exited, will settle in the next settlement cycle of the
Corporation after such confirmation or reconfirmation. On settlement date, the
Corporation will debit the Delivering Fund Member’s account and credit the Receiving
Fund Member’s account for the value of the Fund/SERV Eligible Fund shares
transferred. Settlement of money payments between Receiving Fund Members and
Delivering Fund Members arising out of transfer requests submitted through
Fund/SERV shall be made in accordance with Rule 12 and other provisions of these
Rules.
(i) Credits and debits arising after the settlement of a transfer of the value of
Fund/SERV Eligible Fund shares will be processed in accordance with Section 9 of this
Rule.
SEC. 22- 45. (Section numbers reserved for future use.)
SEC. 46. Notwithstanding the foregoing, the submission of a transaction or

instruction through Fund/SERV and settlement, deletion, rejection and exit of such
transaction or instruction from or through Fund/SERV shall not otherwise relinquish,
extinguish or affect any legal rights, remedies or obligations of the Member, Mutual
TPA Member, Mutual Fund Processor or Fund Member arising out of such transaction
or instruction.
SEC. 47. Each business day, the Corporation will make data available to
Members, Mutual Fund/Insurance Services Member, Investment Manager/Agent
Members, TPP Members, TPA Members, TPP/TPA/IMA Settling Entities, Mutual Fund
Processors and Fund Members, indicating the status of all Fund/SERV transactions and
instructions submitted to the Corporation. On a daily basis, Members, Mutual
Fund/Insurance Services Members, Investment Manager/Agent Members, TPP
Members, TPA Members, TPP/TPA/IMA Settling Entities, Mutual Fund Processors and
Fund Members must compare the data against their records and any discrepancies
must be immediately reported to the Corporation. To the extent necessary or
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(RULE 52)
appropriate, the Corporation may cause an adjustment to be made to the data within
such time as the Corporation determines to be necessary.
SEC. 48. At any time, the Corporation may prohibit one or more orders, money
only related charges or transfer requests from settling through Fund/SERV if the
Corporation, in its discretion, determines that such action is necessary for the protection
of the Corporation, Members, Mutual Fund/Insurance Services Members, Fund
Members, creditors or investors.
SEC. 49. (a) The Corporation may delete from Fund/SERV any incompleted
Fund/SERV items, with the exception of incompleted ACAT-Fund/SERV items, upon the
withdrawal of a Member or Mutual Fund/Insurance Services Member from participation
in Fund/SERV, but not earlier than five business days following notification to Members
and Mutual Fund/Insurance Services Members of such Member’s or Mutual
Fund/Insurance Services Member’s intention to withdraw from Fund/SERV, where such
Member or Mutual Fund/Insurance Services Member continues as such or is merged
into or acquired by another Member or Mutual Fund/Insurance Services Member which
is not a participant in Fund/SERV.
(b) The Corporation may delete from Fund/SERV any incompleted Fund/SERV
items upon the withdrawal of a TPP Member, TPA Member or Investment
Manager/Agent Member from participation in Fund/SERV, but not earlier than five
business days following notification to the TPP/TPA/IMA Settling Entity of such TPP
Member’s, TPA Member’s or Investment Manager/Agent Member’s intention to
withdraw from Fund/SERV.
B. Networking

Fund/Insurance Services Members, Investment Manager/Agent Members, TPA
Members, TPP Members, Mutual Fund Processors and Fund Members to transmit
Fund/SERV Eligible Fund customer account data and/or settle Fund/SERV Eligible
Fund payments, as the case may be, (hereinafter referred to as “Networking
Payments”) between themselves, which service shall be known as NETWORKING.
Networking Payments shall consist of payments other than payments processed thru
Fund/SERV and DTCC Payment aXis. The Corporation may also permit Data Services
Only Members to utilize the Networking service only to request and transmit
Fund/SERV Eligible Fund customer account data.
SEC. 2. Such customer account data if submitted must be transmitted in such

formats and by such times as established by the Corporation from time to time.
Submission of such customer account data to the Corporation, or provided to a Data
Services Only Member shall not relinquish, extinguish or affect any legal or regulatory
rights or obligations of the Member, Mutual Fund/Insurance Services Member, Mutual
Fund Processor, Fund Member, Data Services Only Member, Investment
Manager/Agent Member, TPP Member or TPA Member pertaining to the customer
accounts.
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(RULE 52)
SEC. 3. Settlement of Networking Payments shall occur as follows:
(a) Dividend Payments. Each Fund Member and Mutual Fund Processor must
submit to the Corporation by the time specified by the Corporation, the payable date in
respect of dividend data submitted to the Corporation. If the payable date is a Business
day on which banks in New York are open for business (hereinafter referred to as a
“Dividend Payable Date”) settlement will occur on the payable date. If the payable date
is not a Dividend Payable Date, settlement will occur on the next Dividend Payable Date
after the payable date. Each day the Corporation will produce a report indicating the
dividend amounts which will be required to be paid that day and the following day
(hereinafter referred to as the “Dividend Payable Amount”). On a daily basis, the Fund
Members and Mutual Fund Processors must compare the Dividend Payable Amount
against their records and any errors must be reported to the Corporation in such form
and by such time as established by the Corporation from time to time. The Corporation
will report any corrections submitted by the Fund Member and Mutual Fund Processor
to the Member, Mutual Fund/Insurance Services Member, Investment Manager/Agent
Member, TPP Member, TPA Member and corresponding TPP/TPA/IMA Settling Entity,
Fund Member and Mutual Fund Processor, as the case may be, on the next issued
report after receipt by the Corporation of the correction.
(b) Other Networking Payments. On the Business Day prior to the day the Fund
Member and Mutual Fund Processor intends to be debited (hereinafter referred to as
“Debit Day”) the Fund Member and Mutual Fund Processor must submit to the
Corporation, within the time specified by the Corporation, the dollar value of amounts to
be debited against the Fund Member and Mutual Fund Processor (hereinafter referred
to as “Other Payable Amounts”). If the Debit Day is not a Business Day on which banks
in New York are open for business the Debit Day will be the next business day the
banks in New York are open for business. Each day the Corporation will produce a
report or reports indicating the Other Payable Amounts which will be required to be paid
that day and the following day.
SEC. 4. On Dividend Payable Date or Debit Day, the Fund Member or Mutual
Fund Processor must pay to the Corporation the Dividend Payable Amount or Other
Payable Amounts as indicated on the applicable report in accordance with Rule 12 and
other provisions of these rules.
On Dividend Payable Date or Debit Day, the Corporation shall credit the
appropriate Member’s, Mutual Fund/Insurance Services Member’s or TPP/TPA/IMA
Settling Entity’s account with the Dividend Payable Amount or Other Payable Amounts
indicated on the applicable report.
SEC. 5. Each Business Day a Fund Member and Mutual Fund Processor may
submit correction data to the Corporation in order to correct a previously submitted
incorrect payment. A Member, Mutual Fund/Insurance Services Member, Investment
who disagrees with a correction which results in a debit to the Member, Mutual
Fund/Insurance Services Member, Investment Manager/Agent Member or
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(RULE 52)
TPP/TPA/IMA Settling Entity must notify the Corporation within such time as specified
by the Corporation. Upon timely receipt of such notice the Corporation will delete the
correction and such amount must be settled directly between the Member or Mutual
Fund/Insurance Services Member and the Fund Member or Mutual Fund Processor. If
the correction results in a credit to a Fund Member or Mutual Fund Processor, payment
of such amount shall be made in accordance with Rule 12 and other provisions of these
rules.
SEC. 6-49. (Section numbers reserved for future use.)
SEC. 50. The Corporation will not be responsible for the completeness or
accuracy of any customer account or payment data received from or transmitted to a
Member, Mutual Fund/Insurance Services Member, Fund Member, Data Services Only
Member, Investment Manager/Agent Member, TPP Member or a TPA Member nor for
any errors, omissions or delays which may occur in the absence of gross negligence on
the Corporation’s part, in the transmission of such customer account or payment data to
or from a Member, Mutual Fund/Insurance Services Member, Fund Member, Data
Services Only Member, Investment Manager/Agent Member, TPP Member or a TPA
Member.
C. DTCC Payment aXis

Fund/Insurance Services Members, Fund Members and Mutual Fund Processors to
transmit commission and fee related data (herein collectively referred to as “Payment
aXis Fee Data”), including with regard to investor accounts held at the Fund Member or
Mutual Fund Processor on an omnibus account basis (“Omnibus”), and to settle such
payments between themselves, which service shall be known as the DTCC Payment
aXis service.
SEC. 2. (a) Payment aXis Fee Data, if submitted, must be transmitted in such
formats and by such times as established by the Corporation from time to time.
Submission of Payment aXis Fee Data to the Corporation shall not relinquish,
extinguish or affect any legal or regulatory rights or obligations of the Member, Mutual
Fund/Insurance Services Member, Fund Members or Mutual Fund Processors
pertaining to the commissions or fee payments.
(b) Payment aXis Fee Data instructing for the settlement of certain commission
and other fee type payments must be initiated and submitted to the Corporation by the
Member, Mutual Fund/Insurance Services Member, Fund Member or Mutual Fund
Processor seeking payment thereof (such commission and other fee types are
collectively referred to as “Payee Initiated Fee Types”). Payee Initiated Fee Types may
include commissions and fees with regard to investor accounts held in Omnibus. The
Corporation will transmit such Payee Initiated Fee Type settlement instructions to the
applicable Member, Mutual Fund/Insurance Services Member, Fund Member or Mutual
Fund Processor from whom payment is being sought (the “Paying Participant”) in such
form and by such times as established by the Corporation from time to time. The
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(RULE 52)
Paying Participant may (i) confirm or reject such Payee Initiated Fee Type settlement
instruction by transmitting a confirmation or rejection to the Corporation in such form
and by such time as established by the Corporation from time to time or (ii) release
settlement as set forth in Section 3 below (either with or without a confirmation). If the
Paying Participant confirms or rejects such Payee Initiated Fee Type settlement
instruction, the Corporation will transmit such confirmation or rejection to the Member,
Mutual Fund/Insurance Services Member, Fund Member or Mutual Fund Processor that
initiated the Payee Initiated Fee Type settlement instruction. Designation of Payee
Initiated Fee Types shall be made by the Corporation from time to time, and the
Corporation shall provide notice to Members, Mutual Fund/Insurance Services
Members, Fund Members and Mutual Fund Processors from time to time of such
designation.
SEC. 3. Except as otherwise described with regard to Payee Initiated Fee

Types, settlement of commission and fee payments, including settlement of commission
and fee payments with regard to investor accounts held in Omnibus, shall occur as
follows: On the Business Day prior to the day the amount is intended to be debited
(hereinafter referred to as “Debit Day”) the entity submitting the amount must submit to
the Corporation, within the time specified by the Corporation, the dollar value and the
appropriate accounts to which such amount is to be credited and debited. If the Debit
Day is not a Business Day on which banks in New York are open for business the Debit
Day will be the next business day the banks in New York are open for business. On
Debit Day, the Corporation will credit and debit the appropriate accounts in accordance
with the instructions of the Member, Mutual Fund/Insurance Services Member, Fund
Member or Mutual Fund Processor. Settlement of payments arising out of such
instructions shall be made in accordance with Rule 12 and other provisions of these
rules.
SEC. 4. The Corporation will not be responsible for the completeness or

accuracy of any Payment aXis Fee Data, including Payment aXis Fee Data with regard
to investor accounts held in Omnibus, received from or transmitted to a Member, Mutual
Fund/Insurance Services Member, Fund Member or Mutual Fund Processor nor for any
errors, omissions or delays which may occur in the absence of gross negligence on the
Corporation’s part, in the transmission of such Payment aXis Fee Data to or from a
Member, Mutual Fund/Insurance Services Member, Fund Member or Mutual Fund
Processor.
D. Mutual Fund Profile Service
SEC. 1. The Corporation may offer a service to provide Members, Mutual

Fund/Insurance Services Members, Investment Manager/Agent Member, TPP
Members, TPA Members, Data Services Only Members and Fund Members with
Fund/SERV Eligible Fund information (the “MFPS Data”) as the Corporation may
determine from time to time. Such service shall be known as the Mutual Fund Profile
Service (“MFPS”) and will be accomplished in accordance with the provisions of this
Rule.
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(RULE 52)
SEC. 2. Each Member, Mutual Fund/Insurance Services Member, Investment

Manager/Agent Member, TPP Member, TPA Member, Data Services Only Member or
Fund Member that desires access to MFPS must complete and deliver to the
Corporation such agreements as the Corporation may from time to time require.
SEC. 3. The MFPS Data must be submitted to the Corporation in such formats
and by such times as established by the Corporation from time to time. The submission
of such information to the Corporation shall not relinquish, extinguish or affect any
regulatory or legal rights, remedies or obligations, if any, of Members, Mutual
Fund/Insurance Services Members, Investment Manager/Agent Member, TPP
Members, TPA Members, Data Services Only Members or Fund Members participating
in the MFPS.
SEC. 4. Each Fund member agrees with the Corporation that the Fund Member
will take reasonable steps to validate the accuracy of the MFPS data that it submits to
the Corporation. The Corporation shall not be responsible for the completeness or
accuracy of any MFPS Data nor for any errors, omissions or delays which may occur
relating to the MFPS Data.
SEC. 5. On a regularly scheduled basis, as the Corporation may determine from

time to time, the Corporation may produce scorecards as part of MFPS. Scorecards will
set forth the individual, numerical score issued to each MFPS Data provider and the
combined average numerical score of all MFPS Data providers. The number of
identified Discrepancies (as defined below) within each Discrepancy category, and each
applicable MFPS Data provider’s action or in action with respect to each such
Discrepancy, shall form the basis for the calculation of each score.
As used in this Section, “Discrepancy” means an identified variance between

MFPS Data and the applicable MFPS Data provider’s public filings and/or other
potential MFPS Data discrepancies identified by the Corporation from time to time.
Each MFPS Data provider’s scorecard will contain (i) the individual, numerical
score issued to it, (ii) the number of identified Discrepancies within each Discrepancy
category attributable to such MFPS Data provider and (iii) the combined average
numerical score of all MFPS Data providers. MFPS Data providers will not see the
individual, numerical scores issued to other MFPS Data providers nor the identified
Discrepancies of other MFPS Data providers.
Scorecards distributed to MFPS Data receivers will contain (i) the individual,
numerical score issued to each MFPS Data provider, (ii) the number of identified
Discrepancies within each Discrepancy category attributable to each MFPS Data
provider and (iii) the combined average numerical score of all MFPS Data providers.
The Corporation makes no representation or warranty with respect to the value

or usefulness of any score or scorecard, nor will the Corporation be subject to any
damages or liabilities whatsoever with respect to any Person’s use of or reliance upon
any score or scorecard. In addition, all information contained in the scorecards is
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(RULE 52)
copyrighted and any form of copying, other than for each Member’s, Mutual
Fund/Insurance Services Member’s, Investment Manager/Agent Member’s, TPP
Member’s, TPA Member’s, Data Services Only Member’s or Fund Member’s personal
reference, without the express written permission of the Corporation, is prohibited, and
further distribution or redistribution of the scorecard or any information contained therein
by any means or in any manner is strictly prohibited.
SEC 6. The Corporation shall provide a service (“MF Info Xchange”) to enable
Members, Mutual Fund/Insurance Services Members, Investment Manager/Agent
Members, TPP Members, TPA Members, Data Services Only Members and Fund
Members (“data providers”) to transmit event notifications relating to mutual funds or
other pooled investment entities to other Members or Limited Members and to other
third parties identified by the data providers to receive the event notifications, or to
otherwise supply and provide access to event notification data directly to or from the
Corporation through a data repository. The Corporation may determine from time to
time, and shall announce by Important Notice, which types of event notifications may be
transmitted using MF Info Xchange. The Corporation shall not be responsible for the
completeness or accuracy of any event notifications transmitted using MF Info Xchange
nor for any errors, omissions or delays that may occur relating to the event notifications.
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(RULE 53)
RULE 53. ALTERNATIVE INVESTMENT PRODUCT SERVICES AND MEMBERS
SEC. 1. General
(a) The Corporation may provide a service to enable entities meeting the
relevant qualifications of Rule 2A (“AIP Members”) to transmit such data and information
related to alternative investment products (“AIP Data”) between themselves and to settle
payments relating to such products (“AIP Payments”) between themselves or as
otherwise provided in this Rule. Such service shall be known as the “AIP Service,” or
“AIP,” and shall be accomplished in accordance with this Rule.
The rights, liabilities and obligations of AIP Members (including AIP Fund
Administrators, defined below) in their capacity as such and in the capacity as a Limited
Member shall be governed by this Rule 53 and relevant provisions of such other Rules
as expressly reference AIP Members or Limited Members. References to a Member,
Mutual Fund/Insurance Services Member, Non-Clearing Member, Municipal
Comparison Only Member, Fund Member, Insurance Carrier/Retirement Services
Member, Investment Manager/Agent Member, TPP Member, TPA Member or Data
Services Only Member shall not apply to an AIP Member in its capacity as such unless
specifically noted in this Rule or in such other Rule as applicable to an AIP Member or
Limited Member.
An AIP Member that participates in the Corporation in another capacity pursuant

to another Rule of this Corporation, or which has entered into an agreement with the
Corporation independent from this Rule, shall continue to have all the rights, liabilities
and obligations set forth in such other Rule or pursuant to such agreement, and such
rights, liabilities and obligations shall be separate from its rights, liabilities and
obligations as an AIP Member. As such, with respect to Members, Mutual
Fund/Insurance Services Members, Non-Clearing Members, Municipal Comparison
Only Members, Fund Members, Insurance Carrier/Retirement Services Members,
Investment Manager/Agent Members, TPP Members, TPA Members or Data Services
Only Members who qualify as AIP Members, this Rule only applies to their activities in
connection with transactions in Eligible AIP Products (as defined in Section 4 of this
Rule).
(b) The only service offered by the Corporation that is available to an AIP
Member in its capacity as such shall be the AIP Service, and such other services or
features thereof that the Corporation may from time to time designate as eligible for
access by an AIP Member.
(c) An AIP Member acting on behalf of, or under authority of, the sponsor,
general partner or any other party responsible for the creation or manufacturing of an
Eligible AIP Product (as defined in Section 4 of this Rule) shall be known as an “AIP
Manufacturer”. An AIP Manufacturer that specifically (i) identifies itself to the Corporation
as an entity engaged under contract to provide administrative services with respect to
one or more Eligible AIP Products and (ii) wishes to be so recognized by the
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(RULE 53)
Corporation, shall be known as an “AIP Fund Administrator”. In all events, AIP Fund
Administrators are AIP Manufacturers with respect to the AIP Service.
An AIP Member acting on behalf of, or under authority of, a customer or other
investor in an Eligible AIP Product, or otherwise as the contra-side to an AIP
Manufacturer in a transaction (including information processing) with an AIP
Manufacturer, shall be known as an “AIP Distributor”.
(d) In the Corporation’s sole and absolute discretion, and in accordance with
such procedures as the Corporation may establish as it deems necessary or
appropriate from time to time, the Corporation may permit AIP Fund Administrators to
create one or more sub-accounts approved by the Corporation to settle AIP
Payments at the sub-account level (“AIP Settling Sub-Accounts”). All matters,
activities, liabilities and obligations under these Rules with respect to any AIP Settling
Sub-Account, except for settlement of AIP Payments, shall be the responsibility of the
respective AIP Fund Administrator.
Prior to approval of any such AIP Settling Sub-Account, the applicable AIP
Fund Administrator shall provide the Corporation:
(i) Documentation and/or agreements in such form as required by the

Corporation from time to time for the creation of each such AIP Settling
Sub-Account, which shall include (A) the AIP Fund Administrator’s
acknowledgement and agreement that it shall be responsible for all
matters, activities, liabilities and obligations applicable to AIP Members
under these Rules with respect to each such AIP Settling Sub-Account,
except for settlement of AIP Payments, and (B) the AIP Fund
Administrator’s agreement to indemnify the Corporation for any loss,
liability or expense sustained by the Corporation in connection with,
arising from or related to each such AIP Settling Sub-Account, including
with respect to FATCA.
(ii) An agreement, in such form as required by the Corporation from time to

time, stating that the AIP Fund Administrator shall be responsible for (A)
all charges incurred and payments due under Rule 26 for the
processing of AIP Settling Sub-Account transactions through AIP and
(B) any other charges that may be incurred with respect to each such
AIP Settling Sub-Account under Rule 24.
(iii) Documentation and/or agreements in such form as required by the

Corporation from time to time (A) designating the AIP Non-Member
Fund with responsibility for making AIP Payments with respect to each
such AIP Settling Sub-Account, (B) reflecting such AIP Non-Member
Fund’s consent and approval thereof, (C) agreeing that it is the AIP
Fund Administrator’s obligation to notify the AIP Non-Member Fund of
such AIP Non-Member Fund’s daily AIP Payment balance and (D)
identifying that it is the AIP Fund Administrator’s obligation to notify the
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(RULE 53)
Corporation of any changes in condition to the AIP Non-Member Fund

that would otherwise require notice to the Corporation under Rule 2B
(Ongoing Membership Requirements and Monitoring) or Rule 20
(Insolvency).
(iv) Tax documentation from the applicable AIP Non-Member Fund in such
form as required by the Corporation from time to time. With respect to
any AIP Non-Member Fund that is treated as a non-U.S. entity for U.S.
federal income tax purposes, the AIP Fund Administrator shall provide
the Corporation with an executed FATCA Certification from such AIP
Non-Member Fund.
(v) Documentation and/or agreements in such form as required by the

Corporation from time to time reflecting the AIP Non-Member Fund’s
appointment of an AIP Settling Bank, and such AIP Settling Bank’s
agreement to act as AIP Settling Bank for such AIP Non-Member Fund.
SEC. 2. Qualifications of AIP Members
(a) An AIP Member or applicant to become such must meet the qualifications
set for in Rule 2A and Addendum B of these Rules.
SEC. 3. Application and Admission
(a) Each applicant to become an AIP Member shall complete and deliver to
the Corporation such documents and information as set forth in Rule 2A of these Rules.
The Corporation shall approve an application to become an AIP Member as set

forth in Rule 2A of these Rules.
SEC. 4. Eligible Alternative Investment Products
(a) Upon application by one or more AIP Members, the Corporation may
designate an alternative investment product as eligible for processing through the AIP
Service (an “Eligible AIP Product”). The Corporation shall maintain a list of all Eligible
AIP Products processed through the Corporation. Alternative investment products that
may be designated as Eligible AIP Products include the following: securities issued by
private pooled investment vehicles (including hedge funds and private equity funds,
among others), interests in commodity pools, securities issued by funds of funds, real
estate investment trust securities, managed futures, managed currency products and
such other alternative investment products as shall be approved by the Corporation
from time to time. An Eligible AIP Product may be a security registered under the
Securities Act of 1933, as amended, or a security exempt from registration thereunder
(b) The Corporation may elect to decline to designate an alternative

investment product as an Eligible AIP Product, or may withdraw an alternative
investment product’s designation as an Eligible AIP Product, at any time it deems it to
be in the interests of the Corporation and its participants.
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(RULE 53)
(c) By submitting an Eligible AIP Product for processing through the

Corporation, an AIP Manufacturer is representing to the Corporation that the offer and
sale of such Eligible AIP Product complies with all applicable requirements under
federal securities law and such other laws as may apply, whether state, federal or those
of a jurisdiction outside the United States, for so long as such Eligible AIP Product is
processed through the Corporation.
SEC. 5. Obligations and Rights applicable to AIP Member
(a) The rights and obligations applicable to an AIP Member shall be as set
forth in these Rules as applicable to an AIP Member or Limited Member.
(b) An AIP Member shall not be required to pay a Clearing Fund contribution
to the Corporation in respect of its use of AIP Services.
(c) An AIP Member shall not be responsible for loss allocations or other loss
or liability to the Corporation pursuant to the Rules or Procedure of the Corporation,
except for such losses or liabilities as are set forth expressly in this Rule.
(d) The Corporation shall not be a party to a transaction (whether the

communication of data or payments of money) processed through the AIP Service and
shall not assume any obligations or liability in connection therewith, other than the
obligation to pay AIP Credit Balances and AIP Adjusted Credit Balances in accordance
with this Rule.
(e) FATCA Considerations – AIP Settling Sub-Accounts
(i) AIP Fund Administrators with AIP Settling Sub-Accounts shall be

responsible for obtaining such tax documentation from their
applicable AIP Non-Member Funds as requested by the
Corporation from time to time. With respect to AIP Non-Member
Funds that are treated as non-U.S. entities for U.S. federal income
tax purposes, the applicable AIP Fund Administrator shall be
responsible for obtaining the necessary FATCA Certifications as
requested by the Corporation from time to time. Notwithstanding
any other provision of these Rules, failure to provide such tax
documentation, including FATCA Certifications to the extent
applicable, in the manner and timeframes set forth by the
Corporation from time to time will result in revocation of the
Corporation’s approval, in the Corporation’s sole and absolute
discretion, for such AIP Non-Member Fund to settle AIP
Payments through AIP.
(ii) AIP Fund Administrators with AIP Settling Sub-Accounts shall

indemnify the Corporation for any loss, liability or expense
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(RULE 53)
sustained by the Corporation in connection with, arising from or

related to FATCA in respect of such AIP Settling Sub-Accounts.
SEC. 6. Transmission of AIP Data
(a) AIP Data transmitted through the AIP Service may include data relating to
subscriptions and purchases; redemptions, withdrawals and tender offers; commissions
and other fees; distributions; exchange transactions; transfers; position reporting;
product information; account maintenance, valuation, and activity and such other data
as may be established by the Corporation from time to time.
(b) AIP Data must be submitted to the Corporation in such formats and by
such times as established by the Corporation from time to time, and, depending upon
the type of AIP Data submitted, may require a response from the receiver of AIP Data.
The Corporation will review AIP Data received from AIP Members for
such information as the Corporation determines from time to time to be necessary. If
the AIP Data does not contain the information required by the Corporation, the
Corporation will reject the AIP Data and will advise the appropriate AIP Member in
such form and by such time as established by the Corporation from time to time.
If the AIP Data appears to contain the information required by the

Corporation, the Corporation will transmit the AIP Data to the appropriate AIP Member
in such form and by such time as established by the Corporation from time to time,
subject to any rights the Corporation may have under any applicable Rules and
Procedures of the Corporation.
Pursuant to the procedures established by the Corporation from time to

time, the Corporation will notify, in such form and at such times as established by the
Corporation from time to time, the AIP Member in respect of certain AIP Data which
requires a response, if no such response has been received by the Corporation.
Submission of certain AIP Data may require a confirming instruction

from the contra side AIP Member.
(c) Pursuant to the procedures established by the Corporation from time to

time, an AIP Member submitting AIP Data can withdraw certain submitted AIP Data by
submitting a withdrawal instruction to the Corporation, in such form and by such time as
established by the Corporation from time to time. Withdrawal of certain AIP Data may
require a confirming instruction from the contra side AIP Member. Upon receipt of a
properly submitted withdrawal instruction, the Corporation will (i) delete the withdrawn
AIP Data and (ii) notify the appropriate party of the withdrawn AIP Data in such form
and by such time as established by the Corporation from time to time.
(d) Notwithstanding the foregoing, nothing prohibits an AIP Member from

requiring data or information in connection with transactions in Eligible AIP Products in
addition to AIP Data that has been transmitted through the Corporation.
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(RULE 53)
(e) Submission of AIP Data to, or alteration or withdrawal of AIP Data from,
the Corporation shall not relinquish, extinguish or affect any legal or regulatory right or
obligation of the AIP Member existing outside of this Rule.
(f) The Corporation will not be responsible for the completeness or accuracy
of the AIP Data received from or transmitted to any AIP Member through the AIP
Service, nor shall the Corporation, absent gross negligence on the Corporation’s part,
be responsible for any errors, omissions or delays that may occur in the transmission of
AIP Data to or from any AIP Member.
SEC. 7. Settlement of AIP Payments
(a) The Corporation may provide a facility for the settlement of AIP Payments
pursuant to such settlement procedures as the Corporation shall adopt. AIP Payments
may include amounts to be transmitted in respect of subscriptions and purchases;
redemptions, withdrawals and tender offers; commissions and other transaction fees;
distributions; exchange transactions; transfers; and such other transactions in
connection with the processing and settlement of transactions in Eligible AIP Products
as the Corporation may determine from time to time. Settlement of AIP Payments
through the Corporation shall be in same day funds, effected in accordance with the
provisions of this Rule and such procedures as the Corporation may establish from time
to time. The Corporation shall not guarantee the payment of AIP Payments to any AIP
Member (including to any AIP Fund Administrator’s AIP Settling Sub-Account). For the
avoidance of doubt, the Corporation shall not guarantee the payment of AIP Payments
to any AIP Non-Member Fund. Settlement of all payments and transactions in respect of
Eligible AIP Products which do not settle through the facilities of the Corporation are the
responsibility of the parties thereto and are not subject to the provisions of this Rule.
(b) An AIP Member (including an AIP Fund Administrator with respect to any
AIP Settling Sub-Account thereof) may initiate an instruction for the settlement of AIP
Payments on a certain date by submitting AIP Data that indicates settlement of AIP
Payments is to take place through the Corporation pursuant to the AIP Service, in
accordance with procedures established by the Corporation from time to time. Unless
otherwise stated in such procedures, settlement of AIP Payments shall require a
concurring instruction from the contra side AIP Member (including the AIP Fund
Administrator with respect to any contra side AIP Settling Sub-Account thereof).
Unless otherwise stated in procedures established by the Corporation,

AIP Payments submitted for settlement through the Corporation on a Business Day
designated by the AIP Member (including the AIP Fund Administrator with respect to
any AIP Settling Sub-Account thereof) (the “Settlement Date”) shall be submitted
(and, if applicable, agreed by the contra side AIP Member (including the AIP Fund
Administrator with respect to any contra side AIP Settling Sub-Account thereof)), no
later than the times established by the Corporation for this purpose on the Business
Day prior to Settlement Date (“Settlement Date minus 1”). The references to
Settlement Date in this Rule refer to settlement of AIP Payments through the
settlement facilities of the Corporation and do not define the settlement date of
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(RULE 53)
payment or delivery obligations between the parties for purposes outside of the AIP
Service.
(c) The Corporation shall maintain both a credit balance and a debit balance
for each AIP Member’s AIP account (including each AIP Settling Sub-Account). All AIP
Payment amounts made through the AIP Service shall be credited and debited, as
applicable, to the respective credit and debit balances of the AIP Member’s AIP account
involved in the AIP transaction (including AIP Settling Sub-Accounts), for settlement on
Settlement Date. Posting of a credit to an AIP Member’s account’s (or AIP Settling Sub-
Account’s) credit balance shall always be accompanied by a corresponding debit posted
to the debit balance of the contra side AIP Member’s AIP account (or AIP Settling Sub-
Account). Credit balances and debit balances posted to any AIP Member’s respective
account (or AIP Settling Sub-Account) will not be netted or offset against one another,
but will be maintained on a gross credit and gross debit basis. AIP Payments will not be
netted or offset against any other type of transaction settled through the facilities of the
Corporation.
(d) An AIP Member submitting or receiving instructions for an AIP Payment

(including an AIP Fund Administrator with respect to any AIP Settling Sub-Account
thereof) may delete such instruction for AIP Payment from settling through the
Corporation by submitting a deletion instruction to the Corporation in accordance with
such procedures as are established by the Corporation from time to time. Unless
otherwise stated in the procedures established by the Corporation, a deletion instruction
will require a concurring instruction from the contra side AIP Member. To be effective,
such deletion instruction must be submitted (and, if applicable, agreed by the contra
side AIP Member) no later than Settlement Date minus 1. Upon receipt of a properly
submitted deletion instruction, the Corporation will delete the appropriate credit and
debit amounts from the respective balances of the AIP Members’ accounts and AIP
Settling Sub-Accounts involved in the transaction.
(e) (i) In general, on Settlement Date minus 1, at the time established

by the Corporation for this purpose, the Corporation shall notify each AIP Member and
its AIP Settling Bank of such respective aggregate gross credit balance and aggregate
gross debit balance amounts that are anticipated for settlement of its AIP Payment
amounts on Settlement Date, together with details on the credits and debits comprising
such aggregate balances (the “Preliminary Settlement Report”).
(ii) With respect to AIP Settling Sub-Accounts, on Settlement Date

minus 1, at the time established by the Corporation for this purpose, the Corporation
shall notify (A) each applicable AIP Fund Administrator and (B) each applicable AIP
Settling Bank, in each case, of the respective aggregate gross credit balance and
aggregate gross debit balance amounts that are anticipated for settlement on
Settlement Date, together with a Preliminary Settlement Report. The Corporation shall
not notify, and shall not be responsible for notifying, any AIP Non-Member Fund of any
aggregate gross credit balance or aggregate gross debit balance amounts with respect
to any AIP Settling Sub-Account. It is the AIP Fund Administrator’s obligation to notify
each applicable AIP Non-Member Fund of its respective aggregate gross credit
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(RULE 53)
balance and aggregate gross debit balance amounts that are anticipated for settlement
on Settlement Date.
(f) The Corporation shall establish a modification period after the Preliminary
Settlement Report is issued, during which an AIP Member (including an AIP Fund
Administrator with respect to any AIP Settling Sub-Account thereof) may send
instructions to delete any particular AIP Payment in accordance with procedures
established by the Corporation. Certain deletion instructions may require submission of
an agreement instruction by the contra side AIP Member (including the AIP Fund
Administrator with respect to any contra side AIP Settling Sub-Account thereof). At the
conclusion of the modification period, at the time established by the Corporation for this
purpose, the Corporation shall notify each AIP Member, including each AIP Fund
Administrator with respect to any AIP Settling Sub-Account, of its respective aggregate
gross debit and aggregate gross credit balances for settlement (“AIP Debit Balance”
and “AIP Credit Balance”, respectively), together with details on the credits and debits
comprising such aggregate balances (“Final Settlement Reports”). The Corporation
shall not notify, and shall not be responsible for notifying, any AIP Non-Member Fund of
any AIP Debit Balance or any AIP Credit Balance with respect to any AIP Settling Sub-
Account. It is the AIP Fund Administrator’s obligation to notify each applicable AIP Non-
Member Fund of its respective AIP Debit Balance and AIP Credit Balance.
(g) Settlement shall take place in same day funds in accordance with the
Corporation’s procedures applicable to AIP settlement. Unless otherwise approved by
the Corporation, settlement payments shall be transmitted through AIP Settling Banks.
AIP Debit Balances shall be payable on Settlement Date, at the time

established by the Corporation for this purpose. On Settlement Date, subsequent to
the time at which AIP Debit Balances are payable, the Corporation shall pay AIP
Credit Balances to the applicable contra side AIP Members’ accounts and contra side
AIP Settling Sub-Accounts for which AIP Debit Balances were received by the
Corporation, and shall pay AIP Adjusted Credit Balances if and to the extent
applicable under the following paragraph.
At any time that the Corporation fails to receive payment in the amount
of an AIP Member’s or AIP Settling Sub-Account’s AIP Debit Balance, the
Corporation will reverse the corresponding amounts previously credited to the AIP
Credit Balances of the contra side AIP Members and contra side AIP Settling Sub-
Accounts. The Corporation shall notify the contra side AIP Members (including AIP
Fund Administrators with respect to contra side AIP Settling Sub Accounts) of the
amounts and details of such credit reversals and shall issue a revised settlement
report in respect of the AIP Credit Balances as so reduced (“AIP Adjusted Credit
Balances”).
A failure in payment of an AIP Settlement Debit Balance shall not be

deemed a default in payment to the Corporation under the Rules of the Corporation or
otherwise. The Corporation may establish fees for such late payment or nonpayment
and may establish procedures for limiting or excluding an AIP Member, including an
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(RULE 53)
AIP Fund Administrator with respect to any AIP Settling Sub-Account thereof, from
using the Corporation’s AIP Services in the event of a pre-established number of
instances of late payment or nonpayment, pursuant to procedures established by the
Corporation on a nondiscriminatory basis and communicated to AIP Members in
advance of effectiveness.
(h) Unless otherwise permitted by the Corporation, each AIP Member (and
each AIP Non-Member Fund with respect to AIP Settling Sub-Accounts) shall appoint
an AIP Settling Bank for the purpose of settling with the Corporation on behalf of the
AIP Member or the AIP Settling Sub-Account pursuant to an AIP Settling Bank
Agreement. Settlement shall occur in same-day funds, in accordance with the
procedures established by the Corporation. An AIP Settling Bank may settle for one or
more AIP Members, and for one or more AIP Non-Member Funds, and may settle for
itself. An AIP Settling Bank may refuse to settle for an AIP Member or an AIP Non-
Member Fund by notifying the Corporation in the manner and prior to the time on
Settlement Date set forth in the AIP settlement procedures.
(i) At any time, the Corporation may prohibit any payment from settling
through the Corporation if the Corporation, in its discretion, determines that such action
is necessary for the protection of the Corporation and its Members. The
Corporation shall not be liable for delays in settlement due to operational factors or
otherwise.
SEC. 8. Document Transmission
(a) The Corporation may provide a service to enable AIP Members to

electronically transmit imaged documents, signatures and forms relating to alternative
investment products, including without limitation documents relating to customers of an
AIP Member (“AIP Attachments”). AIP Members may, by agreements among
themselves, establish parameters regarding AIP Attachments such as requirements,
obligations and the legal effect of the transmission of AIP Attachments as between
themselves. The Corporation shall not review AIP Attachments, shall not be a party to
any applicable agreements between AIP Members relating to AIP Attachments, and
shall not provide repository services for AIP Attachments.
SEC. 9. Designation of “Broker-Controlled” and “Customer-Controlled” Accounts
(a) AIP Data includes the designation of a specified AIP Distributor’s

customer account as “broker-controlled” or “customer-controlled” in respect of an AIP
Manufacturer’s Eligible AIP Product.
(b) For so long as any specified customer account is designated as “broker-

controlled” by the applicable AIP Manufacturer, such AIP Manufacturer shall be making
continual and ongoing representations and assurances to the controlling AIP Distributor
with respect to such customer account that:
(i) the Eligible AIP Product securities held (or to be held) in such
customer account are not subject to any right, charge, security
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(RULE 53)
interest, lien or claim of any kind in favor of such AIP Manufacturer

or any person claiming through such AIP Manufacturer;
(ii) to the knowledge of such AIP Manufacturer, there are no

substantial problems of an operational nature which such AIP
Manufacturer is experiencing or which may endanger the interest of
investors in the Eligible AIP Product;
(iii) the Eligible AIP Product securities held (or to be held) in such
customer account are registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended,
are exempt from such registration, or are not required to be
registered;
(iv) the Eligible AIP Product securities held in such customer account
(or to be held in such account) are registered on the books and
records of such AIP Manufacturer, or its designee, in the name of
the controlling AIP Distributor, on behalf of its customer;
(v) in the case of Eligible AIP Product securities issued outside of the
United States, such AIP Manufacturer does not require the
controlling AIP Distributor, or any of its customers, to pay any fees
other than for safe custody or administration as a condition for the
transfer of the Eligible AIP Product securities; and
(vi) such AIP Manufacturer understands and acknowledges that the

controlling AIP Distributor may be relying on the above
representations in order to establish custody in accordance with
Securities and Exchange Commission Rule 15c3-3, and that failure
to comply with the above representations may require that the
controlling AIP Distributor remove the Eligible AIP Product
securities from the applicable customer’s brokerage account.
The above AIP Manufacturer representations and assurances are

collectively referred to in this Rule as the “AIP Manufacturer Representations and
Assurances”.
(c) Each AIP Distributor that is a Registered-Broker Dealer and that is relying
on a specified AIP Manufacturer’s Representations and Assurances with respect to a
customer’s account, shall, for so long as the applicable “broker-controlled” designation
remains in place, be continually stating that:
(i) such AIP Distributor carries those Eligible AIP Product securities
“long” in such customer’s account;
(ii) such AIP Distributor reflects all share positions of the applicable
Eligible AIP Product separately in such AIP Distributor’s securities
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(RULE 53)
records or ledgers maintained pursuant to Securities and Exchange

Commission Rule 17a-3;
(iii) such AIP Distributor maintains in a separate file a current list of all
AIP Manufacturers of which Eligible AIP Product securities are
carried on such AIP Distributor’s books and records, including the
name, telephone number and address of a contact person at each
AIP Manufacturer; and
(iv) such AIP Distributor is not aware of any substantial problems of an

operational nature which the AIP Service or the applicable AIP
Manufacturer or issuer (if different) may be experiencing and which
may endanger the interests of the customer.
The above AIP Distributor statements are collectively referred to in this

Rule as the “AIP Distributor Statements”.
(d) If an account designation within the AIP Service is changed from “broker-
controlled” to “customer-controlled,” the above AIP Manufacturer Representations and
Assurances and AIP Distributor Statements shall no longer apply to the relevant AIP
Members.
(e) Each AIP Distributor and each AIP Manufacturer agrees that any dispute
arising between them under this Section shall be resolved directly between them, and
that the Corporation shall not be made a party to any such dispute and shall have no
responsibility with respect to the resolution thereof.
(a) Notwithstanding any other provision in the Rules of the Corporation: The
Corporation will not be liable for any action taken, or any delay or failure to take any
action, hereunder or otherwise to fulfill the Corporation’s obligations to its AIP Members,
other than for losses caused directly by the Corporation’s gross negligence, willful
misconduct, or violation of federal securities laws for which there is a private right of
action. Under no circumstances will the Corporation be liable for the acts, delays,
omissions, bankruptcy, or insolvency, of any third party, including, without limitation, any
depository, custodian, sub-custodian, AIP Settling Bank, data communication service,
AIP Non-Member Fund or delivery service (“Third Party”), unless the Corporation was
grossly negligent, engaged in willful misconduct, or in violation of federal securities laws
for which there is a private right of action in selecting such Third Party.
(b) Under no circumstances will the Corporation be liable for any indirect,
consequential, incidental, special, punitive or exemplary loss or damage (including, but
not limited to, loss of business, loss of profits, trading losses, loss of opportunity and loss
of use) howsoever suffered or incurred, regardless of whether the Corporation has been
advised of the possibility of such damages or whether such damages otherwise could
have been foreseen or prevented.
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(RULE 54)
RULE 54. DTCC LIMIT MONITORING RISK MANAGEMENT TOOL
SEC. 1. General
NSCC may provide its Members with a risk management tool called DTCC Limit
Monitoring that will enable Members to monitor trading activity on an intraday basis of
their organizations and/or their correspondent firms through review of post-trade data.
DTCC Limit Monitoring will be available to all NSCC Members. Members required to
register for DTCC Limit Monitoring include: (1) any NSCC full service Member that
clears trades for others; (2) any NSCC full service Member that submits transactions to
NSCC’s trade capture system either as a Qualified Special Representative (QSR) or
Special Representative, pursuant to Procedure IV (Special Representative Service);
and (3) any NSCC full service Member that has established a 9A/9B relationship in
order to allow another NSCC Member (either a QSR or Special Representative) to
submit locked in trade data on its behalf.
DTCC Limit Monitoring will provide NSCC Members with: (i) post-trade data relating to
unsettled equity and debt securities trades for a given day that have been compared or
recorded through the Corporation’s trade capture mechanisms on that day (“LM Trade
Date Data”), and (ii) other information as provided in this Rule and the DTCC Limit
Monitoring Procedure. The trade capture mechanisms utilized in the production of LM
Trade Date Data shall be as determined by the Corporation from time to time.
A Member is able to access LM Trade Date Data and other information through DTCC
Limit Monitoring only with respect to its own account(s) at the Corporation. Through the
utilization of filtering criteria known as “Risk Entities”, a Member can define activity it
seeks to monitor through the risk management tool, including that of its correspondents,
or other entities or groups for which LM Trade Date Data is processed through the
Members’ account, including relating to subgroups within its own business.1
Members using the tool will have the ability to input or load start of day and/or intra-day
position data representing open activity from prior days into DTCC Limit Monitoring on
their own (“LM Member-provided Data”) (LM Trade Date Data and LM Member-provided
Data shall collectively be referred to as “LM Transaction Data”). Through its definition of
Risk Entities, and as otherwise provided in the Procedures, a Member may create rules
for the aggregation of LM Transaction Data, set parameters for the monitoring of each
Risk Entities’ activity in relation to LM Transaction Data, and receive alerts for the
display of parameter brakes relating to the LM Transaction Data. These functions, and
the responsibilities of the Corporation and Members with respect to DTCC Limit
Monitoring are further described in the DTCC Limit Monitoring Procedure (Procedure
XVII).
1
The Corporation does not distinguish a Member’s overall activity from that of the Member’s customers
or other groups. Therefore, a Member’s ability to receive LM Trade Date Data organized by Risk Entity
is entirely dependent upon the Member’s provision of defining criteria in accordance with this Rule and
the DTCC Limit Monitoring Procedure.
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(RULE 54)
SEC. 2. No Impact on Trade Guaranty and Other Provisions
Neither reports nor data supplied to Members through DTCC Limit Monitoring, nor the
timing of their distribution, will impact the timing, status, or effectiveness of a trade
guaranty, or lack thereof, of any transaction in CNS Securities or Balance Order
Securities. Furthermore, the provision of information or data to Members, or lack
thereof, through DTCC Limit Monitoring will not be deemed to indicate or have any
bearing on the status of any transaction, including, but not limited to, as compared,
locked-in, validated, guaranteed, or not guaranteed. Any Member that registers for
DTCC Limit Monitoring shall indemnify the Corporation, and any of its employees,
officers, directors, shareholders, agents, and participants who may sustain any loss,
liability, or expense as a result of any act or omission by the Member made in reliance
upon data or information furnished through DTCC Limit Monitoring to the Member
(whether derived from LM Trade Date Data, LM Member-provided Data, or LM
Transaction Data).
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(RULE 55)
RULE 55. SETTLING BANKS AND AIP SETTLING BANKS
SEC. 1. A Settling Bank shall be a Member or a Settling Bank Only Member. An

AIP Settling Bank shall be a Member or an AIP Settling Bank Only Member. Each
Settling Bank shall agree to abide to these Rules and Procedures and shall enter into
an Appointment of Settling Bank and Settling Bank Agreement with the Corporation and
each Member, Mutual Fund/Insurance Services Member, Insurance Carrier/Retirement
Services Member, Fund Member which the Settling Bank represents. Each AIP Settling
Bank shall agree to abide to these Rules and Procedures and shall enter into an
Appointment of AIP Settling Bank and AIP Settling Bank Agreement with the
Corporation and each AIP Member and AIP Non-Member Fund (with respect to AIP
Settling Sub-Accounts) which the AIP Settling Bank represents.
SEC. 2. Each Settling Bank shall settle with the Corporation on a net-net basis
on each Business day: the Net Credit Balance of each participant that settles through
such Settling Bank and has a Net Credit Balance on that business day and the Net
Debit balance of each participant that settles through the same Settling Bank and has a
Net Debit Balance on that business day will be aggregated with the Net Debit Balance
or Net Credit Balance on that business day of the Settling Bank itself, if any, and all
such balances will be netted to a single net-net debit balance or net-net credit balance
for the Settling Bank for that business day. Throughout each business day the
Corporation will provide each Settling Bank with reports of the net debit balance or net
credit balance in the Settlement account of each participant which the Settling Bank
represents and the arithmetic sum of these amounts. The Settling Bank will be
responsible for collecting the Net Debit Balances from, and paying the Net Credit
Balances to, participants represented by the Settling Bank.
SEC. 3. A Settling Bank may refuse to settle for one or more of its participants
(but not for less than all of a given participant’s accounts) in the manner and at the time
specified in the Procedures (a “Refusal”). The Settling Bank shall, if it has a net-net
debit after any Refusal, pay the amount thereof to the Corporation’s account at the bank
specified by the Corporation and in the manner provided in the Procedures, by the time
specified in the Procedures and the participant for whom the Settling Bank has refused
to settle shall pay the Corporation, by Fedwire, the amount of its Net Debit Balance.
SEC. 4. A Member, Mutual Fund/Insurance Services Member, Insurance

Carrier/Retirement Services Member or Fund Member will be deemed to have failed to
settle when the Corporation receives a Refusal from such participant’s Settling Bank
and the participant has failed to pay its Net Debit Balance (or has so failed to pay its Net
Debit Balance if permitted by the Corporation to settle otherwise than through a Settling
Bank), or when its Settling Bank has failed to pay its net-net debit balance by the time
specified in the Procedures.
SEC. 5. If a Settling Bank or, the participant in the case of a Refusal, fails to
settle in the manner and at the time prescribed in the Procedures, the Settling Bank or,
the participant in the case of a Refusal, will be charged interest on the amount of the
required payment calculated in the manner specified in the Procedures and the charge
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(RULE 55)
shall be made to the Settling Bank’s, or in the case of a Refusal the participant’s,
account with the Corporation. In the event of the insolvency of a Settling Bank the
charge shall be made against the Settling Bank’s member account to the extent
sufficient collateral exits in the account; any remaining charge will be made pro rata
against the other Members, Mutual Fund/Insurance Services Members, Insurance
Carrier/Retirement Services Members or Fund Members represented by that Settling
Bank. The Corporation may also assess penalties against a Settling Bank or, in the
case of a Refusal, the participant as specified in the Procedures, in the event the
Settling Bank or, in the case of a Refusal, the participant, fails to settle.
SEC. 6. A Settling Bank shall not terminate its status as a Settling Bank and
shall not terminate its representation of a Member, Mutual Fund/Insurance Services
Member, Insurance Carrier/Retirement Services Member or Fund Member without
having given 10 business days advance written notice thereof to the Corporation. No
Settling Bank shall commence representation of any such participant without having
given 5 business days advance written notice thereof to the Corporation.
SEC. 7. In the event the Settling Bank fails to settle in the manner and at the
time prescribed in the Procedures, due to the insolvency or other cause, each Member,
Member and Fund Member represented by that Settling Bank shall be obligated to the
Corporation for its Net Debit Balance, and the Corporation shall pay to such participant
the amount of its Net Credit Balance; provided, however, if the Corporation has made
payment to the failed Settling Bank the Corporation shall have no obligation to any such
participant for a Net Credit Balance.
SEC. 8. Based on its judgment that adequate cause exits to do so, the
Corporation may at any time terminate a Member’s right to act as a Settling Bank.
SEC. 9. Each AIP Settling Bank shall settle with the Corporation on a gross
basis on each Business day: the AIP Debit Balance and AIP Credit Balance (or, if
applicable, the AIP Adjusted Credit Balance) of each AIP Member and AIP Non-
Member Fund which settles through such AIP Settling Bank. Each AIP Debit Balance of
each AIP Member and each AIP Non-Member Fund which settles through the same AIP
Settling Bank and has a AIP Debit Balance on that business day will be aggregated with
the AIP Debit Balance on that business day of the AIP Settling Bank itself, if any, and all
such balances will be aggregated to a single gross debit balance for the AIP Settling
Bank for that business day. Each AIP Credit Balance (or if applicable, AIP Adjusted
Credit Balance) of each AIP Member and each AIP Non-Member Fund which settles
through the same AIP Settling Bank and has an AIP Credit Balance (or, if applicable
AIP Adjusted Credit Balance) on that business day will be aggregated with the AIP
Credit Balance (or AIP Adjusted Credit Balance, as applicable) on that business day of
the AIP Settling Bank itself, if any, and all such balances shall be aggregated to a single
gross credit balance for the AIP Settling Bank for that business day. Throughout each
business day the Corporation will provide each AIP Settling Bank with reports of the
debit balance or credit balance in the AIP settlement account of each AIP Member
(including AIP Settling Sub-Account) which the AIP Settling Bank represents and the
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(RULE 55)
arithmetic sum of these amounts. The AIP Settling Bank will be responsible for
collecting the AIP Debit Balances from, and paying the AIP Credit Balances (or, if
applicable, the AIP Adjusted Credit Balances) to AIP Members and AIP Non-Member
Funds represented by the AIP Settling Bank.
SEC. 10. An AIP Settling Bank may refuse to settle for one or more of its AIP
Members and/or AIP Non-Member Funds (but not for less than all of a given AIP
Member’s or AIP Non-Member Fund’s accounts) in the manner and at the time specified
in the Procedures (an “AIP Refusal”). The AIP Settling Bank shall, if it has a net debit
remaining after any Refusal, pay the amount thereof to the Corporation’s account at the
bank specified by the Corporation and in the manner provided in the Procedures, by the
time specified in the Procedures and the AIP Member or AIP Non-Member Fund for
whom the AIP Settling Bank has refused to settle may pay the Corporation, by Fedwire,
the amount of its remaining debit balance in accordance with procedures adopted by
the Corporation.
SEC. 11. An AIP Member (including an AIP Fund Administrator with respect to
its AIP Settling Sub-Accounts) will be deemed to have failed to settle an AIP Debit
Balance when the Corporation receives a Refusal from the applicable Settling Bank and
the AIP Member (including the applicable AIP Fund Administrator with respect to its AIP
Settling Sub-Accounts or the AIP Non-Member Fund in respect thereof) has failed to
pay the AIP Debit Balance (or has so failed to pay its AIP Debit Balance if permitted by
the Corporation to settle otherwise than through an AIP Settling Bank) or when its AIP
Settling Bank has failed to pay its debit balance by the time specified in the Procedures.
SEC. 12. If an AIP Settling Bank or the AIP Member (including the AIP Fund
Administrator with respect to its AIP Settling Sub-Accounts) in the case of a Refusal,
fails to settle in the manner and at the time prescribed in the Procedures, the
Corporation shall reduce the AIP Credit Balances of all contra side AIP Members’
accounts (including contra side AIP Settling Sub-Accounts) having an AIP Credit
Balance on that business day as a result of transactions with the AIP Member(s) and/or
AIP Settling Sub-Account(s) which AIP Debit Balance failed to settle, in accordance with
Rule 53 and the Procedures of the Corporation. The Settling AIP Bank or AIP Member
(including an AIP Fund Administrator with respect to its AIP Settling Sub-Accounts) will
not be deemed to have defaulted in a payment obligation to the Corporation. The
Corporation may assess penalties against an AIP Settling Bank or, the AIP Member
(including the AIP Fund Administrator with respect to its AIP Settling Sub-Accounts) as
specified in the Procedures, in the event the AIP Settling Bank or, in the case of a
Refusal, the AIP Member (including AIP Fund Administrators with respect to AIP
Settling Sub-Accounts) fails to settle.
SEC. 13. An AIP Settling Bank shall not terminate its status as an AIP Settling
Bank and shall not terminate its representation of a AIP Member or AIP Non-Member
Fund without having given 10 business days advance written notice thereof to the
Corporation. No AIP Settling Bank shall commence representation of a AIP Member or
AIP Non-Member Fund without having given 5 business days advance written notice
thereof to the Corporation.
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(RULE 55)
SEC. 14. In the event the AIP Settling Bank fails to settle in the manner and at
the time prescribed in the Procedures, due to the insolvency or other cause, the
Corporation in its discretion may permit an AIP Member or an AIP Non-Member Fund
represented by that AIP Settling Bank to pay the Corporation for its AIP Debit Balance,
and the Corporation shall pay the contra side AIP Member’s account (including any
contra side AIP Settling Sub-Account) the amount of its AIP Credit Balance (or AIP
Adjusted Credit Balances, if applicable) to the extent such funds have been received by
such AIP Member or AIP Non-Member Fund; provided, however, if the Corporation has
made payment to the failed AIP Settling Bank the Corporation shall have no obligation
to any AIP Member (including any AIP Fund Administrator with respect to any AIP
Settling Sub-Account) or to any AIP Non-Member Fund for an AIP Credit Balance or
AIP Adjusted Credit Balance, as applicable.
SEC. 15. Based on its judgment that adequate cause exists to do so, the
Corporation may at any time terminate an AIP Member’s right to act as a AIP Settling
Bank.
193
(RULE 56)
194
(RULE 57)
RULE 57. INSURANCE & RETIREMENT SERVICES
SEC. 1. (a) The Corporation may provide a service to enable Members, Mutual
Fund/Insurance Services Members, Insurance Carrier/Retirement Services Members
and Data Services Only Members to transmit such data and information relating to I&RS
Eligible Products (the “I&RS Data”) and, with respect to Members, Mutual
Fund/Insurance Services Members and Insurance Carrier/Retirement Services
Members, to settle payments relating to insurance products between themselves. Such
services shall be known as the Insurance & Retirement Services (“I&RS”) and will be
accomplished in accordance with the provisions of this Rule.
(b) Each Member, Mutual Fund/Insurance Services Member, Insurance

Carrier/Retirement Services Member and Data Services Only Member that desires
access to I&RS must complete and deliver to the Corporation such agreements as the
Corporation may from time to time require.
(c) I&RS Data must be submitted to the Corporation in such formats and by such
times as established by the Corporation from time to time, and, depending upon the
type of I&RS Data submitted, may require a response from the receiver of I&RS Data.
(d) The Corporation will review I&RS Data received from Insurance
Carrier/Retirement Services Members, Mutual Fund/Insurance Services Members,
Members and Data Services Only Members for such information as the Corporation
determines from time to time to be necessary. If the I&RS Data does not contain the
information required by the Corporation, the Corporation will reject the I&RS Data and
will advise the appropriate Insurance Carrier/Retirement Services Member, Member,
Mutual Fund/Insurance Services Member, or Data Services Only Member in such form
and by such time as established by the Corporation from time to time.
(e) If the I&RS Data appears to contain the information required by the
Corporation, subject to any rights the Corporation may have as provided in the Rules
generally, the Corporation will transmit the I&RS Data to the appropriate Insurance
Carrier/Retirement Services Member, Member, Mutual Fund/Insurance Services
Member, or Data Services Only Member in such form and by such time as established
(f) Pursuant to the policies established by the Corporation from time to time, the
Corporation will notify, in such form and at such times as established by the Corporation
from time to time, an Insurance Carrier/Retirement Services Member, Member, Mutual
Fund/Insurance Services Member, or Data Services Only Member, in respect of certain
I&RS Data which requires a response, if no such response has been received by the
Corporation.
(g) Pursuant to the policies established by the Corporation from time to time, a
submitter of I&RS Data can withdraw certain I&RS Data submitted by submitting an
instruction to the Corporation in such form and by such time as established by the
Corporation from time to time. Upon receipt of a withdrawal instruction, the Corporation
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(RULE 57)
will (i) delete from I&RS the I&RS Data withdrawn and (ii) notify the appropriate party of
the withdrawn I&RS Data in such form and by such time as established by the
Corporation from time to time. Unless I&RS Data is rejected, withdrawn or deleted from
I&RS as provided herein, the Corporation will store and maintain all I&RS Data
submitted to it for transmission between and among Members, Mutual Fund/Insurance
Services Members, Insurance Carrier/Retirement Services Members and Data Services
Only Members and be permitted to evaluate the usefulness of such I&RS Data,
including by providing such I&RS Data to third parties under appropriate agreements of
confidentiality and to prohibit such third parties from using such I&RS Data other than
for evaluation purposes.
(h) Notwithstanding the foregoing, nothing prohibits an Insurance

Carrier/Retirement Services Member, Mutual Fund/Insurance Services Member,
Member or Data Services Only Member from requiring data or information in addition to
any I&RS Data that has been transmitted through the Corporation.
(i) Submission of I&RS Data to, or alteration or withdrawal of I&RS Data from,
the Corporation shall not relinquish, extinguish or affect any legal or regulatory right or
obligation of the Member, Mutual Fund/Insurance Services Member, Insurance
Carrier/Retirement Services Member or Data Services Only Member.
(j) The Corporation will not be responsible for the completeness or accuracy of
the I&RS Data received from or transmitted to an Insurance Carrier/Retirement Services
Member, Member, Mutual Fund/Insurance Services Member, or Data Service Only
Member transmitted through I&RS nor for any errors, omissions or delays which may
occur in the absence of gross negligence on the Corporation’s part, in the transmission
of such I&RS Data to or from an Insurance Carrier/Retirement Services Member,
Member, Mutual Fund/Insurance Services Member, or Data Services Only Member.
(k) Settlement of money payments in respect of I&RS transactions shall be

made is accordance with Rule 12 and other provisions of these Rules. At any time, the
Corporation may prohibit any payment from settling through I&RS if the Corporation, in
its discretion, determines that such action is necessary for the protection of the
Corporation, Members, Mutual Fund/Insurance Services Members, Insurance
Carrier/Retirement Services Members, creditors or investors.
(l) If at any time the Corporation fails to receive payment from a Member, Mutual
Fund/Insurance Services Member or Insurance Carrier/Retirement Services Member
which payment was to be used to make payment to the contra side of the I&RS
transaction, the Corporation, in its discretion, may reverse in whole or in part any credit
previously given to the Member, Mutual Fund/Insurance Services Member, or Insurance
Carrier/Retirement Services Member who is the contra side to the I&RS transaction,
within such time frame as determined by the Corporation from time to time.
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(RULE 57)
COMMISSIONS AND COMPENSATION
SEC. 2. (a) The Corporation may provide a service to enable Insurance

Carrier/Retirement Services Members to transmit I&RS Data regarding commissions,
charge backs and other compensation (“Commissions”) to Members, Mutual
Fund/Insurance Services Members and Data Services Only Members and, with respect
to Members and Mutual Fund/Insurance Services Members, to settle payments in
respect of thereof.
(b) An Insurance Carrier/Retirement Services Member may initiate a

Commission transaction by submitting to the Corporation a payment instruction, in such
form and by such time as established by the Corporation from time to time.
(c) Commission transactions received for settlement through the Corporation

prior to the time established by the Corporation for this purpose will settle in the
settlement cycle occurring immediately following the completion of the processing of
data relating to such payment, unless the Insurance Carrier/Retirement Services
Member’s initiation instruction indicated that such transaction will settle on a date
thereafter; provided, however, that no transaction shall settle more than five business
days after the day on which the transaction was submitted to the Corporation.
APPLICATIONS AND PREMIUMS
SEC. 3. (a) The Corporation may provide a service to enable Members, Mutual
Fund/Insurance Services Members and Data Services Only Members to transmit I&RS
Data regarding applications and premiums (“Applications and Premiums”) to Insurance
Carrier/Retirement Services Members and, with respect to Members, Mutual
Fund/Insurance Services Members and Insurance Carrier/Retirement Services
Members, to settle payments in respect thereof.
(b) Applications and premiums transactions submitted for settlement through the
Corporation prior to the time established by the Corporation for this purpose will settle in
the settlement cycle occurring immediately following the submission of data relating to
such payment, provided however that the Member or Mutual Fund/Insurance Services
Member initiating the transaction may submit a cancel instruction prior to the time
established by the Corporation for this purpose. Applications and Premiums
transactions received for settlement through the Corporation and cancelled in a timely
manner will be deleted from I&RS.
LICENSING AND APPOINTMENTS
SEC. 4 (a) The Corporation may provide a service to enable Members, Mutual
Fund/Insurance Services Members, Insurance Carrier/Retirement Services Members
and Data Services Only Members to transmit I&RS Data regarding licensing and
appointment authorizations and activity (including, but not limited to, licensing and
appointment authorizations and activity relating to licensee or appointee training)
(“Licensing and Appointments”) among themselves or to otherwise supply and access
I&RS Data regarding Licensing and Appointments directly to or from NSCC, as the case
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(RULE 57)
may be, and, with respect to Members, Mutual Fund/Insurance Services Members and
Insurance Carrier/Retirement Services Members, to settle payments in respect thereof.
(b) Licensing and Appointments transactions submitted for settlement through

the Corporation prior to the time established by the Corporation for this purpose shall
settle in the settlement cycle occurring immediately following the submission of data
relating to such payment.
POSITIONS AND VALUATIONS
SEC. 5. The Corporation may provide a service to enable Insurance

Carrier/Retirement Services Members to transmit I&RS Data to Members, Mutual
Fund/Insurance Services Members and Data Services Only Members regarding
positions and valuations specific to an I&RS Eligible Product.
ACAT/TRANSFERS
SEC. 6. (a) The Corporation may provide a service to enable Members to

transmit I&RS Data regarding I&RS Eligible Product customer account transfer data
between Members.
(b) Within the time frame established by the Corporation, the Corporation may
transmit, to an Insurance Carrier/Retirement Services Member, I&RS Eligible Product
customer account transfer data in such form and by such time as established by the
Corporation from time to time. The Insurance Carrier/Retirement Services Member
must confirm, reject, or request a modification with respect to the transfer in such format
and by such time as established by the Corporation. Transfers that are not confirmed or
rejected within such time frame and in such manner as established from time to time by
the Corporation will be deleted from the I&RS system by the Corporation.
ASSET PRICING

Carrier/Retirement Services Members to transmit I&RS Data to Members, Mutual
Fund/Insurance Services Members and Data Services Only Members regarding the
pricing of units and other values in respect of funds or other assets within annuities and
other insurance products.
FINANCIAL ACTIVITY REPORTING

Carrier/Retirement Services Members to transmit to Members, Mutual Fund/Insurance
Services Members and Data Services Only Members I&RS Data regarding financial
transactions and related activity specific to an I&RS Eligible Product. The Corporation
may transmit and provide access to transaction-specific subaccount data (“Subaccount
Data”) received through the Financial Activity Reporting service relating to funds or
other assets within variable annuity and variable life insurance products to asset
managers that manage such funds or assets and to service providers on behalf of such
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(RULE 57)
asset managers. Examples of Subaccount Data with respect to variable annuity and
variable life insurance product transactions include, but shall not be limited to, the name
of the insurance carrier, the date of the transaction, the broker-dealer named on the
transaction, the individual advisor listed on the transaction, the type of transaction (e.g.,
new purchase, death claim, rebalance, subaccount transfer to or from the subaccount,
etc.) and the amount of the transaction.
Asset managers which are not Members or Limited Members will be required to
enter into such agreements with the Corporation as determined by the Corporation to
gain access to the Subaccount Data, which agreements will include an agreement to
pay the fees set forth in the Rules to receive such Subaccount Data and to set up any
system requirements necessary to access the data. Service providers receiving the
Subaccount Data on behalf of asset managers will also be required to enter into such
agreements as determined by the Corporation in order to gain access to such
Subaccount Data on behalf of such asset managers to ensure the data is being used as
contemplated herein and that there are proper safeguards by the service provider to
ensure data security.
IN FORCE TRANSACTIONS
SEC. 9. (a) The Corporation may provide a service to enable Insurance

Carrier/Retirement Services Members, Members, Mutual Fund/Insurance Services
Members and Data Services Only Members to transmit I&RS Data relating to an
existing and effective insurance contract (“In Force Contract”) among themselves and,
with respect to Insurance Carrier/Retirement Services Members, Members and Mutual
Fund/Insurance Services Members, to settle payments in respect thereof.
(b) A Member, Insurance Carrier/Retirement Services Member, Mutual

Fund/Insurance Services Member or Data Services Only Member may initiate a request
relating to an In Force Contract by submitting to the Corporation instructions (“In Force
Transaction Request”) in such form and by such time as established by the Corporation
from time to time. The contra-side Member’s, Insurance Carrier/Retirement Services
Member’s, Mutual Fund/Insurances Member’s or Data Services Member’s response to
such In Force Transaction Request (“In Force Transaction Request Response”) shall be
submitted to the Corporation in such form and by such time as established by the
Corporation from time to time. In Force Transaction Requests and In Force Transaction
Request Responses shall be treated and processed by the Corporation as other I&RS
Data is treated and processed by the Corporation, and shall be subject to the terms, set
forth in Section 1 of this Rule 57.
(c) The Corporation may provide a service to enable Members, Insurance

Carrier/Retirement Services Members and Mutual Fund/Insurance Services Members to
settle money-only payment transactions between themselves in respect of In Force
Contracts. A Member, Insurance Carrier/Retirement Services Member or Mutual
Fund/Insurance Services Member shall initiate a money-only settlement transaction
(hereinafter, the “Initiating I&RS Member”) by submitting to the Corporation instructions
to debit such Initiating I&RS Member’s account in such form and by such time as
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(RULE 57)
established by the Corporation from time to time. In no event shall the Initiating I&RS
Member be the Member, Insurance Carrier/Retirement Services Member or Mutual
Fund/Insurance Services Member to be credited as part of the money-only settlement
transaction. Settlement of money-only payments in respect of In Force Contracts shall
be subject to Section 1(k) and (l) of this Rule 57.
INSUREXPRESS

Carrier/Retirement Services Members, Members, Mutual Fund/Insurance Services
Members and Data Services Only Members to transmit I&RS Data relating to the
initiation, processing and completion of applications for life insurance contracts and
other insurance products among themselves.
REPLACEMENTS
SEC 11. (a) The Corporation may provide a service to enable Members,
Insurance Carrier/Retirement Service Members, Mutual Fund/Insurance Services
Members and Data Services Only Members to transmit I&RS Data regarding the
transfer, exchange or replacement of an existing insurance contract (“Replacement”) to
Members, Insurance Carrier/Retirement Service Members, Mutual Fund/Insurance
Services Members and Data Services Only Members and to settle payments in respect
thereof.
(b) A Member, Insurance Carrier/Retirement Service Member, Mutual

Fund/Insurance Services Member or Data Services Only Member may initiate a
Replacement by submitting to the Corporation instructions to process a Replacement, in
such form and by such time as established by the Corporation from time to time
(referred to as a “Request for Replacement”). Within the time frame established by the
Corporation, the Corporation may transmit, to a Member, Insurance Carrier/Retirement
Service Member, Mutual Fund/Insurance Services Member or Data Services Only
Member a Request for Replacement in such from and by such time as established by
the Corporation from time to time. The Member, Insurance Carrier/Retirement Service
Member, Mutual Fund/Insurance Services Member or Data Services Only Member must
confirm, reject, or request modification with respect to the Request for Replacement in
such format and by such time as established by the Corporation. Transfers that are not
confirmed or rejected within such time frame and in such manner as established from
time to time by the Corporation will be deleted from the I&RS system by the
Corporation.
(c) Unless specifically required by state laws, the Member, Insurance

Carrier/Retirement Service Member, Mutual Fund/Insurance Services Member or Data
Services Only Member receiving a Request for Replacement Processing (“Delivering Carrier”)
waives the obligation that a Transfer of Assets, 1035 Exchange Form, or other similar
paperwork (collectively referred to as “TOA”) be signed by an Officer of the carrier submitting
the Request for Replacement Processing (“Receiving Carrier”) and physically transmitted to
the Delivering Carrier. By accepting the Request for Replacement Processing, the Delivering
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(RULE 57)
Carrier also agrees to accept the transfer proceeds; consents to the terms and conditions, if
any, stated in the TOA attached to the Request for Replacement Processing; and is bound by
the TOA with the same force and effect as if it were accompanied by a physical signature.
INSURANCE PROFILE
SEC 12. (a) The Corporation may provide a service (“Insurance Profile”) to
enable Insurance Carrier/Retirement Services Members to transmit I&RS Data to
Members, Mutual Fund/Insurance Service Members and Data Service Only Members
regarding fees, expenses and Commissions (“Fee Data”) or to otherwise supply and
provide access to Fee Data directly to or from the Corporation, as applicable.
(b) Insurance Carrier/Retirement Services Members, Members, Mutual

Fund/Insurance Service Members and Data Service Only Members may not use,
distribute, transmit or otherwise make available Fee Data retrieved from Insurance
Profile as the basis for or as a part of a data product or service offered for commercial
gain to any other person without the prior written consent of the Corporation. This
restriction includes, but is not limited to, service providers and other third parties,
whether or not affiliated with an Insurance Carrier/Retirement Services Member,
Member, Mutual Fund/Insurance Service Member or Data Service Only Member,
regardless of whether such person has previously itself received and/or used any such
Fee Data in the past. The Corporation shall have the right, but not the obligation, to
audit the use and distribution of Fee Data retrieved from Insurance Profile.
INSURANCE INFORMATION EXCHANGE (“IIEX”)
SEC 13. The Corporation may provide a service to enable Members, Insurance
Carrier/Retirement Services Members, Mutual Fund/Insurance Service Members and
Data Service Only Members (collectively, “I&RS Members”), and their respective
service providers, to transmit, view and retrieve I&RS Data using a centralized data
repository. Service providers will gain access to IIEX only by authorization from I&RS
Members and will be required to enter into such agreements as determined by the
Corporation, which agreements will include an agreement to pay the fees set forth in the
Rules.
201
(RULE 58)
RULE 58. LIMITATIONS ON LIABILITY
SEC. 1. Notwithstanding any affiliation between the Corporation and any other
entity, including another clearing agency, except as otherwise expressly provided by
written agreement between the Corporation and such other entity:
(a) the Corporation shall not be liable for any obligations of such other entity nor
shall the Clearing Fund or other assets of the Corporation be available to such other
entity (or any person claiming through such other entity) for any purpose, and no
Member shall assert against the Corporation any claim based upon any obligations of
any other entity to such Member; and
(b) such other entity shall not be liable for any obligations of the Corporation, nor
shall the Participants Fund or any other assets of such other entity be available to the
Corporation (or any person claiming through the Corporation) for any purpose, and no
Member shall assert against such other entity any claim based upon any obligations of
the Corporation to such Member.
SEC. 2. Notwithstanding any other provision in the Rules:
(a) The Corporation will not be liable for any action taken, or any delay or failure
to take any action, hereunder or otherwise to fulfill the Corporation’s obligations to its
Members, Mutual Fund/Insurance Services Members, Settling Bank Only Members,
Municipal Comparison Only Members, Insurance Carrier/Retirement Services Members,
Investment Manager/Agent Members, TPP Members, TPA Members, Mutual
Fund/Insurance Services Members, Fund Members, Data Services Only Members, AIP
Members and AIP Settling Bank Only Members (each hereinafter referred to as a
“participant” for purposes of this Rule 58), other than for losses caused directly by the
Corporation’s gross negligence, willful misconduct, or violation of Federal securities
laws for which there is a private right of action. Under no circumstances will the
Corporation be liable for the acts, delays, omissions, bankruptcy, or insolvency, of any
third party, including, without limitation, any depository, custodian, sub-custodian,
clearing or settlement system, transfer agent, registrar, data communication service,
AIP Non-Member Fund or delivery service (“Third Party”), unless the Corporation was
grossly negligent, engaged in willful misconduct, or in violation of Federal securities
laws for which there is a private right of action in selecting such Third Party.
not limited to, loss of business, loss of profits, trading losses, loss of opportunity and
loss of use) howsoever suffered or incurred, regardless of whether the Corporation has
been advised of the possibility of such damages or whether such damages otherwise
could have been foreseen or prevented.
(c) With respect to instructions given to the Corporation by a Special

Representative/Index Recipient Agent, the Corporation shall have no responsibility or
liability for any errors which may occur in the course of transmissions or recording of
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(RULE 58)
any transmissions or which may exist in any magnetic tape, document or other media
so delivered to the Corporation.
(d) With respect to the Corporation’s distribution facilities, the Corporation

assumes no responsibility whatever for the form or content of any tickets, checks,
papers, documents or other material (other than items prepared by it) placed in the
boxes in its distribution facilities assigned to each participant, or AIP Member, or
otherwise handled by the Corporation; nor does the Corporation assume any
responsibility for any improper or unauthorized removal from such boxes or from the
Corporation’s facilities of any such tickets, checks, papers, documents or other material,
including items prepared by the Corporation.
(e) With respect to Fund/SERV transactions, the Corporation will not be

responsible for the completeness or accuracy of any transaction or instruction received
from or transmitted to a participant through Fund/SERV, nor for any errors, omissions or
delays which may occur in the transmission of a transaction or instruction to or from a
participant.
(f) The Corporation will not be responsible for the completeness or accuracy of
any IPS Data received from or transmitted to a participant through IPS nor for any
errors, omissions or delays which may occur in the transmission of such IPS Data to or
from a participant.
(g) The Corporation will not be responsible for the completeness or accuracy of
any AIT Data received from or transmitted to a Member through the AIT service, nor for
any errors, omissions or delays which may occur in the transmission of such AIT Data
to or from a Member.
(h) The Corporation will not be responsible for the completeness or accuracy of
any AIP Data received from or transmitted to an AIP Member (including an AIP Fund
Administrator with respect to any AIP Settling Sub-Account thereof) through the
Corporation nor for any errors, omissions or delays which may occur in the transmission
of such AIP Data to or from an AIP Member (including an AIP Fund Administrator with
respect to any AIP Settling Sub-Account thereof).
(i) The Corporation will not be responsible for the completeness or accuracy of
LM Trade Date Data, LM Member-provided Data, LM Transaction Data, or other
information or data which it receives from Members or third parties and which is utilized
in DTCC Limit Monitoring, nor for any errors, omissions or delays which may occur in
the transmission of such data or information.
203
(RULE 59)
RULE 59. ACCOUNT INFORMATION TRANSMISSION SERVICE
The Corporation may provide a service to Members that enables Members to

transmit account related information between themselves on an automated basis in
respect of the movement of correspondent accounts between Members, or other
material events that result in the bulk movement of accounts between Members.
Members who desire to use this service must notify the Corporation in such form and by
such time as the Corporation may determine from time to time. Information transmitted
pursuant to this rule (referred to as “AIT Data”) must be submitted to the Corporation in
such form and within such time frame as established by the Corporation from time to
time.
204
(RULE 60)
RULE 60. (MARKET DISRUPTION AND FORCE MAJEURE)
Section 1. Market Disruption Events
On the happening of any one or more of the events or circumstances set out
below (each a “Market Disruption Event”) which, in any case, is likely to materially affect
or has materially affected the business, operations, safeguarding of securities or funds,
or physical functions of the Corporation, including performance by the Corporation of
any obligations under these Rules & Procedures, the Corporation shall be entitled to
take such action as is set out in this Rule 60:
(a) a general suspension or limitation of trading on the New York Stock

Exchange, NASDAQ, or any other exchange or market relevant to the pricing or trading
of securities cleared and settled through the Corporation;
(b) the declaration of a trading or banking moratorium in the United States or

New York State;
(c) any international organization, the government of any nation, state, or

territory, or any institution or agency thereof, or any self-regulatory organization taking
action of a nature likely to affect the normal course of business, including performance
by the Corporation of obligations under these Rules & Procedures;
(d) the unavailability, failure, malfunction, overload, or restriction (whether

partial or total) of any payment, bank transfer or wire, or securities settlement system;
(e) the unavailability, failure, malfunction, overload, or restriction (whether

partial or total) of any cash or securities depository, custodian or clearing bank, or any
material variation of such depository’s, custodian’s or clearing bank’s processing or
turnaround times, whether or not occasioned by action of such depository, custodian or
clearing bank; or
(f) any Force Majeure, which shall include (without limitation) any terrorist or
other criminal action, war or hostilities between any nations, national emergency, riot,
civil unrest, acts of God or the public enemy, fire or other casualty, flood, accident,
disaster (including any nuclear, atomic, environmental, or natural disaster), sabotage,
bomb threat, labor dispute, embargo, the unavailability, failure, malfunction, or
restriction of communication, computer, or data processing systems or facilities, or of
software or technology, cyber attack, lack of transportation facilities, interruption
(whether partial or total) of power supplies or other utility or service, or any event,
situation, or circumstance beyond the reasonable control of the parties (whether or not
similar to any of the foregoing), including those imminent or threatened.
Section 2. Powers of the Corporation
If the Board of Directors or any officer of the Corporation listed below determines,
in its, his, or her judgment that there is a Market Disruption Event, the Corporation shall
be entitled to act (or refrain from acting) as prescribed in Section 3 of this Rule 60. To
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(RULE 60)
the extent practicable, the determination of the existence of a Market Disruption Event,
and the actions to be taken in response thereto, shall be made by the Board of Directors
at a meeting where a quorum is present and acting. However, if the Corporation is
unable to convene a Board meeting promptly and timely in such event, then such
determination may be made by either the Chief Executive Officer, the Chief Financial
Officer, the Group Chief Risk Officer, or the General Counsel, or by any management
committee on which all of the foregoing officers serves (an “Officer Market Disruption
Event Action”), provided that the Corporation shall convene a Board meeting as soon as
practicable thereafter (and in any event within 5 business days following such
determination) to ratify, modify or rescind such Officer Market Disruption Event Action.
Section 3. Authority to take Actions
Upon the determination that there is a Market Disruption Event, the Corporation
shall be entitled, during the pendency of such Market Disruption Event, to:
(a) suspend the provision of any or all services of the Corporation; and
(b) take, or refrain from taking, or require Members and/or Limited Members
(whether or not they are affected by the Market Disruption Event) to take or refrain from
taking, any and all action which the Corporation considers appropriate to prevent,
address, correct, mitigate or alleviate the event and facilitate the continuation of
services as may be practicable, and, in that context, issue instructions to Members
and/or Limited Members.
Section 4. Notifications
4.1 Each Member and Limited Member shall notify the Corporation
immediately upon becoming aware of any Market Disruption Event.
4.2 The Corporation shall promptly notify Members and Limited Members of
any action the Corporation takes or intends to take pursuant to Section 3
of this Rule 60.
4.3 The Corporation shall attempt to consult with officials of the Securities and
Exchange Commission prior to the Corporation taking any action pursuant
to Section 3 of this Rule 60; provided, however, that the authority
contained herein shall not be conditioned by such consultation.
The Corporation shall advise the Securities and Exchange Commission as soon
as practicable by telephone, and confirmed in writing, of any action taken by the
Corporation pursuant to Section 3 of this Rule 60, and a record of such writing shall be
promptly made and filed with the Corporation’s records and shall be available for
inspection by any Member or Limited Member during regular business hours on
business days.
The Corporation shall also advise the Securities and Exchange Commission as
soon as practicable by telephone, and confirmed in writing, at such time it determines
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(RULE 60)
that there is no longer a Market Disruption Event and the Corporation terminates the
actions taken by the Corporation pursuant to Section 3 of this Rule 60. A record of such
writing shall be promptly made and filed with the Corporation’s records and shall be
available for inspection by any Member or Limited Member during regular business
hours on business days.
Section 5. Certain Miscellaneous Matters
(a) Without limiting any other provisions in these Rules & Procedures
concerning limitations on liability, none of the Corporation, its directors, officers,
employees, agents, or contractors shall be liable to a Member, Limited Member or any
other person (including any customer or client thereof) for:
(i) any failure, hindrance, interruption or delay in performance in whole

or in part of the obligations of the Corporation under the Rules or
Procedures, if that failure, hindrance, interruption or delay arises
out of or relates to a Market Disruption Event; or
(ii) any loss, liability, damage, cost or expense arising from or relating
in any way to any actions taken, or omitted to be taken, pursuant to
this Rule 60.
(b) The power of the Corporation to take any action pursuant to this Rule 60
also includes the power to repeal, rescind, revoke, amend, or vary any such action.
(c) The powers of the Corporation pursuant to this Rule 60 shall be in addition
to, and not in derogation of, authority granted elsewhere in these Rules & Procedures to
take action as specified therein.
(d) In the event of any conflict between the provisions of this Rule 60 and any
other Rules or Procedures, the provisions of this Rule 60 shall prevail.
207
(RULE 61)
RULE 61. INTERNATIONAL LINKS
The Corporation may establish links with one or more Foreign Financial
Institutions and may make available to such Foreign Financial Institutions for the benefit
or on behalf of the Foreign Financial Institution’s participants and members such
services of the Corporation which the Corporation in its sole discretion shall determine
to provide. To the extent that the Corporation provides access to a Qualified Security
Depository to a Foreign Financial Institution, the Foreign Financial Institution shall be
required to collateralize its settlement obligations to the Corporation on such terms and
by such means as agreed to between the Corporation and the Foreign Financial
Institution. The Corporation may enter into such agreements as it may deem
appropriate with any such Foreign Financial Institution which agreement and the Rules
of the Corporation, as well as the rules, procedures and other documents of the Foreign
Financial Institution shall govern link transactions between participants and members of
such Foreign Financial Institutions and the Members of the Corporation. The
Corporation may from time to time establish procedures which shall be applicable to the
operation of such links which procedure may be amended from time to time and such
procedures shall be a part of the Rules and Procedures of the Corporation.
208
(RULE 62)
RULE 62. GLOBAL CLEARANCE NETWORK SERVICE
The Corporation may establish a foreign clearing, settlement and custody service
in conjunction with banks, trust companies and other entities to be known as the Global
Clearance Network Service and may provide such service to any Member which is
qualified to be a customer of the bank, trust company or other entity and has executed
such agreement with the Corporation as the Corporation may require providing, among
other things, a guarantee to the bank, trust company or other entity for the services.
The Corporation may from time to time establish procedures for the operation of the
service.
209
(RULE 63)
RULE 63. SRO REGULATORY REPORTING
The Corporation may provide one or more data transmission services to permit
Members and others to meet regulatory reporting requirements imposed by self-
regulatory organizations, as defined in the Securities Exchange Act of 1934. To the
extent that Members or others use any such service they shall be bound by the terms of
any agreement between the Corporation and any self-regulatory organization with
respect to each such service. Entities which are not Members shall be required to enter
into such agreements as determined by the Corporation in order to be permitted to use
such services.
210
(RULE 64)
RULE 64. DTCC SHAREHOLDERS AGREEMENT
SEC. 1. For purposes of this Rule 64:
“DTCC” means The Depository Trust & Clearing Corporation, the holder of all of
the capital stock of the Corporation.
“Shareholders Agreement” means the Shareholders Agreement of DTCC, dated

as of November 4, 1999, as heretofore or hereafter amended and restated.
“Common Shares” has the meaning given to such term in the Shareholders
Agreement.
“Mandatory Purchaser Participant” has the meaning given to such term in the
Shareholders Agreement.
“Voluntary Purchaser Participant” has the meaning given to such term in the
Shareholders Agreement.
SEC. 2. As a condition to its use of the services and facilities of the Corporation,
a Member (other than a Member that is a central securities depository, Federal Reserve
bank, or central counterparty) shall be required to purchase and own Common Shares
in accordance with the terms of the Shareholders Agreement and be a party to the
Shareholders Agreement. For purposes of the Shareholders Agreement, a Member
(other than a Member that is a central securities depository, Federal Reserve bank, or
central counterparty) shall be a Mandatory Purchaser Participant.
SEC. 3. A Fund Member, Insurance Carrier/Retirement Services Member,

Municipal Comparison Only Member or Mutual Fund/Insurance Services Member (other
than any central securities depositories, Federal Reserve banks, and central
counterparties) shall be permitted (but not required) to purchase and own Common
Shares in accordance with the terms of the Shareholders Agreement and be a party to
the Shareholders Agreement. For purposes of the Shareholders Agreement, a Fund
Member, Insurance Carrier/Retirement Services Member, Municipal Comparison Only
Member or Mutual Fund/Insurance Services Member shall be a Voluntary Purchaser
Participant.
SEC. 4. This Rule 64 shall have no application to a Data Services Only Member,
Settling Bank Only Member, Investment Manager/Agent Member, TPP Member, TPA
Member, AIP Member or AIP Settling Bank Only Member.1
1
Note that, if a Fund Member, Insurance Carrier/Retirement Services Member, Municipal Comparison
Only Member or Mutual Fund/Insurance Services Member is also a member or participant of another
clearing agency subsidiary of DTCC, such Fund Member, Insurance Carrier/Retirement Services
Member, Municipal Comparison Only Member or Mutual Fund/Insurance Services Member may be a
Mandatory Purchaser Participant pursuant to the terms of the Shareholders Agreement and the rules
and procedures of such other subsidiary. If a Data Services Only Member, Settling Bank Only
Member, Investment Manager/Agent Member, TPP Member, TPA Member, AIP Member or AIP
211
(RULE 64)
SEC. 5. The Corporation shall execute and deliver the Shareholders Agreement
as attorney in fact for a Person that purchases Common Shares pursuant to Section 2
or Section 3 of this Rule 64 if such Person is not already a party to the Shareholders
Agreement. In addition, the Corporation may on behalf of DTCC pursuant to the
Shareholders Agreement, without duplication of payment, (A) debit a Person for any
amount payable by the Person to DTCC for Common Shares purchased by the Member
and (B) credit a Person for any amount payable by DTCC to the Person for Common
Shares sold by the Person.
Settling Bank Member is also a member or participant of another clearing agency subsidiary of
DTCC, such Data Services Only Member, Settling Bank Only Member, Investment Manager/Agent
Member, TPP Member, TPA Member, AIP Member or AIP Settling Bank Only Member may be a
Mandatory Purchaser Participant or a Voluntary Purchaser Participant pursuant to the terms of the
Shareholders Agreement and the rules and procedures of such other subsidiary.
212
(RULE 65)
RULE 65. ID NET SERVICE
SEC. 1. General
(a) The Corporation may offer a service to provide a means by which a

broker/dealer Member can clear certain of its customer-side activity in Eligible ID Net
Securities (as defined in this Rule 65) that is transmitted to or from the Corporation’s
agency accounts established on behalf of the broker/dealer Member at a Qualified
Securities Depository. Such activity is processed through the CNS accounting system
of the Corporation when the customer is a contra-side participant of a Qualified
Securities Depository, and such participant has agreed with the applicable Qualified
Securities Depository to the delivery of applicable securities directly to the agency
accounts established on behalf of broker/dealer Members participating in this service.
Such a broker/dealer Member meeting the qualifications of this Rule (an “ID Net
Subscriber”) may participate in this service which shall be known as the “ID Net
Service,” and shall be accomplished in accordance with this Rule.
The rights, liabilities and obligations of ID Net Subscribers in their capacity as

such shall be governed by this Rule 65 in addition to the Rules of the Corporation as
they apply to them in their capacity as Members; except that in the event of a conflict
between such Rules, Rules applying to ID Net Subscribers in their capacity as Members
generally shall govern.
SEC. 2. Qualifications of ID Net Subscribers
An ID Net Subscriber must meet the qualifications set forth in this Rule. An ID Net
Subscriber must be: (i) an existing Member of the Corporation, and (ii) eligible for CNS
processing.
SEC. 3. Documentation and Requests for Status as an ID Net Subscriber
(a) Each Member that wishes to become an ID Net Subscriber shall complete
and deliver to the Corporation documentation, in such form as prescribed by the
Corporation from time to time and shall provide such other reports and information as
the Corporation may determine or appropriate. The applicant shall sign and deliver to
the Corporation an agreement or acknowledgement, the form of which shall be
determined by the Corporation from time to time, whereby the applicant shall agree to
the terms and conditions of this Rule 65 and such other terms not inconsistent with this
Rule 65 that are deemed by the Corporation to be necessary to protect itself or its
participants. An applicant shall provide such reports and information as the Corporation
may determine is appropriate.
(b) The Corporation shall approve a request of a Member to become an ID

Net Subscriber pursuant to this Rule 65 upon a determination by the Corporation that
the Member has satisfied the qualifications and requirements for ID Net Subscribers as
set forth in this Rule 65.
213
(RULE 65)
SEC. 4. Eligible ID Net Securities
Subject to limitations set forth by the Corporation from time to time, any CNS
Security shall be an “Eligible ID Net Security”.
SEC. 5. Obligations and Rights applicable to an ID Net Subscriber
(a) An ID Net Subscriber covenants to the Corporation as follows:
(i) to abide by the Rules of the Corporation applicable to an ID Net

Subscriber and the use of the ID Net service, and to be bound by all the provisions
thereof, and that the Corporation shall have all the rights and remedies
contemplated by the applicable Rules of the Corporation;
(ii) that the applicable Rules of the Corporation shall be a part of the
terms and conditions of every transaction which the ID Net Subscriber submits to
the Corporation;
(iii) to pay to the Corporation such fees, charges and other amounts as
may be established by the Corporation in connection with the ID Net Subscriber’s
use of ID Net Service or its status as an ID Net Subscriber, and to pay such fines
or penalties as may be imposed in accordance with this Rule 65; and
(iv) to be bound by any amendment to the applicable Rules of the

Corporation subsequent to the time such amendment takes effect as fully as
though such amendment were now a part of the Rules of the Corporation,
provided, however, that no such amendment shall affect its right to cease to be an
ID Net Subscriber unless before such amendment becomes effective, it is given
an opportunity to give written notice to the Corporation of its election to cease to
be an ID Net Subscriber.
(b) The Corporation may determine to remove a Member’s status as an ID

Net Subscriber, or to suspend, limit or restrict its access to the ID Net Service, under the
following circumstances:
(i) if the ID Net Subscriber is in such financial or operating difficulty that

the Corporation has determined, in its discretion, that such action is necessary for
the protection of the Corporation and its participants;
(ii) the ID Net Subscriber has failed to comply with any requirement of
the Corporation, or if it no longer meets the qualifications for status as an ID Net
Subscriber set forth in this Rule;
(iii) if the ID Net Subscriber is “insolvent” as defined in Rule 20 of these

Rules; or
(iv) under any circumstances in which, in the reasonable discretion of the

Corporation, adequate cause exists to do so.
214
(RULE 65)
Such action may be taken summarily if the Corporation determines in its

reasonable discretion that such summary action is in the interests of the Corporation or
its participants.
SEC. 6. ID Net Processing
Transactions submitted through the ID Net Service shall be processed as set

forth in Procedure XVI.
(a) Notwithstanding any other provision in the Rules of the Corporation: The
Corporation will not be liable for any action taken, or any delay or failure to take any
action, hereunder or otherwise to fulfill the Corporation’s obligations to its ID Net
Subscribers, other than for losses caused directly by the Corporation’s gross negligence,
willful misconduct, or violation of federal securities laws for which there is a private right
of action. Under no circumstances will the Corporation be liable for the acts, delays,
omissions, bankruptcy, or insolvency, of any third party, including, without limitation, any
depository, custodian, sub-custodian, Settling Bank, Registered Clearing Agency,
Affirming Agency, data communication service or delivery service (“Third Party”), unless
the Corporation was grossly negligent, engaged in willful misconduct, or in violation of
federal securities laws for which there is a private right of action in selecting such Third
Party.
not limited to, loss of business, loss of profits, trading losses, loss of opportunity and loss
of use) howsoever suffered or incurred, regardless of whether the Corporation has been
advised of the possibility of such damages or whether such damages otherwise could
have been foreseen or prevented.
215
(PROCEDURE I)
NATIONAL SECURITIES CLEARING CORPORATION PROCEDURES
PROCEDURE I. INTRODUCTION
These Procedures have been adopted under the Rules of National Securities
Clearing Corporation (the Corporation) with respect to services offered by the
Corporation. Each term used in these Procedures shall have the same definition as it
has in the Rules unless it is defined in Section XII of these Procedures, in which case it
shall have the definition specified in said Section XII.
The Corporation establishes data submission thresholds for data files transmitted
for processing. The purpose of these thresholds is to alert the Corporation to the
possibility of either missing (for a submission below the low threshold) or duplicate (for a
submission above the high threshold) data files. It is incumbent upon participants to
review these thresholds and make such adjustments as they deem necessary. Failure
to do so may result in the transmission being rejected, or not being processed to the
extent it exceeds, or is below, the established thresholds.
In addition, the Corporation may establish from time to time, such data field
requirements for transaction and instructional input, including mandatory identifying
details, as it determines are necessary or appropriate for the processing of activity
under the services it provides. The Corporation may reject any such input that does not
contain all mandatory data details.
A reference in any form, document or ticket referred to herein to NYSE, ASE,

NASD, Stock Clearing Corporation, SCC, American Stock Exchange Clearing
Corporation, ASECC, National Clearing Corporation, NCC, SCC Division, ASECC
Division or NCC Division, creates a contractual relationship solely between the
participant and the Corporation subject to the Rules or these Procedures. A reference
in any form, document or ticket to the By-Laws of any entity other than the Corporation
shall be deemed to have been deleted therefrom and shall not bind the Corporation or a
participant in any way.
All references to a “day”, “yesterday”, “today” and similar references herein refer
to settlement days, unless specified as “business” or “calendar days”, or the context
otherwise requires. Terms used in any form, document, or ticket referred to herein shall
have the same definition as they have in the Rules and these Procedures.
216
(PROCEDURE II)
PROCEDURE II. TRADE COMPARISON AND RECORDING SERVICE
A. Introduction
Trade Comparison is the first step in the clearance and settlement of securities
transactions. It consists of reporting, validating and matching the buy and sell sides of a
securities transaction and results in a compared trade. Except with respect to certain
transactions eligible and submitted for processing through the Obligation Warehouse
service and provided under these Rules & Procedures, Trade Comparison for
transactions in equity securities occurs outside of the Corporation through the facilities
of relevant Self-Regulatory Organizations and/or Qualified Special Representatives.
The Corporation may provide Comparison services with respect to transactions in debt
securities. Trade data submitted by Self-Regulatory Organizations and Qualified Special
Representatives on behalf of Members as permitted in this Procedure II is submitted on
a locked-in basis for Trade Recording, and is converted (if necessary), validated,
recorded and reported to Members. Except as specified below, compared and recorded
trades are then entered into the CNS Accounting Operation, the Foreign Security
Accounting Operation, or the Balance Order Accounting Operation.
All trade data submitted to the Corporation by Self-Regulatory Organizations, Qualified

Special Representatives and Special Representatives for recording pursuant to this
Procedure II must be submitted in Real-time, as that term is defined in Procedure XIII
and on a trade-by-trade basis, in the form executed without any form of pre-netting of
such trades prior to their submission. Trades submitted by Special Representatives for
which the counterparties are Affiliates, as defined in Rule 4A, and Client Custody
Movements, as defined in Section 7 of Rule 7, are not subject to the requirements of
this paragraph.
Compared and recorded trades are routed to either the CNS Accounting Operation, the
Balance Order Accounting Operation, or the Foreign Security Accounting Operation.
Separate Trade Recording is provided for regular way and when-issued and when
distributed transactions in equity securities (a) executed on securities exchanges, and
(b) traded in the Over-the-Counter (OTC) market. Separate Trade Comparison and
Recording is also provided for debt securities, including when issued and when-
distributed transactions, for transactions in all marketplaces.
B. Equity and Listed Debt Securities -- Locked-In Trade Input
(i) Recording of Regular-Way Transactions
Self-Regulatory Organizations and Qualified Special Representatives on behalf of

Members (as applicable) may submit to the Corporation trade data relating to regular
way transactions in securities executed on securities exchanges or OTC marketplaces.
Regular-way trade data may be submitted throughout T (“trade date”) until the time
specified by the Corporation (hereinafter referred to as “Original Trade Input”), and shall
include quantity, security identification, identification of the marketplace of execution,
217
(PROCEDURE II)
contra-broker, trade value and other identifying details as the Corporation may require
or permit.
Regular-way trade data as submitted by Self-Regulatory Organizations and Qualified

Special Representatives on behalf of Members (“Locked-in Trade Data”) is converted, if
necessary, and validated. Results of this process are reported by the Corporation to
Members on such reports and in such formats as determined by the Corporation from
time to time. Such reports are available to Members on a real-time and/or intra-day
basis as determined by the Corporation from time to time.
(ii) Recording of Cash, Next Day and Seller’s Option Transactions
Qualified Special Representatives and Self-Regulatory Organizations on behalf of

Members may submit to the Corporation, data relating to cash, next day, and seller’s
option transactions on securities other than securities processed under Procedure VI.
Such trade data may be submitted during the timeframes specified by the Corporation
from time to time and shall include such trade details as the Corporation may specify
(including, if the transaction is a seller’s option, the settlement date, which may be no
greater than 180 days beyond the trade date). Results of this input are reported by the
Corporation to Members on such reports and in such formats as determined by the
Corporation from time to time, and if the securities covered by such trades are CNS-
eligible, the recorded trades will be entered into the CNS accounting operation (unless
otherwise provided in these Procedures). Cash trades received after such cutoff time
as the Corporation designates will be recorded and reported, but may only be settled
directly between the parties. Next day as-of trades received on Settlement Date prior to
the Corporation’s designated cutoff time will settle on that date; otherwise the trade will
be assigned a new settlement date which will be the next settlement day following the
date the trade is recorded by the Corporation. Trades that are either (i) designated as
Special Trades, (ii) in a security which is not CNS-eligible, or (iii) in a CNS Security that
is undergoing a corporate action, or is scheduled to settle between a dividend ex-date
and record date, will be processed on a trade-for-trade basis.
C. Debt Securities
1. Trade Input and Comparison
The Corporation provides the following procedures for trade input and
comparison of transactions in regular way debt securities, including unit
investments trusts, in any par value (excluding fractions and decimals), other
than securities submitted through the correspondent clearing service and by
regional exchanges/marketplaces or Qualified Securities Depositories:
(a) Trade data as submitted by Members and Municipal Comparison Only

Members for comparison processing is converted, if necessary, validated and
matched by the Corporation to ensure that the details of each trade are in
agreement between the purchaser and the seller.
218
(PROCEDURE II)
(b) Trade data may be submitted during the timeframes specified by the
Corporation from time to time, and shall include quantity, security identification,
identification of the marketplace of execution, contra-broker, trade value,
settlement date (which may be no greater than 50 business days beyond the
trade date), trade date, unique reference number (x-ref), MPID (the market
participant identifier issued by the Financial Industry Regulatory Authority, Inc., or
“FINRA”), and other identifying details as the Corporation may require or permit
and shall be in such formats as specified by the Corporation relative to the
method utilized for trade submission.
(c) If the purchaser and seller have submitted trade data that matches in
all required respects other than for trade value, the trades shall be deemed
compared if one of the following tolerances apply:
(1) Trades that are submitted prior to the cut-off time for intraday
comparison established by the Corporation from time to time shall be
deemed compared using (a), for bilateral trades, the seller’s contract
amount if the contract amounts are within (i) a net $2 difference for trades
of $1 million or less and (ii) $2 per million for trades greater than $1
million, and (b), for Qualified Special Representatives and syndicate
trades, the Qualified Special Representative’s or syndicate manager’s
contract amount.
(2) Trades that remain uncompared after the intraday comparison process
shall be deemed compared during the end-of-day enhanced comparison
process using (a), for bilateral trades, the seller’s contract amount if the
contract amounts are within (i) a net $10.00 difference for trades of
$250,000 or less and (ii) $.04 per $1,000 for trades greater than $250,000,
and (b), for Qualified Special Representatives and syndicate trades, the
Qualified Special Representative’s or syndicate manager’s contract
amount.
(d) For trades that are submitted prior to the cut-off time for intraday
comparison established by the Corporation from time to time, when the
purchaser and seller have submitted trade data that matches in all required
respects, including contract amounts which were deemed matched pursuant to
the money tolerances in subsection (c), except for the trade date, the trades shall
be deemed compared if trade dates submitted by the purchaser and seller are
within 20 business days of each other and the earlier of the two trade dates is
used. If the trade dates submitted by the purchaser and seller are not within 20
business days of each other, the trade will remain uncompared.
(e) Trades deemed compared pursuant to subsections (c) and/or (d) shall
be identified on output made available by the Corporation in such format as
determined by the Corporation from time to time. Trades that remain
uncompared after any end-of-day enhanced comparison process shall be treated
219
(PROCEDURE II)
as if they were submitted prior to the cut-off time for the next available
comparison processing cycle.
(f) Trade input must indicate one of the following: corporate bond security
transactions, municipal security transactions or unit investment trust transactions.
(g) Corporate bond and municipal bond trades in quantities other than
multiples of a thousand (round-lots) must be divided into separate trade
submissions of the round lot quantity and the odd-lot quantity (multiples of less
than one thousand). All compared corporate bond and municipal bond trades in
odd-lot quantities are processed on a trade-for-trade basis.
(h) Results of the comparison process shall be provided on intraday or

end-of-day output, as applicable, which shall categorize trade data as:
(1) Compared/Matched - Items identified either as compared or matched

on applicable output are those for which both a purchaser and a seller
submitted mandatory trade details that were either identical or were
compared pursuant to subsections (c) and/or (d) above and for which a
comparison has been effected.
(2) Uncompared/Unmatched - Items identified as uncompared or

unmatched on applicable output reflect trades submitted by the Member or
the Municipal Comparison Only Member for which the opposite side either
did not submit data or did not submit data which agreed in all required
respects including the use of tolerances set forth in subsections (c) and (d)
above.
(3) Advisory/Match Request – Items identified as advisory or match

request on applicable output represent trades submitted by another party
against the Member or Municipal Comparison Only Member, but which did
not match any trade the Member or Municipal Comparison Only Member
submitted.
Information made available to Members and Municipal Comparison Only

Members shall identify each trade as being CNS-eligible (to be processed
through the CNS Accounting System), non-CNS-eligible (to be processed
through the Balance Order Accounting System), or Special Trade (to be
designated for either trade-for-trade processing outside of the Corporation’s
facilities or comparison-only processing) through such designation as the
Corporation shall determine from time to time.
Information made available to Members and Municipal Comparison Only

Members may reflect such other details as the Corporation may determine from
time to time.
(i) (i) The Corporation provides Members with the ability to clear and settle
any compared trade on a trade-for-trade basis. Such transaction is
220
(PROCEDURE II)
referred to as a trade-for-trade Special Trade and may be classified as

such, whether or not the security is a CNS security. In order for a
transaction that is submitted for comparison processing to be classified as
a trade-for-trade Special Trade, each of the purchaser and seller must
indicate the appropriate trade-for-trade indicator (“Trade-for-Trade
Indicator”) on its trade input and such Trade-for-Trade Indicator shall be
part of the terms and conditions of the applicable contract. Unless both
parties submit the identical Trade-for-Trade Indicator, the trade will not
compare. In addition, the Corporation itself may determine that some or
all transactions in a security shall settle on a trade-for-trade basis.
(ii) The Corporation provides Members and Municipal Comparison Only

Members with the ability to submit Special Trades for comparison-only
processing. Trade input must indicate that the trade is being submitted for
comparison-only processing and such trade will not be reflected on a
Consolidated Trade Summary. Trades submitted for comparison-only
processing are subject to the rules of the Municipal Securities Rulemaking
Board (“MSRB”). Information made available with respect to such trades
will not designate such trades as being CNS-eligible, non-CNS-eligible, or
trade-for-trade Special Trades.
(j) (i) All compared trades between Members in municipal securities which
are not eligible for deposit in a Qualified Securities Depository are
processed on a trade-for-trade basis.
(ii) All compared trades in municipal securities between Members and

Municipal Comparison Only Members and between two Municipal
Comparison Only Members, whether or not eligible for deposit in a
Qualified Securities Depository, are processed on a trade-for-trade basis.
(k) (i) All compared trades in municipal securities which have been
processed on a trade-for-trade basis are listed on the applicable
Consolidated Trade Summaries at the original contract amount. Each
such individual listing (including any such listing pursuant to Section
D.2(A)(2)(a) below) constitutes a security order for all purposes of these
Rules and Procedures, including the Fee Schedule. The Corporation may
make additional information regarding such trades available to Members
and Municipal Comparison Only Members by such means as the
Corporation determines from time to time.
(ii) Compared trades between Members in municipal securities which are

eligible for deposit in a Qualified Securities Depository are entered into the
CNS Accounting System, the Balance Order Accounting System, or
processed on a trade-for-trade basis, depending upon the Member’s
standing instructions to the Corporation; provided, however, that if a
Member has a CNS standing instruction and the contra side has a trade-
for-trade standing instruction, the transaction is processed on a trade-for-
221
(PROCEDURE II)
trade basis notwithstanding the CNS standing instruction, provided,

further, that Members may override a CNS standing instruction by
submitting trade input for comparison as a Special Trade.
(l) When the Corporation processes municipal securities transactions as

Special Trades, the resultant compared trades, as indicated on the applicable
Consolidated Trade Summaries, are subject to the rules of the MSRB, including
but not limited to such rules’ close-out provisions and delivery requirements, and
the transactions are not included in the Balance Order Accounting Operation.
Settlement of the resultant compared trades is the responsibility of the parties to
the trades.
(m) The Corporation may accept locked-in trade data reported by Self-
Regulatory Organizations, Qualified Special Representatives and Service
Bureaus on behalf of Members and Municipal Comparison Only Members. Such
trade data is reflected on appropriate output as determined by the Corporation.
Receipt of a locked-in trade that satisfies the Corporation’s trade input
requirements shall result in a compared trade. The status of such transaction as
a compared trade shall not be affected by output indicating a status of “match
request” or “unmatched”.
Submission of any input or instruction by a Member or Municipal

Comparison Only Member on behalf of whom locked-in trade data is being
submitted shall have no legal effect notwithstanding output made available by the
Corporation as a result of such submission.
Data submitted by a Qualified Special Representative which identifies a

trade as a syndicate takedown shall be rejected.
Member submission of a bilateral trade that matches a Qualified Special

Representative’s trade submission in all respects (other than its designation as a
bilateral trade) is converted into a Qualified Special Representative target trade
at the end of the day on which it is submitted.
(n) If a trade, other than a trade which the parties have identified as being
submitted for comparison-only processing, is submitted with a settlement date of
or prior to the date of submission after such cutoff time as the Corporation may
designate, the Corporation shall assign a delivery date of the next Settlement
Date.
(o) Trade input and comparison of transactions submitted for T+1

settlement is handled in the same manner as transactions submitted for regular
way settlement.
(p) The Corporation shall accept cash transactions (where trade date is
the same date as settlement date) for comparison-only processing. Results of
the comparison-only process for these items are reported by the Corporation as
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(PROCEDURE II)
specified from time to time. Settlement of the resultant compared trades is the
responsibility of the parties to the trades.
2. Resolution of Uncompared Trades in Regular Way Debt Securities
The Corporation provides the following procedures for resolution of uncompared

trades in Regular Way Debt Securities:
(a) In order to accept a trade that is reported as advisory or match

request, a Member or Municipal Comparison Only Member must submit the
appropriate instruction within the timeframes specified by the Corporation from
time to time.
(b) A Member or a Municipal Comparison Only Member with an advisory

or match request that does not agree with the terms of the trade may respond
with the appropriate instruction indicating the reason, if any, that it disagrees with
the terms of the trade. Such instruction must be submitted within the timeframes
specified by the Corporation from time to time and causes the trade to be deleted
from processing. The Member or Municipal Comparison Only Member may
submit a subsequent instruction on the same day to return the trade to
processing.
(c) Members and Municipal Comparison Only Members may delete

uncompared trades by forwarding the appropriate instruction by the time
specified by the Corporation from time to time.
(d) Partial deletions for transactions in debt securities are not permitted.
(e) Previously compared trades may be reversed through the submission

of offsetting trade details by both parties to the transaction. The purchaser and
the seller must each submit the trade details within the timeframes specified by
the Corporation from time to time and such trade details must match in all
respects or pursuant to the tolerances set forth in subsections (c) and/or (d) of
Section C.1 above.
(f) Transactions which are deleted or reversed, and offsetting submissions

which are matched appear on the appropriate output. Unless otherwise specified
herein, deletion or reversal of a trade pursuant to the procedures set forth above
does not extinguish the rights and obligations of either party with respect to such
trade.
(g) The Corporation may permit uncompared trade details to be modified

by the submitter through the use of the appropriate instruction within the
timeframes specified by the Corporation from time to time. Syndicate takedown
submissions may only be modified on the submission date. After a trade is
matched, only such fields as determined by the Corporation from time to time
may be modified by the submitter.
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(PROCEDURE II)
(h) Transactions which compare after such cutoff time as the Corporation
may designate on the date on which they were scheduled to settle or later are
assigned a Settlement Date of the next business day following the date the trade
is compared. The assignment of a new Settlement Date applies to trades
designated for CNS-eligible processing, Balance Order processing, and trade-
for-trade Special Trades (i.e., trades other than those submitted for comparison-
only processing).
(i) Trade input which is not compared by such timeframes as determined

by the Corporation from time to time shall be deleted from processing.
(j) The Corporation shall have no responsibility for determining whether

any trade submission is duplicative of an earlier trade submission. Any such
input shall be treated as a separate submission for all purposes of these Rules
and Procedures.
(k) Only the submitter of a locked-in trade may submit subsequent

processing instructions with respect to such trade and any action in this respect
taken by the Member or Municipal Comparison Only Member on behalf of whom
such trade has been submitted shall have no legal effect notwithstanding output
made available by the Corporation as a result of such action.
D. When-Issued and When-Distributed Securities
The Corporation provides Members with the ability to compare transactions in

debt when-issued securities. Trade Comparison for transactions in equity when-issued
securities occurs outside of the Corporation through the facilities of relevant Self-
Regulatory Organizations and/or Qualified Special Representatives.
1. Equity
(a) Input
Trade data for when-issued and when-distributed equity transactions must be

submitted and is recorded in the same manner as specified in subsection B of
this Procedure II.
(b) Settlement
The Settlement Date for issues traded on a when-issued and when-distributed

basis is established by the appropriate regulatory authority. When-issued and
when-distributed compared trades are netted and allotted with regular way trades
for the same Settlement Date as the when-issued and when-distributed trades.
When-issued and when-distributed trading activity may enter either the Balance
Order Accounting Operation, the Foreign Security Accounting Operation, or the
CNS Accounting Operation for settlement at the appropriate time. Determination
of eligibility for CNS is at the discretion of the Corporation.
224
(PROCEDURE II)
2. Debt
(A) The following provisions apply to municipal debt securities:
(1) (a) Municipal securities transactions that are submitted at least one day
prior to the initial Settlement Date for the issue are processed in accordance with
this subsection 2(A) if they specify (i) a final settlement amount and a settlement
date that is the initial Settlement Date for the issue, (ii) a final settlement amount,
a settlement date and a specified number of days after the Initial Settlement Date
for the issue, (iii) a dollar price or a dollar price and a specified number of days
after the initial Settlement Date for the issue, or (iv) a price-to-yield and
concession (if any) or a price-to-yield concession and a specified number of days
after the initial Settlement Date for the issue.
(b) Municipal securities transactions that are submitted one day prior to
the initial Settlement Date for the issue or later, and contain a settlement date
which is after the initial Settlement Date for the issue, but do not meet the above
criteria are treated as regular way transactions.
(c) All other transactions that are not submitted as specified in

subsections (1)(a) and (b) above are rejected.
(2) Trade input, comparison/trade recording, resolution of uncompared trades

and settlement for transactions accepted by the Corporation pursuant to
subsection (1)(a) of this subsection 2(A) above function in the same manner as
with respect to regular way transactions, except for the following:
(a) When the initial Settlement Date and all required pricing information for
an issue has been submitted to the Corporation (and, if deemed necessary by
the Corporation, confirmed in a manner satisfactory to the Corporation), the
Corporation shall calculate the final settlement amount for all transactions that do
not have a final settlement amount, and trades are deemed compared if either
(i) the final settlement amounts are identical or (ii) the final settlement amounts
fall within the money tolerances set forth in subsection (c) of Section C.1 of this
Procedure II. In addition, when the initial Settlement Date has been changed and
the Corporation is notified of a new initial Settlement Date least 2 days prior to
such date (and, if deemed necessary by the Corporation, confirmed in a manner
satisfactory to the Corporation), the Corporation recalculates the final settlement
amounts for all affected transactions (whether or not the original final settlement
amount was calculated by the Corporation), and the new final settlement
amounts are set forth on the applicable contract lists or other applicable output
made available by the Corporation.
If a submission contains a settlement date and a final settlement amount,

but the Corporation does not have confirmation satisfactory to it of the initial
Settlement Date for the issue, then the Corporation shall report the transaction as
a memo item on the output it makes available to Members. If the Corporation
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(PROCEDURE II)
obtains, within 2 days of the submission, confirmation satisfactory to it of the

initial Settlement Date for the issue which matches the settlement date submitted
or matches the settlement date submitted by taking into account the specified
number of extended settlement days submitted, the memo items are changed to
compared or uncompared/advisory, as appropriate. If no such confirmation is
obtained within 2 days of submission, the items are deleted.
(b) Any when-issued compared trade which is to be entered into the CNS
Accounting Operation shall be netted with any regular-way compared trades for
the same Settlement Date.
(c) The initial Settlement Date for municipal issues is established by the
issuer or underwriter, but may be extended by agreement of the submitting
parties similar to regular way municipal trades. The Settlement Date for
syndicate takedown trades may not be extended.
(d) If the Corporation is notified that the initial Settlement Date is

postponed after the applicable Consolidated Trade Summary has been made
available, the fact that trades in such issue are indicated in such Consolidated
Trade Summary shall have no force and effect for purposes of the Corporation’s
Rules and Procedures unless the Corporation notifies Members to the contrary.
In such case, the Corporation may adjust accrued interest as determined by the
Corporation from time to time. The provisions of this paragraph also apply to
transactions that are treated as regular way transactions pursuant to subsection
(1)(b) of this subsection 2(A) above.
(e) If the Corporation receives notice that an entire issue has been
canceled prior to its initial Settlement Date, trades in such issue are deleted by
the Corporation from the comparison process and, if the applicable Consolidated
Trade Summary has been made available, trades in such issue that are indicated
in such Consolidated Trade Summary are considered null and void by the
Corporation. To the extent that any trades in such issue have been entered into
the CNS Accounting Operation, such trades shall be journalled out of CNS. The
provisions of this paragraph also apply to transactions that are treated as regular
way transactions pursuant to subsection (1)(b) of this subsection 2(A) above.
(f) Transactions that remain uncompared at the close of business on the

day prior to the initial Settlement Date for the issue shall be deleted from
processing.
(g) (i) Syndicate takedown trades may be submitted for comparison by

both the syndicate manager and the syndicate member, and, in both
cases, such trade input must be identified as a syndicate takedown trade.
A syndicate manager or a syndicate member that does not agree with the
terms of a takedown trade as reported on the contract sheet may delete
the trade by submitting the appropriate instruction to the Corporation by
the time specified by the Corporation. Submissions of a syndicate
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(PROCEDURE II)
takedown trade by a syndicate manager that are not deleted result in a

compared trade; submissions of a syndicate takedown trade by a
syndicate member that are not deleted result in a compared trade only
after submission by the syndicate manager on that trade. Compared
trades are reported to the syndicate manager and the syndicate member
on output made available by the Corporation. The status of such
transaction as a compared trade shall not be affected by output indicating
a status of “match request” or “unmatched”.
(ii) Syndicate takedown submissions against Members and Municipal

Comparison Only Members designated as brokers’ brokers by the
Corporation will be rejected. The Corporation shall maintain a list of such
brokers’ brokers which shall be available to Members upon request.
(iii) Syndicate takedown reversals shall be submitted by both a syndicate

manager and the syndicate member, and, in both cases, such trade input
must be identified as a syndicate takedown trade. A syndicate manager
or a syndicate member that does not agree with the terms of a reversal
takedown trade as reported on the contract sheet may delete that reversal
trade by submitting an appropriate instruction to the Corporation by such
time specified by the Corporation.
Submissions of a syndicate takedown reversal by a syndicate manager

that are not deleted result in a compared reversal trade; submissions of a
syndicate takedown reversal by a syndicate member that are not deleted
result in a compared reversal trade only after submission by the syndicate
manager on that reversal trade. Compared reversal trades are reported to
the syndicate manager and syndicate member on output made available
by the Corporation.
(iv) Submission of any instruction by the syndicate member not otherwise

provided for under these Rules and Procedures shall have no legal effect
notwithstanding output made available by the Corporation as a result of
such submission.
(v) All syndicate takedown trades settle on a trade-for-trade basis.

Extended settlement date is not available for syndicate takedown trades.
(vi) Member submission of a bilateral trade that matches a syndicate

manager’s submission on a syndicate takedown trade or a syndicate
takedown reversal in all respects (other than its designation as a bilateral
trade) will be converted into a syndicate takedown trade or syndicate
takedown reversal, as appropriate, at the end of the day on which it is
submitted.
(B) If the Corporation has received a transaction in a security for which the
Corporation does not have information with respect to its coming to market that satisfies
227
(PROCEDURE II)
subsection (A)(1)(a) of this subsection 2 above, the Corporation shall pend the
transaction. If the Corporation does not receive information that the security is coming
to market by the cut-off time on the submission date, the transactions shall be deleted.
E. Special Trades
The Corporation provides (i) Members with the ability to clear and settle any
compared trade on a trade-for-trade basis, and (ii) SRO’s with the ability to submit
trades for processing on a trade-for-trade basis. Such transactions are referred to as
Special Trades and may be classified as such, whether or not the security is a CNS
Security. With respect to transactions submitted by Members, both the purchaser and
seller must agree to settle on a trade-for-trade basis and must identify the transaction in
its trade input as a “Special Trade”. If only one party identifies a transaction as a
Special Trade, it will not be compared by the Corporation. In addition, the Corporation
itself may determine that some or all transactions in a security shall settle on a trade-for-
trade basis.
F. Index Receipts
1. Composition and Preliminary Financial Data
Each day, by such time as required by the Corporation from time to time, the
Index Receipt Agent shall report to the Corporation a) the composition of index
receipts for creations and redemptions occurring on the next business day (“T”),
i.e., the shares and their associated quantities, b) the cash value of the portfolio
for creates and redeems made solely for cash, and, if applicable, c) the
estimated cash amount, representing accrued dividend, cash-in-lieu of
securities1, if applicable, and balancing amount data (hereinafter referred to as
the “Divided/Balancing Cash Amount”), and d) such other financial data as the
Corporation may require or permit from time to time.
Each day, by such time as determined by the Corporation from time to time, the
Index Receipt Agent may also report to the Corporation the composition of index
receipts for purposes other than creations and redemptions.
Each evening, by such time as determined by the Corporation from time to time,
the Corporation will make available to Members a report detailing, if applicable,
the estimated Dividend/Balancing Cash Amount, other financial data and the
composition of the next business day’s index receipts (“Portfolio Report”). The
composition data within the Portfolio Report may be used by the Corporation to
process index receipt creations and redemptions on the next business day. The
Portfolio Report will also include, if available, portfolio holdings of the index
receipts.
1
The “cash-in-lieu-of securities” portion of the cash amount represents cash substituted for a partial
quantity of the components underlying a creation or redemption rather than acting as the sole
underlying component.
228
(PROCEDURE II)
2. Creation/Redemption Input
On each business day, the Corporation will perform reasonability checks of

transaction data submitted by an Index Receipt Agent to the Corporation. The
Corporation will pend any transaction data that exceeds thresholds established
by the Corporation. The Corporation will notify the Index Receipt Agent of any
transaction data that the Corporation has pended. The Index Receipt Agent
must provide confirmation, in the form and within the timeframe required by the
Corporation, that such pended transaction data should be accepted by the
Corporation. If the Index Receipt Agent fails to provide such confirmation, such
pended transaction data will be rejected. The Corporation may, in its sole
discretion, adjust thresholds from time to time and the Corporation may consider
feedback from its Members or market conditions.
From time to time, the Corporation shall inform Members of the time periods for
each cycle (the intraday cycle, the primary cycle, and the supplemental cycle)
applicable to creation/redemption input. On T, during any of the cycles, by such
time as established by the Corporation from time to time, an Index Receipt Agent
may submit to the Corporation on behalf of Members, index receipt creation and
redemption instructions and their scheduled settlement date, the final
Dividend/Balancing Cash Amount relative to such instructions and a transaction
amount representing the Index Receipt Agent’s fee for the processing of the
index receipt. The Index Receipt Agent may elect a Settlement Date of T+1 or
later for the index receipts and the component securities or cash. The Index
Receipt Agent may submit as-of index creation and redemption instructions, but
only if such as-of data is received by the cut-off time as designated by the
Corporation from time to time, with same-day settling creates and redeems
required to be received by such cut-off time on Settlement Date.
Any as-of index creation and redemption instructions for same-day settlement
received after the cut-off time, designated by the Corporation from time to time,
will be rejected.
On T, the Corporation will report to Members on the Index Receipt Detail Report
the details of the creations and redemptions submitted, the gross quantity of
underlying security components of creation and redemption instructions and the
quantity of index receipt shares associated with particular creation and
redemption activity. The report will also indicate the final Dividend/Balancing
Cash Amount that must be paid or received and the transaction amount that
must be paid on Settlement Date.
3. Settlement
Index receipts and the underlying component securities which are eligible for
CNS or cash, if applicable, will be reported on the next available Consolidated
Trade Summary. The applicable Consolidated Trade Summary will also
229
(PROCEDURE II)
separately indicate the other component securities, or cash component, if

applicable, due to settle. Component securities will be netted with all other CNS
and Non-CNS securities and entered into the CNS and Balance Order
Accounting operations for settlement.
G. Reports and Output
Reports and output may be made available to Members on a real-time and/or on

an intra-day basis as determined by the Corporation from time to time.
Reports identify each security as being eligible (a CNS Security) or non-eligible

(a Balance Order Security) for processing through the CNS system. Depending upon
the format of the report, separate totals may be provided for each of these categories. If
designated as a Special Trade, such designation will be reflected upon the
report/output.
With regard to Locked-in Trade Data reported on T by Self-Regulatory

Organizations and Qualified Special Representatives, the Corporation may report back
such data to Members on separate reports. If data received from a Self-Regulatory
Organization is the result of a trade executed on a system which provides trading
anonymity (i.e., the contra side is not revealed at the time of the trade) the report may
list, in lieu of the actual contra side for the trade, an acronym designated by such Self-
Regulatory Organization. In this case, the contra side shall, for all purposes, be
deemed to be one of the entities which the Self-Regulatory Organization includes as an
eligible entity which may participate in the anonymous trading system.2
Reports are produced at such intervals and in such formats as determined by the
Corporation showing all compared trade data resulting from T+1 and older adjustments
processed by a Self-Regulatory Organization, as well as step out transactions
processed that day. Designations for CNS Securities and Balance Order securities are
shown in the same manner as on the reports issued as a result of T input. If trades are
listed on reports which include totals, the new data is added to or subtracted from such
totals, to arrive at new totals. The new totals represent the combined input for T
through such cutoff time on T+2 as the Corporation may designate. Trades received
after such cutoff time as established on T+2 are not included in the normal settlement
cycle. Such trades will be assigned a new settlement date which will be the next
settlement day following the date the trade is received by the Corporation.
Notwithstanding the previous sentence, with respect to Index Receipts, if Index
Receipts for same-day settlement are received by the Corporation after the applicable
cut-off time, such Index Receipts will not be assigned a new settlement date and will be
rejected.
2
In the event that the Corporation ceases to act for a Member which is the unidentified contra side of
any such trade and the Corporation determines that such trade is to be exited from trade processing,
the Self Regulatory Organization shall have the responsibility to identify to Members the trades
included in reports produced by the Corporation which are with the affected Member.
230
(PROCEDURE II)
The Reports for trade data other than Locked-in Trade Data will categorize the
trade data as compared, uncompared and advisory, and may display such other data
relevant to such trades as the Corporation shall determine from time to time.
(a) Compared - Items identified as compared are those for which both a
purchaser and a seller submitted identical trade data and for which a comparison
has been effected.
(b) Uncompared - Items identified as uncompared reflect trades submitted

by the Member for which the opposite side either did not submit data or did not
submit data which agreed in all respects.
(c) Advisory - Advisory data represents trades submitted by another party

against the Member, but which did not match any trade the Member submitted.
Advisory reports may be generated by the Corporation for items listed as
advisory data. The use of Advisory reports is explained below.
As with listed equity reports, reports for OTC and other exchange trades will
identify each security as being eligible (a CNS Security) or non-eligible (a Balance
Order Security) for processing through the CNS system and depending on the format of
the report may provide separate totals for each of these categories.
In order to maximize the number of compared trades, if the major and minor side
executing broker information, when used as a criteria in the trade comparison process,
results in an uncompared trade, the Corporation will recycle the trade data without the
major and/or minor side executing broker information originally submitted.
Reports/output will indicate when a resulting compared or uncompared trade has been
processed without the use of the major and/or minor side executing broker information.
H. Consolidated Trade Summaries
The Corporation produces a Consolidated Trade Summary distributed three

times daily for the reporting of CNS, Balance Order, and trade-for-trade transactions.
On each Settlement Day, each Consolidated Trade Summary includes Receive and
Deliver instructions for items designated by the Corporation to settle trade-for-trade that
day and the next Settlement Day. To facilitate settlement of such items, the Corporation
may aggregate and net Receive and Deliver instructions for trade-for-trade items
between counterparties such that a Member may have only one net buy obligation or
sell obligation, where applicable, in a particular security on a given day with a given
counterparty. When Members have an equal number of shares bought and sold
between counterparties for such Special Trades, NSCC will not issue a receive or
deliver obligation and will record any cash difference in the NSCC money settlement
system. Where issuing of a net buy or sell instruction would result in an money
settlement that is directionally opposite what it would be for a typical money settlement
in relation to a securities movement (i.e., a Member receives an instruction to: (i)
receive securities with a corresponding receipt of money settlement payment, or (ii)
deliver securities with a corresponding delivery of a money payment) or if the
231
(PROCEDURE II)
associated money settlement is flat in relation to a securities movement (i.e., a Member

receives an instruction to receive or deliver securities without a corresponding money
settlement amount) then the Corporation may, in lieu of netting, separately aggregate
the receive and deliver instructions so that a Member would have only one aggregate
buy obligation and one aggregate sell obligation in the given security with the given
counterparty.
232
(PROCEDURE II.A)
PROCEDURE II.A OBLIGATION WAREHOUSE
A. Introduction
The Obligation Warehouse (the “OW”) is a service available to Members for (i)
comparison of transactions that are not otherwise submitted by Members, Self-
Regulatory Organizations, or Qualified Special Representatives on behalf of Members
for trade comparison or recording through other services of the Corporation, (ii) tracking,
storage and maintenance of obligations either compared through the service or
forwarded to it from other services of the Corporation in accordance with the Rules and
Procedures, and (iii) the repricing and updating of fail obligations.1
Other than Balance Order Contracts and obligations that have been forwarded to CNS
from the OW, which shall continue to be subject to the Rules, all Buy-Ins; deliveries,
receives and reclamations; adjustments for corporate actions, whether mandatory or
voluntary; and transactions of a Member that have been DK’ed, shall be remain subject
to the rules of the appropriate marketplace.
Members may submit to the Corporation trade data relating to securities eligible for OW
processing as provided in this Procedure. Obligations eligible for submission must have
a valid CUSIP or ISIN and be denominated in U.S. Dollars or such other currencies as
the Corporation determines from time to time. NSCC will designate certain security or
transaction types as eligible for the OW process from time to time.2 Comparison of
items submitted directly by Members to the OW shall occur daily on a real-time basis in
accordance with the OW Comparison process set forth below. Each OW Obligation
shall be assigned a unique “OW Control Number” to facilitate tracking the obligation
through its settlement, cancellation or closure. OW Obligations (as defined in Rule 51)
will be tracked, stored, and maintained until settled or otherwise cancelled by Members
or otherwise removed by the Corporation in accordance with the Rules and Procedures.
In addition, for those Members participating in the OW Service, transactions exited from
CNS, ACATS Receive and Deliver transactions (e.g., either ACATs deliveries that were
never eligible for the ACATS Settlement Accounting Operation or those exited from the
ACATS Settlement Accounting Operation) Balance Orders, and Special Trades shall
automatically be entered by the Corporation into the OW for storage and for
Reconfirmation and Pricing Service (“RECAPS”) processing, as set forth below.
Additionally, pursuant to Procedure XVIII, uncompleted transactions in the ACATS
Settlement Accounting Operation at the end of day whereby the Corporation has issued
ACATS Receive and Deliver transactions shall also be automatically entered by the
1
Members should note that in accordance with MSRB rules, NSCC reports transactions in municipal
securities matched through its Real-Time Trade Matching (“RTTM”) service to the MSRB on behalf of
Members. Transactions submitted through the OW will not be reported to the MSRB. In order to
remain compliant with MSRB reporting requirements, transactions subject to MSRB rules should
continue to be submitted by Members to NSCC’s RTTM service.
2
The Corporation may determine from time to time, and shall announce by Important Notice, which
items are eligible for the Obligation Warehouse service.
233
(PROCEDURE II.A)
Corporation into the OW Service (if eligible). In addition, the Corporation will cause
CNS-eligible OW Obligations to be entered into the CNS Accounting Operation on a
regular basis.
B. OW Comparison
The following steps will apply with respect to transactions submitted to the Obligation
Warehouse for comparison:
1. Transaction data as submitted by Members for processing in the

Obligation Warehouse is compared by the Corporation to ensure that the
matching criteria of each obligation are in agreement between the
purchaser and the seller.
2. Data may be submitted during the timeframes and in such form as may be
specified by the Corporation from time to time. Data required for a valid
submission will include quantity, which party is deliverer or receiver,
security identification, contra-broker, deliverer’s final money, settlement
date, unique reference number (“x-ref”), market participant identification
(MPID), where applicable, whether a transaction should be excluded from
CNS processing and other identifying details as NSCC may require or
permit, and shall be in such formats as specified by the Corporation
relative to the method utilized for submission. Criteria which must match
between contra-parties to effect a comparison of transaction details
includes quantity, an indication as to which party is deliverer or receiver,
security identification, contra-broker, deliverer’s final money, settlement
date, whether a transaction should be excluded from CNS processing and
other identifying details as NSCC may require or permit (collectively
referred to herein as the “Required Matching Fields”).
3. Upon receipt and validation by the Corporation of obligation information

from the initiating party, the contra side will receive an Advisory, to which
they must respond by submitting like details to facilitate a compared
obligation or they can DK the obligation entry. Any submission of a DK
must include the applicable reason code pertaining to the Member’s
disagreement with the transaction.
4. A Member against which a DK is submitted may respond with modifying

details of the applicable transaction within the timeframes specified by the
Corporation from time to time, otherwise the item will be deleted from
processing in accordance with timeframes specified by the Corporation
from time to time. If a Member submits modifying details in response to a
DK from a contraparty, the item will be treated as a new submission
pursuant to Section B(1) of this Procedure.
5. A Member may modify trade details of, or cancel, a transaction, that it has
submitted and is designated by the Corporation as uncompared by
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(PROCEDURE II.A)
forwarding the appropriate instruction to the Obligation Warehouse by the

time specified by the Corporation from time to time, so long as notification
of settlement of the uncompared transaction has not been received by the
Obligation Warehouse prior thereto. If a Member submits modifying
details, the item will be treated as a new submission pursuant to Section
B(1) of this Procedure.
6. If the deliverer and receiver submit trade data that matches in all required
respects, the trades will be deemed compared if it meets money
tolerances as announced by the Corporation from time to time, and
deemed an OW Obligation.
7. The Corporation may delete trade input which is not matched by such
timeframes as determined by the Corporation from time to time.
8. The Corporation shall have no responsibility for determining whether any

trade submission is duplicative of an earlier trade submission. Any such
input shall be treated as a separate submission for all purposes of these
Rules and Procedures.
C. Obligation Warehouse Storage, Tracking, Maintenance and Settlement
1. The Corporation will track, store and maintain each OW Obligation until
settled or otherwise cancelled by the Members party to the obligation or
otherwise closed by the Corporation.
2. The Corporation may adjust compared OW Obligations with respect to the

following mandatory reorganization events: forward stock splits, name
changes, mergers (both cash and stock) and full calls with respect to
bonds.3 In the case of such an event, at such time on or after the effective
date of the event as the Corporation shall determine it has all relevant
information, the affected OW Obligation will be adjusted in accordance
with the terms of the reorganization event.4 With respect to name
changes and forward stock splits, OW positions in the subject security
shall be converted into the equivalent positions of the new securities
and/or cash and a new obligation will be created automatically as part of
the processing for OW. Any cash adjustment associated with a
mandatory reorganization will be included as part of the Member’s daily
money settlement with the Corporation and will appear on reports
generated in the OW.
3
Please note that the processing of dividends and interest will not be done for OW transactions and
remain the responsibility of the parties outside the facilities of the Corporation.
4
If the Corporation determines that it does not have the relevant information, Members may adjust OW
Obligations subject to such events by cancelling and resubmitting them.
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(PROCEDURE II.A)
3. On a regular basis, the Corporation will review all OW Obligations for CNS
eligibility. Unless otherwise excluded by a Member through its submission
of an appropriate instruction, the Corporation will cause all CNS-eligible
OW Obligations: (i) that have not reached their scheduled settlement date
to be reported on the CNS Miscellaneous Activity Report the night prior to
Settlement Date (SD-1) and entered into the CNS Accounting Operation
for the night cycle on SD (i.e., the evening of SD-1), and (ii) that have
reached or passed their scheduled settlement date to be reported on the
Miscellaneous Activity Report on the evening of the date they become
CNS-eligible and entered into the CNS Accounting Operation for
settlement on the next Settlement Day (i.e, the night cycle which runs on
the same evening of the Miscellaneous Activity reports covering the
obligations is issued). Such items shall be subject to Rule 11 and other
provisions of these Rules and Procedures; provided, however, that subject
to any rights the Corporation may have as provided in these Rules
generally, the Corporation will guarantee the settlement of any such OW
Obligation only to the extent that the Member pays the Corporation its full
settlement obligation on the date the obligation is scheduled to settle in
the CNS Accounting Operation. To the extent that such Member fails to
pay in full its settlement obligation, in the sole discretion of the
Corporation, OW Obligations which have been sent to the CNS
Accounting Operation may, in whole or in part, be removed from the CNS
Accounting Operation by reversing all credits and debits for the Member
relating to OW Obligations that have entered the CNS Accounting
Operation. Settlement of such item shall be effected between the
Receiving and Delivering Member and not through the facilities of the
Corporation.
4. The Corporation will update OW Obligations for which deliveries have

been made through a Qualified Securities Depository to reflect their status
as settled, in accordance with instructions received from the Qualified
Securities Depository.5 The Qualified Securities Depository’s instructions
shall use the OW Control Number and contain such other information as
the Corporation determines from time to time. In the event of a partial
delivery through a Qualified Securities Depository, the Corporation, in
accordance with proper instructions from the Qualified Securities
Depository, will update the records of the respective OW Obligation
accordingly.
5. In order to reflect the settlement of a transaction effected otherwise than

through a Qualified Securities Depository, one party must submit the
relevant obligation details, similar to the data required for OW comparison
(including the actual settlement date, quantity and amount settled), as
5
In order to effect such an update, Members must provide the Qualified Securities Depository with
instructions in accordance with the Procedures of the Qualified Securities Depository.
236
(PROCEDURE II.A)
specified by the Corporation. At that point, the contraparty will receive an

advisory, to which they must respond by submitting like details, or by
notification that it does not accept the submitted settlement details. If the
parties submit settlement data that matches in all required respects, the
obligation will be updated to reflect the amount so settled, if it meets
money tolerances as announced by the Corporation from time to time. If
the contraparty responds to an advisory that it does not accept the
submitted settlement details, however, the initiating party may submit
modifying details to the applicable transaction, in which case the item will
be treated as a new update of the settlement details.
6. Obligations that have been reflected in the OW as settled in accordance

with these Procedures may be re-opened (either partially or fully), as a
result of a delivery reclaim message sent by either party to the obligation
to OW. Updates to reflect reclaims of settled transactions will be made
once one party enters details of the original transaction, and the original
transaction’s OW Control Number. Once these details are submitted, an
advisory of the reclaim will be sent to the contraparty, who must either
submit identical transaction details to facilitate the reclaim and re-open the
obligation in OW, or submit notification that it does not accept the reclaim
details entered by the initiating party. Updates for reclaims may only be
submitted to the OW for a period of two business days following the actual
settlement date of the relevant obligation. If the reclaim message is not
accepted by the contraparty, it will be deleted from the OW, and the
parties will need to generate a new reclaim message in OW. If the original
obligation has been settled for longer than two business days, any reclaim
message will be rejected.
D. Reconfirmation and Pricing
1. Introduction
The OW system includes a reconfirmation and pricing service (“RECAPS”) which

will be run from time-to-time as established by the Corporation for such securities
in the OW system as the Corporation shall determine. The system provides an
opportunity to reconfirm and reprice transactions that already have been
compared.6 The time on the day that the Corporation determines to commence a
cycle of the RECAPS process shall be referred to as “R”.
6
Obligations initially compared through the OW service, or forwarded to the OW from other NSCC
systems or services will not be reconfirmed; however, pre-existing fail obligations submitted by
Members will be reconfirmed upon their submission to the OW subject to the matching process
outlined in subsections A, B, and C above.
237
(PROCEDURE II.A)
2. RECAPS Processing
(a) Eligibility
OW Obligations (i.e., items that have either: (i) been matched pursuant to this
Procedure, or (ii) forwarded to the OW from other NSCC systems or services as
provided in this Procedure) and have a settlement date of at least two days prior
to the date of R will be considered for the RECAPS process; however, such OW
Obligations can be excluded from the RECAPS process if so designated by the
Member or the Corporation. Fail items not already in the OW but which are
eligible for RECAPS processing must have been submitted to, and matched in,
OW prior to R. Any such submission is subject to the eligibility and matching
provisions of subsections A and B of this Procedure.
(b) RECAPS Processing
On R, except as provided below, each eligible OW Obligation will be re-priced, if

appropriate, netted and allotted, if appropriate, the settlement date updated to the
next business date and opened as a new obligation. Certain securities, including
securities that are not CNS-eligible, securities that are designated to settle on a
trade-for-trade basis, municipal securities and securities for which the current
market price is not available, may not be netted and allotted.
In the event that the current market price for a security is not available, the fail
obligation will be priced at the amount at which the obligation previously was
compared and assigned a new settlement date; and such items may not be
netted and allotted.
(c) Cash Adjustment
The difference between the aggregate value of a Member’s original fails and the
aggregate value of the Repriced RECAPS positions (i.e., the current market price
of the reconfirmed trades) is known as the net cash adjustment. The net cash
adjustment will settle on the Business Day following the date on which the
RECAPS process is run and will be included as part of the Member’s daily
settlement with the Corporation.7
(d) Adjustment of Settlement Date
For the purposes of the Corporation’s Buy-In Rules and Procedures the RECAPS
Settlement Date shall be considered to be the original RECAPS Settlement Date
for transactions processed through RECAPS.
7
Such net cash adjustments will be separately identified on Members’ money settlement statements.
238
(PROCEDURE II.A)
E. Pair Off
(a) Eligibility
Members may designate OW Obligations to which they are a party that are in the
“Open” status as eligible for pair off. NSCC may, in its discretion, exclude certain
obligations from pair off, and will announce such exclusions by Important Notice.
(b) Pair Off Processing
On a regular basis, the OW system will apply a pair off methodology to all eligible
OW Obligations based on the quantity of underlying securities, the final money
amount, and the settlement dates of the underlying obligations.
Only OW Obligations that have been designated as eligible for pair off by both
Members that are party thereto, and that are in the same CUSIP and have the
same counterparties, where the counterparties have offsetting long and short
obligations, will be paired-off. A pair off will never occur if it would result in (1) a
negative quantity of underlying securities in either of the original obligations, (2) a
negative final money amount, or (3) at least one of the obligations subject to the
pair off to remain open, with a reduced quantity of underlying securities and have
a final money amount of zero or less than zero.
(c) Closed Out or Cash Adjustment
If a pair off is successful, the underlying OW Obligations will either be closed out
of the OW or, where the quantities of underlying securities are not exactly
matched between obligations being paired off, the pair off will result in one or
more of the obligations being reduced by the quantity of securities that were
paired off with another OW Obligation. OW Obligations that are not closed out
as a result of a pair off will remain in “Open” status in OW, and will be adjusted to
reflect the reduced quantity of underlying securities.
Where the underlying final money amounts are not exactly matched between
obligations being paired off, the pair off will result in a cash adjustment, which will
be reflected in the Members’ money settlement with the Corporation on the
following business day.
F. Notifications and Reports
Members will be informed in real-time of status changes with respect to obligations

submitted to the OW.
The Corporation shall make available to each Member a report which reflects the end-
of-day status of OW activity which took place for such Member during each Business
Day.
Activity relating to RECAPS processing will be separately identified on such reports.
239
(PROCEDURE II.A)
Each Member participating in the OW service shall have an affirmative obligation to

monitor status updates and reports issued by the Corporation with respect to its OW
activity, and immediately inform the Corporation of any discrepancies between its OW
activity and the contents of such updates and reports.
G. Non-Guaranteed Service
The Obligation Warehouse shall not be a guaranteed service of the Corporation. If the
Corporation Ceases to Act for a Member pursuant to Rule 18 it may: (i) close all open
activity relating to that Member from the OW, (ii) reverse all credits and debits for the
Member relating to OW Obligations that have entered the CNS Accounting Operation,
and (iii) reverse any cash adjustments forwarded to settlement pursuant to this
Procedure.
H. Applicability of Marketplace Rules
It is intended that Buy-In executions, good delivery requirements for physical deliveries,
reclamation rights and transactions of a Member that have been DK’ed shall be remain
subject to the rules of the appropriate marketplace, notwithstanding that such
requirements would not otherwise apply to a transaction processed in the OW, unless
the relevant process is otherwise specifically provided for in these Rules & Procedures
(e.g., such as the buy-in process for CNS transactions).
240
(PROCEDURE III)
PROCEDURE III. TRADE RECORDING SERVICE (INTERFACE WITH QUALIFIED

CLEARING AGENCIES)
A. Introduction
Through arrangements with Qualified Clearing Agencies, the Corporation allows trades
from different marketplaces to be cleared and settled through the Corporation.
B. Settlement of Option Exercises and Assignments and Settlement of Stock

Futures Reaching Maturity
Through an arrangement (the “Accord”) with The Options Clearing Corporation (“OCC”),
Participating Members (defined below) may settle regular way through the facilities of
the Corporation security and money obligations arising out of (i) the exercise or
assignment of an option, and (ii) the maturity of a stock futures contract (collectively,
“E&A/Delivery Transaction”); provided that (x) the E&A/Delivery Transaction is between
two Participating Members, and (y) securities to be delivered or received in such
settlement are either (1) CNS Securities, or (2) Balance Order Securities.
A “Participating Member” is (i) a Member that is also a member firm of OCC, as

separately defined by the rules of that entity (“OCC Member”); (ii) a Member that has
been appointed by an OCC Member to effect settlement of E&A/Delivery Transactions
through the Corporation on the appointing OCC Member’s behalf; (iii) an OCC Member
that has appointed a Member to effect settlement of E&A/Delivery Transactions through
the Corporation on its behalf; (iv) the Canadian Depository for Securities Limited
(“CDS”); or (v) a Canadian clearing firm that is an OCC Member and settles activity at
the Corporation through an identifiable subaccount in the account at the Corporation of
CDS in which CDS effects settlement on behalf of such firm. Only Participating
Members that are Members identified in (i), (ii), and (iv) above shall be named as
counterparties on E&A/Delivery Transactions delivered to the Corporation pursuant to
the Accord.
A Participating Member that wishes to utilize this service must execute an agreement
with OCC in the form acceptable to OCC. OCC shall notify the Corporation of all
Participating Members that have executed such agreements.
Unless otherwise agreed between OCC and the Corporation, E&A/Delivery

Transactions are received by the Corporation from OCC each day on which both the
Corporation and OCC are open for accepting trades for clearance. Subject to the
paragraph below, the Corporation’s guarantee pursuant to Addendum K shall become
effective for each E&A/Delivery Transaction when the Required Fund Deposits to the
Clearing Fund, after taking into account that E&A/Delivery Transaction, are received by
the Corporation from all Participating Members.
If (i) a Participating Member has failed to satisfy its Clearing Fund obligations to the
Corporation pursuant to Procedure XV, or (ii) the Corporation has declined or ceased to
act for a Participating Member pursuant to these Rules and Procedures prior to the time
that the Corporation’s guarantee of such Participating Member’s E&A/Delivery
241
(PROCEDURE III)
Transactions become effective (such Participating Member, a “Defaulting Participating

Member”), then none of the E&A/Delivery Transactions involving such defaulting
Participating Member for which the Corporation’s guarantee pursuant to Addendum K
has not yet become effective shall be guaranteed by the Corporation, and all such
E&A/Delivery Transactions shall be exited out of the CNS Accounting Operation or the
Balance Order Accounting Operation, as applicable, unless otherwise agreed between
OCC and the Corporation. The Corporation shall have no further obligation regarding
the settlement of the exited E&A/Delivery Transactions, other than such obligations as
the Corporation may have pursuant to its arrangement with OCC, and the non-
defaulting Participating Members’ Required Fund Deposit to the Clearing Fund will be
recalculated excluding the exited E&A/Delivery Transactions.
E&A/Delivery Transactions are routed to the Balance Order Accounting Operation or the
CNS Accounting Operation and are reported to Members on such reports and in such
formats as determined by the Corporation from time to time.
Exercised calls and assigned puts appear as purchases. Exercised puts and assigned
calls appear as sells. Physical delivery of matured futures appear as purchases or
sells.
The date of the maturity or exercise/assignment at OCC is recorded as the trade date
for the maturity or exercise/assignment. The Settlement Date for such transactions is
two days later. If the exercise occurs on a Saturday during exercise weekend, the
preceding OCC business day is the trade date.
Regarding any E&A/Delivery Transaction submitted to the Corporation by OCC,
(1) if and to the extent that a security to be delivered and received in settlement
of such E&A/Delivery Transaction is not a CNS Security or a Balance Order
Security, such transaction shall be treated as a trade-for-trade transaction and
the Corporation’s guarantee pursuant to Addendum K shall not apply to these
transactions; or
(2) if and to the extent that such E&A/Delivery Transaction is not submitted to the
Corporation for regular way settlement, such transaction shall be processed in
accordance with these Rules, as applicable.
242
(PROCEDURE IV)
PROCEDURE IV. SPECIAL REPRESENTATIVE SERVICE
A. Introduction
A Special Representative which has been authorized by one or more other persons to
act on their behalf, may submit transactions in securities to the Corporation.
The Special Representative submits a transaction which is treated by the Corporation in

the same manner as if both parties had agreed to the details of the transactions.
Transactions entered by Special Representatives may enter the Accounting Operation.
As provided in Rule 7 hereof, all trade data submitted to the Corporation pursuant to
Sections C and D of this Procedure IV, other than trades excluded pursuant to Section 7
of Rule 7, must be submitted in Real-time, as that term is defined in Procedure XIII, and
on a trade-by-trade basis, in the form executed without any form of pre-netting of such
trades prior to their submission.
B. Institutional Clearing Service
The Institutional Clearing Service is a means by which a broker/dealer Member can

clear its customer-side activity through the accounting systems offered by the
Corporation when the customer is a Member or institutional participant of a Qualified
Clearing Agency.1
The Institutional Clearing Service utilizes the institutional clearing and delivery services
operated by various Qualified Clearing Agencies for input and affirmation purposes.
Transactions which are affirmed through these systems and which are between a
broker/dealer Member and customer Member or institutional participant of a Qualified
Clearing Agency, as principal or agent, are then entered to the Accounting Operation for
purposes of delivery and settlement. The Qualified Clearing Agency is the Special
Representative in the Institutional Clearing Service.
The broker/dealer Member submits input to the institutional system in accordance with
the rules and/or procedures of the Qualifying Clearing Agency. After the agent bank or
institutional participant affirms the transaction, the transaction is removed from the
institutional system and entered as a compared trade into the CNS Accounting
Operation or Balance Order Accounting Operation as a transaction between (a) the
broker/dealer and (b) the customer Member.
If the customer is not a Member or elects not to clear transactions through this Service,
the broker/dealer-side of the transaction is removed from the institutional system and
entered into the CNS Accounting Operation or the Balance Order Accounting Operation.
1
For the purposes of this procedure, a Qualified Clearing Agency shall include an entity that performs
institutional trade matching and confirmation services that has received an exemption under the
Securities Exchange Act of 1934, as amended, to register as a clearing agency.
243
(PROCEDURE IV)
The customer clears the transaction through the institutional system according to the
rules and/or procedures of the Qualified Clearing Agency involved.
C. Correspondent Clearing Service
The Correspondent Clearing Service permits Members to clear and settle transactions
executed for them by other Members acting as their Special Representative in the
following situations: first, to accommodate a Member with multiple affiliate accounts who
wishes to move a position resulting from an “original trade” in the process of clearance
from one affiliate account to another, and second, to accommodate a Member that
relies on its Special Representative to execute a trade in any market on its behalf to
enable the resulting position to be moved from the Special Representative to that
Member.
Through the Correspondent Clearing Service, the Special Representative offsets trades
that it has executed on behalf of the Member, which are in the process of clearance and
settlement (“original trades”)2 by inputting transaction data as described below.
The Member functioning as a Special Representative submits transaction data to the

Corporation. For example, if the original trade is a purchase order, the Special
Representative inputs a transaction where it is the seller, and the Member is the
purchaser. The Member agrees to be bound by the details of all transactions submitted
on its behalf by the Special Representative. Any errors or omissions must be resolved
directly between the Member and the Special Representative. Corrective input may be
submitted to the Corporation by the Special Representative on a subsequent day.
The Corporation produces reports for both the Special Representative and the Member.
These reports identify the details of each transaction as submitted by the Special
Representative and identifies any transactions which have not been accepted by the
Corporation.
Transactions (other than cash, or next day fixed-income transactions, or cash equity
transactions received after the Corporation’s designated cut-off time) which are
accepted by the Corporation are then entered into the Balance Order Accounting
Operation or CNS Accounting Operation (pursuant to Procedure V and VII) which, when
processed through the Balance Order Accounting Operation or CNS Accounting
Operation, effectively net the Special Representative out of the original trade.
The Correspondent Clearing Service is not intended, and therefore may not be utilized,
by Special Representatives for the purpose of submitting original locked-in trade input,
as all such input shall be submitted pursuant to Procedure II hereof. This prohibition
2
The term “original trade” is used solely to distinguish between trades executed in the marketplace,
and trades booked for accounting purposes to accommodate the movement of positions between
Members as permitted in this Procedure.
244
(PROCEDURE IV)
shall apply to any Member, including any Special Representative or Qualified Special
Representative that, directly or indirectly, engages in such activity.
D. Qualified Special Representatives
A Qualified Special Representative is a Special Representative who meets the

requirements set forth in Rule 7. As such, and subject to the requirements of Rule 7
and as otherwise set forth in these Rules, a Qualified Special Representative may
submit locked-in trades (pursuant to Procedure II above) for other Members and/or their
correspondent.
E. Automated Special Representative Facility
The Corporation may determine, in its discretion, to provide an automated facility

through which Members may establish and ultimately retire their Special Representative
relationships. A Member may appoint another Member as its Special Representative
through the automated facility, and that Member must then consent to via the
automated facility to acting in such capacity (or vice versa).
The establishment of such relationships through the automated facility shall meet the
written notice requirements for such services as otherwise set forth within these Rules
and Procedures. Members agree to be bound by the details of all transactions
submitted on their behalf by the Special Representative, and any errors or omissions or
disputes relating to such relationships and related transactions must be resolved directly
between the parties.
245
(PROCEDURE V)
PROCEDURE V. BALANCE ORDER ACCOUNTING OPERATION
A. Introduction
The Balance Order Accounting Operation includes transactions in all Balance Order
Securities and transactions which have been identified as Special Trades including
Special Trades in CNS Securities. The Balance Order Accounting Operation processes
trades compared or recorded under the provisions of Section II, trades recorded under
the provisions of Section III and transactions entered by Special Representatives under
the provisions of Section IV. The Balance Order Accounting Operation produces
Balance Orders which identify the receive and deliver obligations of Members. Balance
Orders may be issued on a trade-for-trade basis or a net basis. The Corporation will
make available to participants information detailing their receive or deliver obligations,
on a trade-for-trade or net basis, as applicable, in respect of Balance Order
transactions.
B. Trade-for-Trade Balance Orders
All transactions either: (i) identified as Special Trades, (ii) compared or otherwise
entered to the Balance Order Accounting Operation on SD-1, after the cutoff time
established by the Corporation, or thereafter, (iii) in securities which are subject to a
voluntary corporate reorganization which have a trade date on or before the expiration
of the voluntary corporate reorganization and which are compared or received on SD-1,
after the cutoff time established by the Corporation, and at least one day prior to the end
of the protect period, or (iv) identified as cash, next day or seller’s option transactions in
Balance Order Securities, or in securities which are subject to any corporate action,
whether mandatory or voluntary, are processed on a trade-for-trade basis. Receive and
Deliver Orders are produced instructing Members to deliver or receive a quantity of
securities to or from the contra-Member involved in that transaction.
C. Net Balance Orders
Trades in Balance Order Securities (except for Special Trades) which are compared on
T, and transactions entered through the Trade Recording or Special Representative
procedures on T, are netted so that the Member becomes a net purchaser or net seller
in each security issue in which it had activity. An allotting procedure matches these net
quantities and produces Net Balance Orders. Net Balance Orders are instructions to a
Member to deliver or receive a quantity of securities to or from another Member. Net
Balance Orders have the same status under the Rules and these Procedures as
Balance Orders.
In order to net trades executed at different prices, a uniform Settlement Price is used.
The uniform Settlement Price shall be established as the Settlement Price that is the
current market price of the applicable Balance Order Security.
A mechanism is required to adjust the differences between Contract Money (i.e., the
price at which the trade was executed) and Settlement Money. To avoid calculating an
adjustment for each Balance Order, the Corporation computes a single adjustment
246
(PROCEDURE V)
amount for each Member. This amount is called the Clearance Cash Adjustment. The
Clearance Cash Adjustment amount for all Balance Orders, both bond and equity, plus
the net amount of both figures will appear on the applicable Consolidated Trade
Summary.
Since Special Trades produce Balance Orders at the Contract Price, Settlement Money
is the same as Contract Money and requires no Clearance Cash Adjustment.
D. Balance Order Contracts
Balance Orders issued under subsections B and C above are Balance Order Contracts
as defined in Rule 5.
E. Consolidated Trade Summaries
On each settlement day, three separate Consolidated Trade Summaries each indicating
Balance Order transactions settling that day and the next settlement day will be made
available to participants.
F. Obligation Warehouse
Balance Order transactions will be forwarded to the Obligation Warehouse for

processing in accordance with the Obligation Warehouse Procedure.
247
(PROCEDURE VI)
PROCEDURE VI. FOREIGN SECURITY ACCOUNTING OPERATION
A. Introduction
The Foreign Security Accounting Operation includes transactions in all Foreign

Securities. The Foreign Security Accounting Operation processes trades compared and
recorded under the provisions of Procedure II and transactions entered by Special
Representatives under the provisions of Procedure IV. The Foreign Security
Accounting Operation produces Foreign Security receive and deliver instructions which
identify the receive and deliver obligations of Members.
B. Trade-for-Trade Foreign Security Receive and Deliver Instructions
Transactions identified as Special Trades and all transactions compared otherwise

entered to the Foreign Security Accounting Operations on SD-1 or thereafter are
processed on a trade-for-trade basis. Receive and deliver instructions are produced
instructing Members to deliver or receive a quantity of securities to or from the contra-
Member involved in that transaction.
C. Netted Member-to-Member Receive and Deliver Instructions
Transactions in Foreign Securities will net only on a Member-to-Member basis. Netted

Member-to-Member receive and deliver instructions are reported on the next available
Consolidated Trade Summary representing the netted positions of each Member with
respect to its transactions with another Member, and the related Foreign Security
Clearance Cash Adjustment, in each Foreign Security issue in which it had activity.
Both the settlement of the underlying transaction and payment of the Foreign Security
Clearance Cash Adjustment will not be guaranteed by the Corporation. In the event a
Member fails to make payment of the Foreign Security Clearance Cash Adjustment with
the Corporation, the Corporation will reverse all Foreign Security Clearance Cash
Adjustment debits and credits with respect to that Member, and the netted Member-to-
Member Foreign Securities receive and deliver instructions issued that day with respect
to that Member will be null and void.
248
(PROCEDURE VII)
PROCEDURE VII. CNS ACCOUNTING OPERATION
A. Introduction
The CNS Accounting Operation processes transactions in CNS Securities. Subject to

the provisions of Procedure XVI, and for the purposes of this Procedure VII, references
to CNS Securities shall include Eligible ID Net Securities.
Transactions in CNS Securities which are reported as compared or recorded on the

various report output issued through such time on Settlement Date, as the Corporation
may determine, and those submitted by Special Representatives, are reported on
Consolidated Trade Summaries. The netted obligations are then entered into the CNS
Accounting Operation.
CNS is an on-going accounting system which nets today’s Settling Trades with
yesterday’s Closing Positions, producing new short or long positions per security issue
for each Member. The Corporation is always the contra side for all positions. The
positions are then passed against the Member’s Designated Depository (as defined in
Section C of this Procedure, below) positions and available securities are allocated by
book-entry. This allocation of securities is accomplished through a night cycle followed
by a day cycle. Positions which remain open after the night cycle may be changed as a
result of trades accepted for settlement that day. Members may influence the receipt
and delivery of their securities through the use of Exemptions (for deliveries) or
Priorities (for receipts).
Money settlement is not associated with the individual security movements but is the
result of comparing the Closing Money Balance to the Closing Net Market Value of the
Member’s CNS account.
Dividends are credited or charged to the Member’s account according to the security
positions that exist on record date. The record date positions are automatically updated
for “As-Of” trades and appropriate due bill activity. Interest is credited or charged to the
Member’s account according to the security position that exists on the day prior to the
payable date; and stock splits are credited or charged on the Member’s account
according to the security position that exists on due bill redemption date, as described in
Section G of this Procedure.
B. Consolidated Trade Summary
All compared and recorded transactions in CNS Securities (excluding Special Trades)
are processed through the CNS Accounting Operation. This includes transactions
compared under the provisions of Section II, recorded under the provisions of Section
III, or entered by Special Representatives under Section IV. Purchases and sales due
for settlement on a given day are summarized on the Consolidated Trade Summaries
that are issued three times daily and contain, with respect to CNS Securities:
249
(PROCEDURE VII)
(i) those trades compared or recorded through the Corporation’s cutoff time
on that day which are due to settle on the following settlement day (i.e., if the report is
issued late Monday evening, it will show trades due to settle on Wednesday), and
(ii) with respect to trades due to settle on the same settlement day (i.e.,
Tuesday), T+1 and older as-of trades and next day settling trades not previously
reported on the prior Consolidated Trade Summary, in each case in CUSIP order,
reported as broad buys and sells by marketplace or source, netted by issue, quantity
and money.
Each Consolidated Trade Summary issued on each settlement day reports activity
compared or recorded, including cash trades which are due to settle on that same day
for the period beginning after the cutoff time for the prior Consolidated Trade Summary
and ending on the Corporation’s cutoff time for such Consolidated Trade Summary.
Note: any T+2 or older as-of trades compared or recorded after such cutoff time on
settlement day will settle on the next settlement day and appear on that night’s
Consolidated Trade Summary. Notwithstanding the previous sentence, with respect to
Index Receipts, if Index Receipts for same-day settlement are received by the
Corporation after the applicable cut-off time, such Index Receipts will not be assigned a
new settlement date and will be rejected.
Net quantities purchased or sold in each security issue are entered into the CNS Stock
Record together with their associated contract monies at the beginning of the
Settlement Date processing cycle. Subsequent obligations (reflecting supplemental
activity), together with their associated contract monies, are entered into the CNS stock
record thereafter during such processing cycle until such cutoff time as the Corporation
may determine.
Each Consolidated Trade Summary shows all equity and debt transactions and can be
subdivided or totaled by marketplace of execution or source of trade input.
C. Receipt and Delivery of Securities
1. Stock Record Update
Each day, Settling Trades shown on the Consolidated Trade Summary are
netted with the Closing Positions which have been carried forward from the
previous day. The resulting net positions represent the quantity of each security
due for settlement by the Member on Settlement Date. A long position
represents the quantity owed to the Member by the Corporation (the Member’s
fail-to-receive). A short position represents the quantity owed to the Corporation
by the Member (the Member’s fail-to-deliver). The Corporation is the contra side
to all long and short positions.
250
(PROCEDURE VII)
2. Selection of Depository
Each Member must select a Qualified Securities Depository for purposes of CNS
settlement (the Member’s “Designated Depository”). All short positions must be
satisfied by, and long positions allocated to, the Member’s account at the
Designated Depository.
3. Night Cycle
After the procedures described in paragraph 1 have been completed, each

Member’s positions are passed to the Designated Depository. Subject to the
limitations imposed by Exemptions (see subsection D) and Procedure XVI,
securities are transferred from the Member’s applicable Designated Depository
account to satisfy its short positions. If the quantity on deposit is insufficient to
settle the entire short position, a partial movement occurs. Securities received
from Members in settlement of short positions are placed in the Corporation’s
applicable account at the Designated Depository. The Corporation then provides
instructions to deliver those securities from its account at that depository to the
Designated Depository accounts of those Members which have long positions.
The results of the night allocation are recorded on the CNS Settlement Activity
Statement distributed the following morning. All security movements in
Designated Depositories are made on a “free” basis. Money settlement
associated with such security movements is accounted for by the Corporation as
a separate function. The Current Market Value of each entry is shown on the
Settlement Activity Statement for informational purposes.
4. Day Cycle
Positions which remain open after the night allocation, or become open as a
result of subsequent activity, are recycled on the following day. As additional
securities are made available in Members’ Designated Depository accounts,
additional receipts and deliveries are made against long and short positions.
Subject to the differences in the allocation algorithm for receipts from CNS (see
subsection E of this Procedure VII), the daytime recycle functions essentially the
same as the night allocation except that the process is continual.
In order to notify Members of settlement activity as quickly as possible,

Settlement Activity output is issued throughout the day. This output is produced
by the Designated Depository which actually made the entry to the Member’s
account, and is made available to the Member shortly after the entry is made.
In addition, in order to notify Member of changes in their positions due to same

day (including cash) settling trades or miscellaneous activity, the Corporation will
251
(PROCEDURE VII)
make available information in respect of such activity and new net settling
positions as a result thereof, in such form as the Corporation may determine.
At the end of the daytime recycle, all daytime activity is summarized on the CNS
Settlement Activity Statement.
D. Controlling Deliveries to CNS
As noted in subsection C, the delivery of securities from a Member’s Designated

Depository account to satisfy short positions is an automatic process and requires no
action on the part of the Member. Securities are removed from the Member’s
Designated Depository account to the extent that a sufficient quantity is on deposit.
In order for a Member to avoid segregation violations and to meet other delivery needs,
a procedure is provided to control this automatic system. The first phase of this
procedure provides the Member with its projected positions due for settlement the
following day. The second phase involves the submission of instructions by the
Member indicating which short positions it does not wish to settle. Members are
required to provide instructions to exempt from delivery any transactions compared or
received on SD-1 or thereafter, including cash or next day transactions, which are
processed for next day or same day settlement and which create or increase a short
position. This exemption shall hereinafter be referred to as the “One Day Settling
Exemption”.
1. Projection Report
Twice a day, a Projection Report is distributed to each Member. This report

shows, as of the time of its preparation, the Member’s long position or short
position for each security, settling trades for the next day, plus any miscellaneous
activity and stock dividends payable on the next day; and may include long and
short positions due to settle that day. Throughout the day the Corporation will
make available updates to this information, in such formats as it may determine.
Long and short positions reflect the Member’s status in each security issue as of
the time the Projection Report is prepared. These positions may change due to
same day settling trades and/or miscellaneous activity, and as the settlement
cycle on the day the report is issued continues. If a Member’s long and short
positions change during the day, the projection position will also change. The
Member must, therefore, update these positions based on same day settling
trade and settlement activity which occurs during the course of the day.
2. Exemptions
Except as described below, each Member has the ability to elect to deliver all or
part of any short position. It controls this process by Exemptions. By indicating a
particular quantity as an Exemption, the Member directs the Corporation not to
settle certain short positions or portions thereof. Exemptions govern short
positions in the CNS Stock Record and not Designated Depository positions. All
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(PROCEDURE VII)
short positions or positions thereof for which no Exemption is indicated are

settled automatically to the extent that the Member has made such securities
available in the Member’s Designated Depository account or they become
available in its Designated Depository account through other depository activity.
Notwithstanding the above, a Member may not exempt delivery of any securities
available in an agency account established at a Qualified Securities Depository
for the processing of transactions through the ID Net Service.
(a) Types of Exemption
The CNS system provides for two levels of Exemption. By proper use of
the Projection Report and Exemptions, Members can utilize current inventory as
well as securities received from other sources on settlement day in order to
satisfy delivery requirements.
(i) Level 1 Exemption - By submitting a Level 1 Exemption, the

Member indicates that the portion of the short position
exempted should not be automatically settled against its
current Designated Depository position or against any
securities which may be received into its Designated
Depository account as a result of other depository activity.
(ii) Level 2 Exemption - The submission of a Level 2 Exemption

is an instruction by the Member that the portion of the short
position exempted should not be automatically settled
against its current depository position. Such a position may
be satisfied, however, by certain types of “qualified” activity
in its Designated Depository account.
(b) Qualified Activity
There are four types of qualified activity which allow short positions
carrying Level 2 Exemptions to be settled:
(i) Coded Deposits - The Member deposits securities into its

Designated Depository account in the normal manner, but by
using a special deposit ticket which indicates that these
securities are available for settling Level 2 Exemption
quantities.
(ii) Coded Collateral Loan Releases - A Member may release

securities from its Designated Depository collateral loan
account and wish those securities to be used in settling a
Level 2 Exemption quantity. In this case, the Member uses
a special Collateral Loan Release form which authorizes
such use.
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(PROCEDURE VII)
(iii) Receipts from Banks - All securities received against

payment from banks are eligible to settle Level 2 Exemption
quantities. Settlement of such items is automatic and no
special instruction by the Member is required.
(iv) Receipts from Member’s Sub-Account - As a result of CNS

sub-accounting (see subsection I of this Section), a Member
may have a long position in a given security in one CNS
account and a short position in the same security in another
CNS account. Since both CNS accounts settle against a
single Designated Depository Account, the Member may
receive securities from itself.
(c) Methods of Submitting Exemptions
Exemptions may be submitted by using such form or automated means as

are acceptable to the Corporation from time to time. Exemptions must either
indicate the quantity to be exempted, or indicate all, and designate that quantity
as Level 1 or Level 2. A Member may submit daily Exemption instructions to the
Corporation. If a Member has no Exemptions on a given day, instructions may
be submitted indicating no Exemptions for either Level 1 or Level 2.
A Member must submit standing Exemption instructions to the

Corporation. Standing Exemption instructions will govern all of the Member’s
short positions for any day on which (i) specific daily Exemption instructions are
not submitted to the Corporation, (ii) are not received by the Corporation, or (iii)
are unable to be processed by the Corporation.
Exemptions may be submitted by Members through the facilities of service

bureaus and other agencies provided that the service bureau or agency has
been authorized by the Corporation to act on behalf of its Member.
Exemptions must be submitted for each CNS Sub-Account maintained by

the Member (see subsection I of this Section).
(d) Exemption Override
With respect to one day and same day settling transactions, Members
may select a standing Exemption override to permit all such short positions to be
delivered. Additionally, during the daytime cycle, a Member may override the
One Day Settling Exemption as well as other Exemptions entered by the Member
the previous evening. To do so, the Member should prepare a Delivery Order
(DO) and submit it to its Designated Depository in the normal manner. If the
Designated Depository is DTC, the receiving Member must be designated as
888.
The securities designated to be delivered on the DO are first applied to

any quantity covered by a Level 1 Exemption and the One Day Settling
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(PROCEDURE VII)
Exemption. Any remaining quantity (or if no Level 1 Exemption existed, the

entire delivery) is applied to any quantity covered by a Level 2 Exemption. If
there is still a remaining quantity, that quantity is not processed.
E. Influencing Receipts from CNS
After securities are received by the Corporation from Members with short positions, they
are allocated to other Members which have long positions. The allocation of these
securities is designed so as not to benefit any one Member. Members may change
their relative rank by submitting Priority Requests. The submission of a Buy-In Intent
will also affect the priority of a Member’s long position in that particular security.
1. Standing Priority Request
A Member may enter a Standing Priority Request which moves its long positions
in all securities to a higher rank in the allocation formula every day and remains
in effect until canceled or changed by the Member in writing.
A Member may enter a Standing Priority Request for the night cycle only, the day
cycle only, or both the night and day cycles in respect of its general account or
any sub-account.
2. Priority Overrides
A Member may override a Standing Priority Request which it has previously

submitted, or obtain priority when it has not submitted a Standing Priority
Request by submitting a Priority Override. Each Priority Override changes the
Member’s relative rank in the allocation algorithm for its long position in one
security only. The Priority Override remains in effect for one day.
The Member may submit a Priority Override for the specified security for the
night cycle only, the day cycle only, or for both the night and day cycles.
3. Buy-In Intent Notices
A Member which submits a Buy-In Intent in accordance with the provisions of

subsection J of this Procedure VII is assigned to a higher relative rank in the
allocation algorithm for the quantity of securities specified on the Buy-In Intent
than those Members which have requested high priority through the use of a
Standing Priority Request or Priority Override.
4. Allocation Algorithm
The algorithm which governs the allocation of long positions is based on priority
groups in descending order and, for the day cycle only, age of position within a
priority group and random numbers within age groups.
Priority groups include the following:
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(PROCEDURE VII)
(a) long positions in a CNS Reorganization Sub-Account established

pursuant to paragraph H.4. of this Procedure VII;
(b) long positions against which Buy-In Intent notices are due to expire
that day but which were not filled the previous day;
(c) long positions against which Buy-In Intent notices are due to expire
the following day;
(d) (i) long positions in a receiving ID Net Subscriber’s agency account

established at a Qualified Securities Depository, and (ii) long
positions against the component securities of index receipts;
(e) in descending sequence, priority levels as specified by Standing

Priority Requests and as modified by Priority Overrides.
For the day cycle only, when more than one long position in a given security
exists within the same priority group, the “oldest” position is allocated first. Age is
defined as the number of consecutive days during which the position has been
long, irrespective of quantity.
For the day cycle only, when more than one long position in a given security
exists within the same priority group all of which have been long the same
number of consecutive days, the allocation rank is determined by a computer
generated random number. Random numbers, which change daily, are
computed so that each Member’s random number is different for each security.
The allocation algorithm for the night and day delivery cycles is computed
separately to allow for different allocation factors used for night and day cycles as
well as Standing Priority Requests and Priority Overrides which have specified
different levels of priority for night and day cycles.
5. Fully-Paid-For Account
(Procedures for Movements to the Long Free Account)
The Corporation’s processing day is divided into two parts. It begins with a night
cycle on the evening preceding the settlement day for which the work is being
processed and is followed by a day cycle which ends on the settlement day for
which the work is processed. If a Member with a long position and/or a position
due for settlement on the next settlement day, in anticipation of receiving
securities from the Corporation (other than municipal securities, as that term is
defined by the Securities Exchange Act of 1934, as amended), as a result of the
allocation process during the night or day cycle for that settlement day, instructs
that securities within its possession or control (other than municipal securities) be
delivered on the next day and is subsequently not allocated the securities during
the night or following day cycle, the Member may, in order to meet the “customer
segregation” requirements of SEC Rule 15c3-3, instruct the Corporation, during
256
(PROCEDURE VII)
the day cycle for that settlement day by the time specified by the Corporation, to
transfer the position(s) which has not been allocated to a special CNS sub-
account (the “Long Free Account”). The Corporation will then debit the Member’s
settlement account for the value of the position in the Long Free Account. The
Long Free Account will be guaranteed by the Corporation and will be marked
daily.
All funds which the Corporation receives from debiting the Member’s settlement
account for the value of a position moved into the Long Free Account and all
marks credited to the Long Free Account as a result of marking positions to the
market daily, will be segregated by the Corporation from all other funds received
by the Corporation. Any time that a Member determines that he no longer needs
the position(s) in the Long Free Account for 15c3-3 purposes, he may instruct the
Corporation to transfer back the position(s) to its Long Valued Account and make
the appropriate adjustment to its settlement account.
NOTE: The SEC has stated that: “any broker/dealer that takes advantage of
proposed rule NSCC-82-25 must recall deficits from bank loan within shorter time
intervals than those presently allowed under SEC Rule 15c3-3(d)(1). In the case
of bank loan, broker/dealers will be expected to effect a recall within one
business day instead of the two business days presently allowed.
F. Computation of CNS Money Settlement
The computation of the Net CNS Money Settlement Amount is based on the Accounting
Summary and the Cash Reconciliation Statement. The Net CNS Money Settlement is
then recorded in the Settlement Statement (described in Section VIII) and is netted with
settlement obligations resulting from other services.
1. Accounting Summary
The Accounting Summary constitutes the official record of all CNS activity,
positions and settlements. CNS accounting is completed with the issuance of an
Accounting Summary at the end of the settlement day. This report is divided into
two parts. The first part deals with CNS Stock Record security movements and
positions; the second part summarizes money activity and balances. Security
and money accounting are two distinct functions under CNS and are performed
separately.
The part of the Accounting Summary which deals with security accounting shows
the Member’s Opening Position, Settling Trades, stock dividends and
miscellaneous activity, receipts and deliveries, Closing Position, and Current
Market Value of Closing Positions for each security in which it had a position or
activity that day. The Current Market Value of closing long positions and closing
short positions is totaled at the end of the report. The net of these two figures is
the Net Market Value of the Member’s account at the end of the day and
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(PROCEDURE VII)
represents the net value of securities which the Member owes to the Corporation
or which the Corporation owes to the Member.
The last section of the Accounting Summary reflects the Member’s Opening
Money Balance, net money amounts for Settling Trades, cash dividends and
interest, miscellaneous activity and Closing Money Balance. The Closing Money
Balance represents the net amount of money which the Member owes to the
Corporation or which the Corporation owes to the Member.
The net CNS Money Settlement Amount is calculated by subtracting the Net
Market Value from the Closing Money Balance. The effect of this calculation is to
bring the Member’s money balance into agreement with the market value of its
Closing Positions.
The Accounting Summary is the final report produced by the CNS system for
each Settlement Date. Members are required to reconcile all security and money
balances shown thereon by comparing the Accounting Summary to their own
records and promptly reporting any difference to the Corporation for
reconciliation.
2. Cash Reconciliation Statement
Members are also provided with a separate report known as the Cash
Reconciliation Statement. Although the Cash Reconciliation Statement is a
different method of computing the settlement amount arrived at on the
Accounting Summary, it relies on the same concepts in that the value of Closing
Positions is compared to the money balance for that day, the difference being the
Member’s money settlement amount. In the case of the Cash Reconciliation
Statement, the money settlement is computed in the early morning and is
continuously updated throughout the day cycle to reflect activity which takes
place during the day. The Corporation will make such updated information
available to Members throughout the day cycle in such manner as it may from
time to time determine.
The results of the daytime delivery cycle are summarized on a Settlement Activity
Statement issued on the afternoon of Settlement Date. Each entry is valued at
the Current Market Price with totals at the end of the report. These totals must
be posted by the Member to the Cash Reconciliation Statement. When these
totals are netted with the preliminary figure shown on the report, the result will be
the final Net CNS Money Settlement Amount.
A final Cash Reconciliation Statement is issued on the afternoon of each

settlement day, and shows all information shown on the Preliminary Cash
Reconciliation Statement updated for daytime activity to arrive at a final
settlement amount.
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(PROCEDURE VII)
G. CNS Dividend Accounting
Dividend Accounting within the CNS system is based primarily on the Member’s Closing
Position on the record date for the dividend, distribution, etc. Cash dividends, stock
dividends, spinoffs, etc. are calculated and reported to the Member on the morning after
record date. On payable date, the appropriate debit or credit is applied to the Member’s
CNS account. In the case of a non-U.S. sourced dividend or other income distribution,
such debit or credit may be adjusted for any applicable non-U.S. withholding taxes at a
rate to be determined by the Corporation in its sole discretion.
Stock splits and interest are charged to or credited in a similar manner, but calculations
are based on the CNS record date positions updated through the Due Bill period.
1. Record Date Report
Each day the Corporation issues a Record Date Report advising Members of the
Closing Positions on record date for the previous day. Appropriate dividend,
distribution and interest data including dates, rates and calculated amounts are
also shown. The purpose of this report is to advise the Member of the pending
dividends which will be applied to its account at a later date. These record date
positions should be compared by the Member against its internal records for
accuracy.
2. Dividend Activity Report
Cash and stock dividends which are to be applied to a Member’s account are
shown on the Dividend Activity Report usually produced on the day before
payable date. Dividends are calculated according to record date closing
positions updated for As-Of Trades. As-Of Trades submitted up to two days prior
to payable date and which have an original trade date before ex-dividend date
are automatically included in the payment calculation.
Stock dividends shown on this report appear on the Accounting Summary.
The net of all cash dividends appears on the Dividend Activity Report as well as
the Accounting Summary and the Cash Reconciliation Statement.
Fractional shares resulting from stock dividends are credited and charged in
cash. The cash in-lieu amount is shown on the Dividend Activity Report and is
included in the overall total along with cash dividends. Fractional shares are
valued using the Current Market Price for the day the report is produced.
Distributions for stock splits and interest calculations are not reflected on this
report as updating is necessary during the Due Bill period.
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(PROCEDURE VII)
3. Due Bill Accounting
The credit or charge to Members for interest, stock splits, rights distributions or
any other distribution which involves trading of a CNS Security with Due Bills, is
processed in a different manner. The Designated Depositories automatically
account for security receipts and deliveries during a Due Bill period through an
interim accounting system. The Corporation, therefore, credits or debits a
Member’s CNS account for the appropriate securities or money based only on
the Member’s Closing Position on Due Bill Redemption Date in the case of stock
splits and distributions, and the day prior to payable date in the case of interest.
The quantity or money due to or from each Member appears on a separate

Dividend Activity Report which is issued on the morning after Due Bill
Redemption Date. Share quantities are added to each Member’s long or short
position prior to the night delivery cycle for the day’s settlement. Cash-in-lieu of
fractions, as well as interest amounts, are included in that day’s money
settlement.
In the case of stock splits, the Current Market Price is adjusted by the rate of the
split during the one day prior to the Due Bill Redemption Date. This process
synchronizes the application of additional quantities to the Member’s account
with the valuation of that security at the new price.
If a particular distribution is not eligible for processing through the interim

accounting systems of the Designated Depository, the Corporation records the
record date position of the security carrying the Due Bill as well as all receipt and
delivery activity during the Due Bill period. Based on the net of these amounts,
the Corporation computes the amount to be debited or credited to each Member
and records such quantities on the Dividend Activity Report.
4. Optional Dividends
Dividends which may be paid in the form of securities or cash at the option of the
holder are processed as follows:
Record date positions are initially recorded in the CNS Dividend Accounting
system using the option specified by the issuer as the “default option” (the
“default option” is the form in which payment will be made by the issuer if
instructions to the contrary are not received).
Each Member with a long position as of the close of business on record date may
change the form of payment for all or part of its position by submitting an
Optional Dividend Instruction. The Optional Dividend Instruction must be
received by the Corporation no later than the cutoff time and date specified by
the Corporation. If an Optional Dividend Instruction is not received from a
Member with a long position on record date, that Member will be credited on the
basis of the default option.
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(PROCEDURE VII)
The Corporation will charge Members with short positions on record date
according to the options selected by members with long positions on record date
using a random method of allocation. Members with short positions will be
advised of the form by which they will be charged.
H. Miscellaneous CNS Activity
Certain types of activity occur within the CNS system which are reflected on
Miscellaneous Activity Reports. Each entry shown on these reports is identified by
legend as to type, e.g., reorganization, OW Obligations, journal entry, etc. Security
entries also appear on the Accounting Summary identified as “miscellaneous”. Money
entries are netted to a single figure on the Miscellaneous Activity Reports and are
identified as “miscellaneous” on the Accounting Summary.
1. Removal of Eligible Securities from CNS
When the Corporation declares a security ineligible for processing through CNS,
all net positions in that security are removed from the CNS Stock Record on the
effective date. Any pending positions (trades, stock dividends, etc.) are removed
as soon as they are posted to the CNS Stock Record. Such entries are posted to
the Member’s next available Miscellaneous Activity Report issued on the date of
removal. The Current Market Value of the security, as of the date of removal,
appears on the next available Miscellaneous Activity Report and is posted to the
Member’s Money account.
When a security is removed from CNS, a random allocation procedure matches

Members with long positions to Members with short positions. CNS Receive and
Deliver Instructions are produced instructing a Member to receive securities from
or deliver securities to another Member of the Corporation or a participant of an
interfacing clearing corporation. CNS Receive and Deliver Instructions for
equities and corporate bonds are considered Balance Orders (see Section V)
and are due for settlement on the date issued and must be settled in the same
manner as are Balance Orders. Municipal Bond Receive and Deliver Instructions
are subject to the rules of the MSRB and the settlement thereof are the
responsibility of the parties to the Receive and Deliver Instructions.
Securities removed from CNS that result in a CNS Receive and Deliver
Instruction may be entered into the Obligation Warehouse service in accordance
with the Obligation Warehouse Procedure.
2. Journal Entries
Occasionally, it is necessary to adjust positions or money balances within the

CNS system. These entries appear on the applicable Miscellaneous Activity
Report which identifies, by legend, the type of journal entry made.
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(PROCEDURE VII)
3. Member Mergers
If two or more Members merge their operations, or if one Member assumes the
obligations of one or more other Members, all CNS Stock Record positions and
money balances are merged under the new Member number. Such entries are
made at the opening of business on the effective date, and appear on the
Miscellaneous Activity Report.
4. Corporate Reorganizations
Through the facilities of the CNS Reorganizations Processing System, the

Corporation offers Members the ability to process within the CNS System
transactions in certain securities undergoing corporate reorganizations. For the
purpose of the CNS Reorganization Processing System, reorganizations are
divided into two categories: “mandatory” reorganizations, which may include, for
example, mergers, full redemptions, liquidations, reverse splits and name
changes; and “voluntary” reorganizations, which may include, for example,
mergers with elections, and either tender offers or exchange offers (collectively
“voluntary offers”).
All CNS Securities subject to a reorganization (hereinafter referred to as “the

subject security”) may be included in the CNS Reorganization Processing
System other than: (i) securities subject to a conversion event; (ii) securities
subject to a reorganization where baby bonds are issued; (iii) securities made
ineligible for processing at a Qualified Securities Depository during a corporate
reorganization; and (iv) in circumstances when the Corporation determines that
operational difficulties prevent the processing of the security in the CNS
Reorganization Processing System, in which case the security shall be removed
from the CNS System, and Receive and Deliver Instructions for such security are
issued as explained in paragraph 1 of this subsection H, above. For example, in
general, the Corporation will not process a reorganization event where the
protect period for such event is greater than two business days.
Notwithstanding the foregoing, the Corporation may, from time to time, process
corporate actions through the CNS Reorganization Processing System that
would otherwise be ineligible, if the Corporation, in its sole discretion, determines
that it has the capability to do so. In such circumstances, the Corporation will
provide Members with notice detailing how such security will be processed.
To the extent the Corporation receives timely notification of a reorganization,

each business day, starting two business days before the effective day of a
mandatory reorganization, or four business days before the expiration date of a
voluntary reorganization (“effective day” and “expiration day” hereinafter referred
to as “E”) through such time as the Corporation shall determine, the
reorganization information received by the Corporation will be provided to
Members. If the Corporation does not receive sufficient notification of a pending
reorganization to provide to Members on the dates prior to E specified above, the
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(PROCEDURE VII)
Corporation will provide such information to Members as soon as practical after

receipt of such information. While the Corporation uses its best efforts to ensure
that the reorganization information provided is complete and accurate, the
information provided is solely an unofficial summary prepared by the Corporation
for the convenience of its Members, and the Corporation is not responsible for
the completeness and accuracy of the information.
Processing within the CNS Reorganization Processing System is handled in the

following manner:
(a) Mandatory Reorganizations
At such time on or after E as the Corporation shall determine, positions in

the subject security are updated into equivalent positions of the new securities
and/or cash. Fractional shares resulting from a reorganization are credited and
charged in cash, and are valued using the Current Market Price.
These updates appear on Members’ CNS Miscellaneous Activity Reports

and the type of mandatory reorganization is identified.
(b) Voluntary Reorganizations
The Rules below assume the processing of subject securities with a

protect period of two days. The processing of subject securities with a protect
period of one day or less shall be in accordance with the time frames set forth in
the table below.
After Night Cycle – E+1
After the night cycle on E+1, by such time and in such manner as
established by the Corporation from time to time, the Corporation shall advise
Members with short positions (including short positions due to settle up to and
including the last day of the protect period) in a subject security of their potential
liability based on their short positions as of that time in such subject security.
Note: Any same day settling trade in such subject security that is received
for processing after the night cycle of E+1 will be designated a Special Trade and
will be cleared and settled on a Member-to-Member basis between the parties
directly.
On E+1
On E+1, by such time and in such manner as established by the

Corporation, a Member with a long position in a subject security (including long
positions due to settle up to and including the last day of the protect period) at
the close of business on such day who seeks to have the Corporation provide the
protection described below for such long position, must instruct the Corporation
to move such long positions into a CNS Reorganization Sub-Account.
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(PROCEDURE VII)
Instructions by a Member to move a position to a CNS Reorganization Sub-

Account constitute a formal request by the Member for the Corporation to provide
such protection for the position moved.
On E+2 (Protect Period Expiration Date)
The regular CNS allocation process takes place through the day cycle on
the last day of the protect period. A long position in a subject security for which
an instruction has been received by the Corporation to establish a position in the
CNS Reorganization Sub-Account, as described above, has the highest priority
for CNS allocation, as provided for in Section E, 4(a) of this Procedure VII.
By such time and in such manner as established by the Corporation from

time to time, the Corporation shall inform Members who have given the
Corporation instructions to move a long position in a subject security into a CNS
Reorganization Sub-Account of the expected move of that position to a CNS
Reorganization Sub-Account. On E+2, until such time as established by the
Corporation from time to time, Members may add, adjust, or delete long positions
which will be moved to the CNS Reorganization Sub-Account in whole or in part
by submitting an instruction to the Corporation in such form and until such time
on E+2 as established by the Corporation from time to time.
Members are prohibited from moving positions in subject securities

between the CNS General Account and that Member’s Fully-Paid-For
Subaccount.
After Day Cycle – E+2
At the time established by the Corporation after the day cycle on E+2, long
positions for which proper instructions have been received are moved to a CNS
Reorganization Sub-Account. Simultaneously, the Corporation shall move into
the CNS Reorganization Sub-Account a corresponding number of short positions
in the subject security held by those Members with the oldest such short
positions. If more than one short position in the subject security is of the same
age, the Corporation may utilize a random allocation procedure to select short
positions to be moved into the CNS Reorganization Sub-Account. On E+2, when
the long and short positions in the subject security are moved into the CNS
Reorganization Sub-Account, the Corporation provides Members with long
positions in the subject security notification of their final protection, and provides
Members with short positions in the subject security notification of their final
liability.
The Corporation may, following a request by a Member and an approval of

that request by the Member with the corresponding long or short position in a
subject security, move their respective positions from a CNS Reorganization
Sub-Account back to the CNS General Account.
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(PROCEDURE VII)
The Corporation may establish a minimum of two separate CNS

Reorganization Sub-Accounts for each security subject to multiple voluntary
offers; provided, however, that if applicable, and provided it has the operational
capabilities to do so, the Corporation may establish additional CNS
Reorganization Sub-Accounts in order to process affected securities.
On and Following E+3
Short positions in the CNS Reorganization Sub-Account are marked from

the Current Market Price to the voluntary offer price on E+3 and on each
subsequent day; funds received as a result of such mark payments are retained
by the Corporation until the conclusion of the voluntary offer. The Corporation
freezes the positions in the CNS Reorganization Sub-Account; corresponding
long and short positions in the CNS Reorganization Sub-Account only will be
moved out of the CNS Reorganization Sub-Account (i) upon the request of both
the Members with a long and short positions, as described above, (ii) upon
conclusion of the voluntary offer, (iii) when the voluntary offer is canceled, or (iv)
when the expiration date of the voluntary offer is extended. In such cases,
positions in the CNS Reorganization Sub-Account are automatically returned to
the Members’ CNS General Account, and the mark to the voluntary offer price
returned to Members with short positions.
The table below sets forth the time frames for the processing of subject
securities subject to a voluntary reorganization with a protect period of one day
and voluntary reorganizations with no protect period.
Date long Date long Last date

position Members are long Date long
member must prohibited Members may Member
instruct Last date
from moving submit Date long notified of Short
NSCC Date short Date long long
positions in Protect Add positions Final position
to move Member Member members
subject or Adjust moved to Protection marked to
position notified of notified of may
securities Instructions Reorg. and short voluntary
to Reorg. potential potential submit
between CNS (protect add Sub- Member offer
Sub- Liability Protection Delete
General or adjust Account notified of price
Acct. instructions
Account and submitted on Final
(Standard Fully-Paid-For CNS end Liability
Date) Subaccount date)*
1 Day E+2 or
E E E+1 E+1 E+1 E+1 E+1 E+1
Protect thereafter
No E+1 or
E-1 E-1 E E E E E E
Protect thereafter
* “CNS end date” is either the protect expiration date of the offer or, when there is no protect, it is the expiration date of
the offer.
On Conclusion of Voluntary Offers
Upon conclusion of the voluntary offer, at a time determined by the

Corporation, the Corporation shall make journal entries to unwind positions in the
CNS Reorganization Sub-Account and established positions representing the
terms of the voluntary offer in the CNS General Account by:
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(PROCEDURE VII)
(i) crediting a long Member’s CNS General Account for the securities
distributed under the terms of the voluntary offer and/or crediting a
long Member’s settlement account for the cash or securities
distributed under the terms of the voluntary offer;
(ii) debiting a short Member’s CNS General Account for the securities
distributed under the terms of the voluntary offer and/or debiting a
short Member’s settlement account for the cash or securities
distributed under the terms of the voluntary offer; and
(iii) crediting the settlement account of short Members with the mark to
the voluntary offer price being retained by the Corporation.
In the event that not all positions in a subject security are accepted
pursuant to the terms of a voluntary offer, entries crediting and debiting the
positions and/or cash under the terms of the voluntary offer are made on a pro
rata basis, based on the pro rata acceptance ratio of the voluntary offer as
reported to the Corporation by a Qualified Securities Depository. All entries with
respect to the voluntary offer appear on the Member’s CNS Miscellaneous
Activity Report and are identified as resulting from a voluntary offer. Fractional
shares resulting from a pro rata acceptance are credited to Members’ settlement
accounts and charged in cash, and are valued using the voluntary offer price.
The Corporation shall provide protection to the long Member for a position
in the CNS Reorganization Sub-Account upon completion of the voluntary offer
only to the extent of the monetary difference between the Current Market Price
and the voluntary offer price, and only to the extent of the pro rata acceptance
ratio of the voluntary offer as discussed above.
5. ID Net Service
Pursuant to Rule 65 and Procedure XVI, ID Net Subscribers may enter into
transactions eligible for the ID Net Service, and all such transactions are
recorded on the Miscellaneous Activity Report. All removals of such transactions
from the ID Net Service occurring in either day or night cycle are also recorded
on the Miscellaneous Activity Report.
6. Obligation Warehouse
Pursuant to Rule 51 and Procedure II.A, OW Obligations submitted for

processing through the Obligation Warehouse service that are CNS-eligible may
be entered into the CNS Accounting Operation. Unless otherwise excluded by
the Member pursuant to Procedure II.A, CNS-eligible OW Obligations are
recorded on the Miscellaneous Activity Report on the night before Settlement
Date (SD-1) and included in the CNS Accounting Operation in the night cycle on
Settlement Date in accordance with the provisions of Procedure II.A. All OW
CNS activity is reflected on the Miscellaneous Activity Report.
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7. Asset Servicing and Other Events; Revealing Counterparties
The Corporation may support asset servicing or other events or payments and
the Corporation may, in its sole discretion, determine that such event or payment
be processed outside the Corporation’s facilities for any reason, including, for
example, operational difficulties in processing the payment or event or because
the payment or event is not processed by a Qualified Securities Depository.
Examples of payments or other events that the Corporation may determine shall
be processed outside its facilities include payments pursuant to litigation or other
disputes, distributions on class actions, bankruptcy payments, consent
solicitations, other distributions, claims, fees, or events with respect to which a
Member has notified the Corporation that it either has incurred or anticipates it
will incur liabilities greater than the terms of the reorganization event.
In order to assist Members in processing a payment or other event that is not

applied by the Corporation, or to assist Members to address claims, disputes or
information requests related to an event that the Corporation has processed and
that requires the Member to work directly with the counterparty, the Corporation
may utilize a random allocation procedure (as described in this Procedure VII,
Section H(1)) to match Members with long positions with Members with short
positions over the critical event date, and identify such counterparties to each
other.
I. CNS Sub-Accounting
The Corporation provides sub-accounts for Members for use within certain specialized
CNS services, e.g., reorganizations of CNS Securities. For the most part, a sub-
account functions as if it were a completely separate Member account in that positions
in sub-accounts are maintained separately and separate CNS reports are issued in
most cases.
Members do not maintain Designated Depository sub-accounts for the purpose of

settling CNS sub-account obligations. Before passing long and short positions in sub-
accounts to a Designated Depository for security settlement, the Corporation converts
the sub-account number to the Member’s regular account. All Designated Depository
reports, therefore, reflect activity for CNS sub-accounts under the Member’s regular
number. When the results of Designated Depository activity are received by the
Corporation, the information is converted back to the sub-account before it is posted to
the CNS Stock Record.
The CNS Cash Reconciliation Statement reflects a consolidation of the Member’s

regular account and all sub-accounts.
All other reports are issued separately for each CNS sub-account.
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J. Recording of CNS Buy-Ins
1. Equity Securities and Corporate Debt Securities
Defined Terms
For the purpose of this Section J,
The day the Buy-In Intent is transmitted is referred to as N; and N+1 and
N+2 refer to the succeeding business days. As noted in Section A of this
Procedure VII, each day commences in the evening and includes a night
allocation of securities and a day allocation of securities.
An “originator” shall mean the Member with a Long Position who submits a
Buy-In Intent to the Corporation pursuant to this Procedure.
“Buy-In Position” shall mean the quantity of securities the originator

intends to buy-in as identified on its Buy-In Intent.
“Original Buy-In Intent” shall mean a Buy-In Intent transmitted by a

Member with a Long Position for which such Member is the original
submitter.
“Buy-In Retransmittal Notice” shall mean a Buy-In Intent submitted by a

Member with a Long Position with respect to a Buy-In Position for which
the Member has a corresponding obligation as to which it has received a
Buy-In Intent initiated outside of the CNS System.
Unless the context otherwise requires, where these Procedures refer to a

“Buy-In Intent” without distinction, such reference refers to both an Original
Buy-In Intent and a Buy-In Retransmittal Notice.
“Buy-In Liability” shall mean the quantity specified on each CNS

Retransmittal Notice.
Buy-In Intent
Except with respect to securities subject to a voluntary corporate reorganization

(as described in Section H.4. of this Procedure VII), a Member having a Long
Position at the end of any day may transmit, in such form and within such times
as determined by the Corporation, to the Corporation a Buy-In Intent specifying
its Buy-In Position, which shall not exceed the long positions which it intends to
buy-in.
With respect to securities subject to a voluntary corporate reorganization, a

Member may not transmit a Buy-In Intent after the expiration date of the
reorganization event until the end of the protection period for the reorganization
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event; provided, however, that at no time may a Member submit a Buy-In Intent
for a Long Position in a CNS Reorganization Sub-Account.
A Buy-In Intent may be submitted to the Corporation by a Member on successive

days, provided the succeeding Buy-In Intent does not specify a quantity of
securities covered by the prior Buy-In Intent and the quantity of securities
representing the sum of the Buy-In Intent notices does not exceed the Member’s
total Long Position.
If, at any time after a Buy-In Intent is submitted and processed, until the
completion of CNS allocation processing on the day the Buy-In expires, the
originator has settling trades or miscellaneous activity that reduce their Long
Position such that the originator becomes either short or flat in a security covered
by the Buy-In Intent, or such that the originator’s Long Position in CNS is less
than its Buy-In Position, NSCC will consider that Buy-In Position (or portion
thereof) satisfied, and will either reduce its Buy-In Position accordingly or the
Buy-In Intent will be removed from the system, as applicable.
CNS Allocation Priority and CNS Retransmittal Notices
Original Buy-In Intent (expiring on N+2):
A Buy-In Position on an Original Buy-In Intent is given high priority for

CNS allocation from N+1 through the daytime allocation on N+2. If a Buy-
in Position remains unfilled after the night allocation on N+1, the
Corporation issues CNS Retransmittal Notices on the morning of N+1 to a
sufficient number of Members with Short Positions. Such CNS
Retransmittal Notices shall specify the originator and the remaining portion
of the Buy-In Position not yet received and demand delivery from each
such Member of a specified quantity of securities. CNS Retransmittal
Notices are issued in an aggregate quantity at least equal to the Buy-in
Position. In no case will the Buy-In Liability of a Member exceed the Buy-
in Position or the total Short Position of the Member. If several Members
have Short Positions with the same age, all such Members are issued
CNS Retransmittal Notices, even if the total of their Short Positions
exceeds the Buy-in Position.
Buy-In Retransmittal Notice (expiring on N+1):
A Member that has a Long Position in CNS at the end of any day and that
has received a Buy-In Intent initiated outside of the CNS System in that
same CUSIP, may submit a Buy-In Retransmittal Notice to the
Corporation for execution on N+1 as described below. The Buy-In
Retransmittal Notice shall include such information as the Corporation
may determine from time to time, including the identity of the entity that
initiated the Buy-In against the Member. A Buy-In Position on a Buy-In
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(PROCEDURE VII)
Retransmittal Notice is given high priority for CNS allocation from N

through the daytime allocation on N+1.
Upon receipt of the Buy-In Retransmittal Notice on N, the Corporation

issues CNS Retransmittal Notices to a sufficient number of Members with
Short Positions. Such CNS Retransmittal Notices shall specify the
originator and the remaining portion of the Buy-In Position not yet received
and demand delivery from each such Member of a specified quantity of
securities. CNS Retransmittal Notices are issued in an aggregate quantity
at least equal to the Buy-in Position. In no case will the Buy-In Liability of
a Member exceed the Buy-in Position or the total Short Position of the
Member. If several Members have Short Positions with the same age, all
such Members are issued CNS Retransmittal Notices, even if the total of
their Short Positions exceeds the Buy-In Position.
A Member’s Buy-In Liability may be satisfied by the actual settlement of the Short
Position up to the time on N+1 (for a Buy-In Retransmittal Notice), or N+2 (for an
Original Buy-In Intent). If a deposit of securities is required to satisfy the Short
Position, that deposit should be made prior to the Designated Depository daytime
deposit cut-off time on the expiration date of the Buy-In Intent and prior to the
time specified below. Going from a Short Position to a flat or Long Position due
to settling trades, stock dividends, or other activity on N through N+2 does not
free a Member from Buy-In Liability.
Prior to the execution of a Buy-In, the originator must accept and pay for any
portion or all the remaining securities delivered to the originator.
Buy-In Execution
If the Buy-In Position is not satisfied by the completion of the CNS allocation
process in the day cycle on the expiration date of the Buy-In Intent, the Buy-In
may be executed, as provided for under Procedure X.
2. Municipal Securities
Notwithstanding the foregoing, a Member that has transmitted a Buy-In Intent to

the Corporation with respect to a municipal security shall have its Buy-In Position
removed from the CNS System prior to commencement of the CNS night cycle
on N+1. The Corporation will remove corresponding Short Position(s)
representing the Member(s) with the oldest Short Position(s) in an aggregate
quantity at least equal to the Buy-in Position, and will produce special close-out
receive and deliver orders, which may name Members or a participant of an
interfacing clearing corporation as the contra side and which receive and deliver
orders will be subject to the rules of the MSRB.
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(PROCEDURE VIII)
PROCEDURE VIII. MONEY SETTLEMENT SERVICE
The Money Settlement Service is the end product of a number of other Services.
Individual sections of these Procedures and the Rules specify the method of calculation
for determining the total net amounts owed to the Member, Mutual Fund/Insurance
Services Member, Insurance Carrier/Retirement Services Member or Fund Member or
owed by the Member, Mutual Fund/Insurance Services Member, Insurance
Carrier/Retirement Services Member or Fund Member for each service. The function of
the Money Settlement Service is to record these individual totals or net amounts on the
Settlement Statement, together with amounts due to or from Members (and, if
applicable, Mutual Fund/Insurance Services Members) as a result of Clearing Agency
Cross-Guaranty Agreements, and determine a single net amount owed to or owed by
each such participant.
A. Settlement Statement
Each business day at such time as determined by Corporation, the Corporation

produces a Settlement Statement for each Member, Mutual Fund/Insurance Services
Member, Insurance Carrier/Retirement Services Member and Fund Member. The
Settlement Statement reflects each credit or debit which has been entered to such
participant’s account for each service in which it had activity that day together with
amounts due to or from Members (and, if applicable, Mutual Fund/Insurance Services
Members) as a result of Clearing Agency Cross-Guaranty Agreements. All credit and
debit amounts are totaled and the net of the two is calculated. This net amount
represents the amount owed to the participant or owed by the participant.
B. Money Settlement
If the net settlement for the day is a debit, the Member, Mutual Fund/Insurance Services
Member, Insurance Carrier/Retirement Services Member and/or Fund Member must
settle such amount in accordance with Rule 12. If the net settlement for the day is a
credit, the Corporation must settle such amount in accordance with Rule 12.
C. Final Settlement Statement
Each business day at such time as determined by the Corporation, a Final Settlement
Statement is produced for each Member, Mutual Fund/Insurance Services Member,
Insurance Carrier/Retirement Services Member or Fund Member which contains the
credit and debit amounts shown on the prior Settlement Statement, any adjustments to
those amounts and the status of the settlement of these amounts. Any resulting debit or
credit amount reflected on such statement is recorded as “Suspense”. Suspense
amounts are settled between such participant, and the Corporation, in accordance with
the procedures established by the Corporation. Participants must verify all figures on all
Settlement Statements and immediately bring any discrepancies to the attention of the
Corporation.
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(PROCEDURE VIII)
D. Settling Bank Procedures
1. Settling Bank Obligations
Each day at such time as determined by the Corporation, NSCC will make available to
Settling Banks the final net-debit or net-credit figure for each of its participants’ accounts
and the Settling Bank’s net-net debit or net-net credit figure. This action initiates the
settlement process. If the Settling Bank’s final settlement figure is a net-net debit, it
should pay that amount in the manner provided in Sections 3 and 4 below to NSCC’s
Settlement Agent by such time as established by the Corporation.
By such time as established by the Corporation, Settling Banks, without exception, must
acknowledge to NSCC via the terminal system their settlement figures and (1) their
intention to settle with NSCC their net-net settlement amount by the settlement
deadline, or (2) their refusal to settle for particular Members, Mutual Fund/Insurance
Services Members, Insurance Carrier/Retirement Services Members and Fund
Members. This acknowledgment must be sent even if the Settling Bank has wired the
amount of its net-net debit prior to the acknowledgment cut off time. Notwithstanding
the foregoing, a Settling Bank that is a Member and settles solely for its own accounts
may opt, pursuant to such procedures as the Corporation may, from time to time,
establish, to not acknowledge its settlement balance.1
If the Settling Bank sends refusal messages and its new net-net settlement amount after
the refusal is a credit, it must send a message to NSCC immediately after the refusal
messages acknowledging that amount. If its new net-net settlement amount is a debit,
the Settling Bank must send a message to NSCC immediately after the refusal
messages acknowledging its intention to settle that amount with NSCC by the
settlement deadline.
Note:
A Settling Bank that cannot send an acknowledgment or refusal message to NSCC may
telephone its instructions to the number for Settlement Operations specified in NSCC’s
notices and membership directory.
If NSCC has not received funds from the Settling Bank with a net-net debit and the
Settling Bank has not sent refusal messages and/or an acknowledgment message to
NSCC by the deadline, NSCC begins failure-to-settle procedures in respect to the
Settling Bank at this time.
A Settling Bank with a net-net debit that has sent an acknowledgment message to
NSCC must settle by the settlement deadline. (See the payment procedure below.) If
the Settling Bank has acknowledged its net-net settlement debit and NSCC has not
1
If the Settling Bank is also a settling bank at DTC, then to be eligible for such “opt out”, it must also
settle at DTC solely for its own accounts, and any such “opt out” must apply to both its NSCC and
DTC settlement balances.
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(PROCEDURE VIII)
received funds from the Settling Bank by this time, NSCC begins failure-to-settle
procedures in respect to the Settling Bank at this time.
Note:
A refusal to settle for a Member, Mutual Fund/Insurance Services Member, Insurance
Carrier/Retirement Services Member or Fund Member is a refusal to settle all accounts
of that participant. The Settling Bank cannot refuse to settle only some of the accounts
of a participant with multiple accounts. A Settling Bank that has sent a refusal message
must send an acknowledgment of its new net-net settlement amount.
At such time as the Corporation has received sufficient funds it will initiate payments to
Settling Banks with net-net credits.
2. Settlement Agent
DTC provides NSCC with services with respect to NSCC’s money settlement operations
as described in, and in accordance with, these procedures. DTC will act as “Settlement
Agent” (as that term is used in the Federal Reserve Board’s Operating Circular 12 and
in NSCC’s Rule & Procedures) for NSCC and NSCC’s Settling Banks, for purposes of
(i) receiving and paying, as NSCC’s settling bank and for the account of NSCC, end-of-
day money settlement payments from or to, as applicable, NSCC Settling Banks and
participants, (ii) with respect to the Federal Reserve Bank’s (“FRB”) National Settlement
Service (“NSS”), as the means of effecting money settlement for NSCC, and (iii)
aggregating and netting the Settlement balance of those Settling Banks that act as such
for both DTC and NSCC participants, and crediting or debiting the account of either
NSCC, or DTC, as the appropriate clearing agency, with the settlement amounts
determined in accordance with this procedure, as described in item 4 below.
3. Settlement Payment By Net-Net Debit Settling Bank
The Settling Bank with a final net-net debit must settle its net-net debit balance via the
FRB’s NSS. Note: Any bank or trust company applying to act as a Settling Bank must
execute such agreements authorizing the Corporation’s Settlement Agent to utilize NSS
for end of day money settlement as the FRB may, from time to time require. Those
Settling Banks that also act as Settling Bank for DTC participants are required to sign a
Settler Agreement with the FRB designating DTC as their NSS Settlement Agent for
purposes of DTC settlement. Accordingly, those banks will not be required to sign new
Settler Agreements to separately cover NSCC’s NSS settlement. Rather the Settler
Agreements they provide to DTC for delivery to the FRB are hereby deemed to include,
as covered in the NSS settlement arrangements, the Settling Bank’s NSCC settlement
obligations as well as their DTC settlement obligations.
After receiving an acknowledgment (if applicable) from the Settling Bank, NSS will allow
the Corporation’s Settlement Agent to instruct the FRB to debit the Settling Bank’s
account at the FRB by the amount of its net-net debit balance. The Settlement Agent
will send a “pre advice” to each Settling Bank, notifying it that the Settlement Agent is
about to send its NSS transmission to the FRB.
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(PROCEDURE VIII)
Any Settling Bank that settles for both participants of NSCC and for participants of DTC
will have its net-net credit or debit balances at each corporation aggregated and netted
to one consolidated sum (see Section 4 below). At the end of each day, after receiving
the applicable acknowledgments from the Settling Bank, DTC, as Settlement Agent will
then instruct the FRB to debit the FRB account of each such Settling Bank which has a
Consolidated Settlement Debit Amount (as defined in Section 4 below) by the amount
determined in accordance with Section 4 below. If the Settling Bank settles only for
NSCC participants, then DTC will instruct the FRB to debit such bank’s FRB account by
the amount of its net-net debit owed to NSCC. If the Settling Bank’s account at the FRB
has sufficient funds, it will be debited. Upon confirmation from the FRB, the Settling
Bank will be credited to reflect payment to NSCC of its net-net debit amount. If the
Settling Bank’s account has insufficient funds, DTC will receive notification from the
FRB that the account was not debited. If this occurs, DTC will notify the Settling Bank
of the deficiency. Any Settling Bank with a deficiency must then wire the funds to the
Settlement Agent.
Note – Settling Banks must monitor their Settling Bank Account Statement to ensure
that funds have been credited to their account and that no balance exists. The Settling
Bank must be prepared to wire payment to the Settlement Agent if funds are not
available or if the NSS is unavailable or inoperable. NSCC requires that a bank
representative authorized to wire funds be available at the Settling Bank until settlement
is complete. If a Settling Bank is experiencing extenuating circumstances and, as a
result, needs to opt out of NSS for one business day and send its wire directly to DTC’s
FRBNY account for its debit balance, that Settling Bank must notify the Settlement
department prior to acknowledging its settlement balance.
If funds need to be wired to the Settlement Agent’s account at the FRBNY for any
reason the following guidelines for sending settlement wires should be used. The
format of the instructions conforms to Fedwire standards for funds transfers. Other
formats are acceptable as well. NSCC expects to receive settlement payments by the
settlement deadline.
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(PROCEDURE VIII)
Fedwire Message Entry Instructions
Receiving Bank Enter Settlement Agent’s ABA Number

ABA Number:
Receiving Bank Enter the name of the Settlement Agent

Name:
Originator to Beneficiary SET(indicating Settlement as the purpose of the wire)

Information (OBI):
Type Code: Settling Banks should use type code 1600 for Settlement
wires. Type code wires may be wired to the Settlement
Agent after the Interdistrict Fedwire cutoff, whereas the
type code 1000 wires cannot. In the event a Settling
Bank experiences system problems which delay its
outgoing wires, use of type code 1600, the Fedwire code
for settlement wires, will prevent the bank’s wire to the
Settlement Agent from being rejected by the Fed due to
the Interdistrict cutoff.
Other Information: The bank will complete other required fields in the
Fedwire structured format according to the bank’s
standard procedures.
The Settlement Agent will advise as to the receipt of any wires.
4. DTC/NSCC Settling Bank Netting Arrangements
Any Settling Bank that settles for both participants of the Corporation and for
participants of DTC will have its net-net credit or debit balances at each clearing
corporation aggregated and netted, and shall pay, or be paid, as follows:
(i) For purposes of this item 4, the following terms have the meanings specified:
(a) “Common Settling Bank” means any entity that has qualified and acts as a
Settling Bank for both DTC and NSCC in accordance with their respective
rules and procedures.
(b) “DTC Credit Amount” or “NSCC Credit Amount” means, as applicable, any
net-net credit settlement payment due from the relevant clearing agency to
a Common Settling Bank, as determined in accordance with the Rules and
Procedures of the relevant clearing agency.
(c) “DTC Debit Amount” or “NSCC Debit Amount” means, as applicable, any
net-net debit settlement payment due to the relevant clearing agency from
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(PROCEDURE VIII)
a Common Settling Bank, as determined in accordance with the

respective Rules and Procedures of the relevant clearing agency.
(d) “Consolidated Settlement Debit Amount” means on any settlement day

the net sum, if a negative number (i.e. debits being deemed negative
numbers, and credits being deemed positive numbers) of a Common
Settling Bank’s applicable DTC Debit or Credit Amount, plus its applicable
NSCC Debit or Credit Amount.
(ii). For each Common Settling Bank on each settlement day, DTC, as Settlement
Agent, shall aggregate and net the DTC Credit and/or Debit Amount of the Common
Settling Bank with the applicable NSCC Credit or Debit Amount of such Common
Settling Bank and:
(a) If the Common Settling Bank has both a DTC Debit Amount and an
NSCC Debit Amount, then following the acknowledgment of those
respective balances by such bank in accordance with DTC’s procedures
and NSCC’s procedures, DTC shall (i) advise the Common Settling Bank
of its intention to transmit debit instructions to the FRB, and (ii) instruct the
FRB via NSS to debit the FRB account of such Common Settling Bank by
the aggregate sum of such debit balances. DTC, upon receipt of such
monies, shall credit NSCC with the amount of the NSCC Debit Amount,
and credit DTC with the amount of the DTC Debit Amount, from such
Common Settling Bank.
(b) If the Common Settling Bank has both a DTC Credit Amount and an
NSCC Credit Amount, then at the time established in DTC’s and NSCC’s
procedures, DTC shall credit payment to the FRB account of the Common
Settling Bank with the aggregate sum of such credit balances, and shall
debit NSCC with the amount of the NSCC Credit Amount, and debit DTC
with the amount of the DTC Credit Amount, for such Common Settling
Bank.
(c) If the Common Settling Bank has a Debit Amount at one clearing agency
and a Credit Amount at the other, then:
--if the sum of such DTC Credit Amount and NSCC Debit Amount (or DTC
Debit Amount and NSCC Credit Amount, as the case may be) is a positive
number, that excess amount (i.e. equal to the positive number) shall be
paid by the Settlement Agent for the account of the clearing agency with
the Credit Amount to the Common Settling Bank, and the clearing agency
with the Credit Amount shall pay the other clearing agency an amount
equal to the Common Settling Bank’s Debit Amount owed to the other
clearing agency. Payments made as so provided shall be in full
satisfaction of the settlement obligation of (i) the clearing agency that
owes the Credit Amount to the Common Settling Bank and (ii) the
Common Settling Bank to the other clearing agency.
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(PROCEDURE VIII)
--if the sum of such DTC Credit Amount and NSCC Debit Amount (or DTC
Debit Amount and NSCC Credit Amount, as the case may be) is a
negative number, then the absolute value of that amount shall be paid by
the Common Settling Bank to the Settlement Agent for the account of the
clearing agency to which the Common Settling Bank has a Debit Amount,
via NSS in the manner provided above in full satisfaction of the settlement
obligation of the Common Settling Bank to such clearing agency, and the
clearing agency with the Credit Amount shall pay the other clearing
agency an amount equal to the Credit Amount, in full satisfaction of the
settlement obligation of the clearing agency from whom such Credit
Amount was owed to the Common Settling Bank.
--if the sum of such amounts equals zero (i.e. the Credit Amount due from
one clearing agency equals the Debit Amount owed to the other clearing
agency), then the clearing agency that owes the Credit Amount to the
Common Settling Bank shall pay the amount of such Credit Amount to the
other clearing agency in full satisfaction of both the settlement obligation
of the Common Settling Bank to the clearing agency owed the Debit
Amount and the settlement obligation of the clearing agency that owes the
Credit Amount to such Common Settling Bank. In that instance, no
payment shall be due to or from such Common Settling Bank to or from
either DTC or NSCC.
(iii) Notwithstanding the foregoing, if any Common Settling Bank fails to pay its
Consolidated Settlement Debit Amount in full by the time specified in DTC and NSCC’s
procedures, then (i) if that bank has an NSCC Debit Amount, NSCC shall implement its
failure to settle procedures, and (ii) if that bank has a DTC Debit Amount, DTC shall
implement its failure to settle procedures.
(iv) Under FRB Operating Circular No. 12, DTC, as Settlement Agent, has certain
responsibilities in allocating an indemnity claim made by an FRB as a result of NSS. In
making such an allocation, NSCC and DTC will first apportion any such liability between
them (and their respective participants) in proportion to the amount of the net-net debit
due to each clearing agency by the Settling Bank to which the indemnity claim relates.
If that Settling Bank owed a debit to one and had a credit due from the other clearing
agency, then the entire indemnity amount will be allocated to the clearing agency to
which the Settling Bank owed the debit amount (and for which, via NSS, its FRB
account was debited) relating to the indemnity claim. NSCC and DTC will then further
allocate the FRB claim among their participants for whom the Settling Bank was then
acting. If for any reason such allocation is not sufficient to fully satisfy the FRB
indemnity claim, then the remaining loss will be allocated pro rata among all the
applicable clearing agency’s participants in the same manner as provided in NSCC’s
and DTC’s Rules with respect to a general (i.e., non-system related) loss.
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(PROCEDURE VIII)
5. Settlement Payment To Net-Net Credit Settling Bank
As soon as NSCC is advised by its Settlement Agent that settlement payments made by
Settling Banks with net-net debits have been received, and it has sufficient available
funds the Settlement Agent will begin to credit funds to Settling Banks with net-net
credits.
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(PROCEDURE IX)
PROCEDURE IX. SPECIAL SERVICES
A. Clearing Centers
The Corporation provides Clearing Centers in a number of cities for the convenience of
Members. Such offices may be operated by the Corporation, agents of the Corporation
or through the facilities of a correspondent organization.
Clearing Centers serve as input/output facilities for Members located near that office.
The use of a Clearing Center by any Member is voluntary and may be used for certain
services but not for others at the Member’s option.
Each Member is, however, required to select a primary Clearing Center. The
Corporation provides output records at the destination chosen by the Member. Physical
securities which are requested by a Member are directed to its primary Clearing Center.
B. Sponsored Accounts
For those Members which choose not to maintain direct membership in a Qualified
Securities Depository, the Corporation makes Qualified Securities Depository facilities
available through the use of Sponsored Accounts. Each such Member is assigned a
Qualified Securities Depository account number and uses that account as if it were a
direct depository participant. The account is under the jurisdiction of the Corporation,
however, which is solely responsible for all liabilities arising from the use of the account
including the payment of fees to the Qualified Securities Depository.
Members which choose to use Sponsored Accounts may deposit and withdraw
securities, receive and deliver securities by book-entry for CNS obligations, receive and
deliver securities by book-entry with other Qualified Securities Depository participants,
collateralize bank loans through the pledge of securities, and generally make use of all
services and facilities offered by the Qualified Securities Depository to its direct
participants.
At the discretion of the Corporation, all securities to be deposited in a Sponsored

Account and all depository input documents including deposit tickets, book-entry
delivery instructions, withdrawal tickets and collateral loan forms may be required to be
submitted by the Member to the Corporation. If submitted by the Member to the
Corporation, the Corporation may verify such items for accuracy and reasonableness
before submitting them to the Qualified Securities Depository for processing. The
Corporation may reject any item which, in its opinion, creates a liability inconsistent with
the Member’s normal level of business or financial capability.
All money settlement obligations in a Sponsored Account are settled directly between
the Corporation and the Qualified Securities Depository. The Corporation consolidates
the Member’s obligations from its Sponsored Account with its Settlement obligation and
effects a single money settlement representing the net of the two obligations.
279
(PROCEDURE X)
PROCEDURE X. EXECUTION OF BUY-INS
Equity Securities and Corporate Debt Securities
A Member who has transmitted a Buy-In Intent under Section J of Procedure VII (as
defined in Section 7 of Rule 11 as “the originator”) and has not received either all or a
portion of the Buy-In Position shown on its Buy-In Intent, may submit a Buy-In Order to
the Corporation on the expiration date of the Buy-In Intent (N+2 for an Original Buy-In
Intent, and N+1 on a Buy-In Retransmittal Notice), in such form and by such time as
determined by the Corporation.
An originator that does not submit a Buy-In Order by this time, may not submit a Buy-In
Execution pursuant to this Procedure, and it will be necessary for the originator to
recommence the buy-in process by submitting another Buy-In Intent to the Corporation,
as described in Section J of Procedure VII.
If an originator submits a Buy-In Order as provided for above, but does not submit a
Buy-In Execution pursuant to this Procedure, such that the Buy-In Order is not executed
on its expiration date, the Buy-In Order shall not be executed thereafter, and it will be
necessary for the originator to recommence the Buy-In process by submitting another
Buy-In Intent to the Corporation in order to have its Long Position bought-in.
An originator who has submitted a Buy-In Order as described above, and has still not
been allocated its Buy-In Position by the completion of the CNS allocation process in
the day cycle on that day, or has only been allocated a portion of such Buy-In Position
by that time, may execute the buy-in, as described below.
The Buy-In Order is executed by the originator in such marketplace and through such
agents as the originator shall elect, and such execution shall be subject to the relevant
rules of such marketplace. Upon completion of the buy-in execution, the originator shall
submit to the Corporation a Buy-In Execution, which shall include the position and price
of the buy-in execution in such form and within such time as determined by the
The Corporation does not validate the terms of the buy-in execution provided to it by the
originator. Any disputes between the originator and the Members with Buy-In Liability
shall be addressed between such parties away from the Corporation.
Members with Short Positions who receive CNS Retransmittal Notices and do not
satisfy them assume liability for the loss, if any, which occurs as a result of the buy-in
execution.11
1
If the originator transmits does not timely rescind a Buy-In Order, notwithstanding any agreements
that may have been entered into with Member(s) with Short Positions away from the Corporation,
such Member(s) with Short Positions shall remain liable for the executed buy-in.
280
(PROCEDURE X)
The execution of a buy-in is reported in the Miscellaneous Activity Report on the next
business day following the day such execution is reported to the Corporation.
281
(PROCEDURE XI)
PROCEDURE XI. FEES - SEE ADDENDUM A
282
(PROCEDURE XII)
PROCEDURE XII. TIME SCHEDULE
These Procedures state that the Corporation will receive and deliver information, data
and other items at specified times. The specified times may change from time to time.
Members may, upon request to the Corporation, obtain the time schedule then in effect.
The Corporation will notify Members of any change in the time schedule ten (10) days in
advance of the change.
283
(PROCEDURE XIII)
PROCEDURE XIII. DEFINITIONS
Clearing Center - A branch facility of the Corporation.
CNS Stock Record - The CNS System accounting of all CNS Securities owed to and by
the Corporation which operates on a perpetual inventory basis providing each Member
a single long or short position per CNS Security.
Contract - A Balance Order Contract or CNS Contract.
Contract List – Reports and/or output prepared by the Corporation showing compared
trades, uncompared trades and advisory data.
Contract Money - The unit price of the securities traded multiplied by the quantity of
securities traded or the stated value agreed to by both parties to the trade.
Current Market Value - The number of units of a security multiplied by the Current
Market Price per unit.
Current Position - The long or short position of a Member in the CNS Stock Record at
any time or, when the term is used in a report or statement to a Member, at the time the
report or statement is prepared.
Designated Depository - The Qualified Securities Depository designated by a Member.
ESS - The Envelope Settlement Service provided for under Section 1 of Rule 9.
IESS - The Intercity Envelope Settlement Service provided for under Section 2 of
Rule 9.
Non-Participant - A participant in a Qualified Clearing Agency who is not a Member.
NYSE - New York Stock Exchange LLC.
NYSE Alternext – NYSE Alternext US LLC.
OCC - The Options Clearing Corporation.
OTC - The over-the-counter securities market.
Primary Clearing Center - The Clearing Center designated as such by a Member.
Qualified Clearing Agency - A Registered Clearing Agency which has entered into an
agreement or agreements with the Corporation pursuant to which transactions
submitted to the Corporation or the Registered Clearing Agency may be transferred to
the other for comparison and/or settlement.
Real-time – The term “Real-time”, with respect to the submission of trade data to the
Corporation, means the submission of trade data on a trade-by-trade basis promptly
284
(PROCEDURE XIII)
after trade execution, in any format and by any communication method acceptable to
the Corporation.
Security - A cleared security.
SIAC - Securities Industry Automation Corporation
T - T denotes the day on which the trade occurred. T+1 is the next business day, and
so on. T+2 is normally the Settlement Date.
when-issued transaction - Typically, a transaction in a security which has occurred prior

to the issuance of such security and is determined to be a when-issued transaction by
the marketplace or exchange on which it trades.
when-distributed transaction - Typically, a transaction in a security which has occurred

prior to the initial distribution of such security and is determined to be a when-distributed
transaction by the marketplace or exchange on which it trades.
285
(PROCEDURE XIV)
PROCEDURE XIV. FORMS, MEDIA AND TECHNICAL SPECIFICATIONS
From time to time the Corporation may specify various forms which participants must
use to submit instructions and data to the Corporation and which the Corporation uses
to report transactions and information to participants. The information called for by such
forms may be submitted or received by use of a hard copy paper form or by such other
media as the Corporation shall from time to time permit. Submission of such
information on other media shall be made in accordance with specifications determined
from time to time by the Corporation.
The Corporation will notify participants of any change in such forms, media or
specifications ten (10) days in advance of the effective date of the change.
286
(PROCEDURE XV)
PROCEDURE XV. CLEARING FUND FORMULA AND OTHER MATTERS 1
Changes to this Procedure XV, as amended by File Nos. SR-NSCC-2020-003 and

SR-NSCC-2020-802 are available at dtcc.com/~/media/Files/Downloads/legal/rule-
filings/2020/NSCC/SR-NSCC-2020-003.pdf and
dtcc.com/~/media/Files/Downloads/legal/rule-filings/2020/NSCC/SR-NSCC-2020-
802.pdf, respectively. These changes have been approved and not objected to,
respectively, by the SEC, but are not yet implemented. These changes will be
implemented by February 28, 2021. The Corporation will issue an Important Notice
when these changes are implemented, and this legend will automatically be
removed from this Procedure XV.
I.(A) Clearing Fund Formula for Members
Each Member of the Corporation, except as otherwise provided in this Procedure, is

required to contribute to the Clearing Fund maintained by the Corporation an amount
calculated by the Corporation equal to:
(1) For CNS Transactions
(a) (i) The volatility of such Member’s net of unsettled Regular Way, When-
Issued and When-Distributed pending positions (i.e., net positions that have not
yet passed Settlement Date) and fail positions (i.e., net positions that did not
settle on Settlement Date), hereinafter collectively referred to as Net Unsettled
Positions, which shall be the highest resultant value among the following:
I. an estimation of volatility calculated in accordance with any

generally accepted portfolio volatility model including, but not limited to,
any margining formula employed by any other clearing agency registered
under Section 17A of the Securities Exchange Act of 1934, provided,
however, that not less than two standard deviations’ volatility shall be
calculated under any model chosen. Such calculation shall be made
utilizing (1) such assumptions and based on such historical data as the
Corporation deems reasonable and shall cover such range of historical
volatility as the Corporation from time to time deems appropriate; and
(2) each of the following estimations:
A. an exponentially-weighted moving average volatility estimation

using a decay factor of less than 1, and
B. an evenly-weighted volatility estimation using a look-back

period of not less than 253 days.
1
All calculations shall be performed daily or, if the Corporation deems it appropriate, on a more
frequent basis.
287
(PROCEDURE XV)
The higher of the two estimations described in (A) and (B) above, shall be
the “Core Parametric Estimation”.
In calculating these estimations of volatility, the Corporation shall include

an additional bid-ask spread risk charge measured by multiplying the
gross market value of each Net Unsettled Position by a basis point
charge, where the applicable basis point charge shall be reviewed at least
annually and shall be based on the following groups: (i) large and medium
capitalization equities, (ii) small capitalization equities, (iii) micro-
capitalization equities, and (iv) exchange traded products (“ETPs”).
II. if the absolute value of the largest non-index position in the portfolio
represents more than 30 percent of the value of the entire portfolio (the
“concentration threshold”), an amount determined by multiplying the gross
market value of such position by a percentage designated by the
Corporation, which percentage shall be not less than 10 percent. Such
percentage shall be determined by selecting the largest of the 1st and
99th percentiles of three-day returns of a composite set of equities, using
a look-back period of not less than 10 years that includes a one-year
stress period,2 and then rounding the result up to the nearest whole
percentage.
The concentration threshold would be no more than 30 percent, and would

be determined by the Corporation from time to time and calibrated based
on the portfolio’s backtesting results during a time period of not less than
the previous 12 months.
III. the sum of:
A. the net directional market value of the portfolio, which shall be

the absolute difference between the market value of the long
positions and the short positions in the portfolio, multiplied by
a percentage; such percentage shall be determined by the
Corporation based on a percentile of the annual historical
volatility levels of relevant equity indices (which shall be no
less than the historical minimum volatility of the indices), as
determined by the Corporation from time to time; and
B. the balanced market value of the portfolio, which shall be the

lowest corresponding market value of long positions and short
positions in the portfolio, multiplied by a percentage; such
percentage shall be a fraction of the percentage used in (A)
above, determined by the Corporation from time to time by
2
If the one-year stress period overlaps with the ten-year look-back, only the non-overlapping period will
be combined with the look-back window.
288
(PROCEDURE XV)
considering the model backtesting performance of the

applicable balanced portfolios.
(ii) The Corporation shall have the discretion to exclude from the calculations in
subsection (i) above Net Unsettled Positions in classes of securities whose
volatility is (x) less amenable to statistical analysis, such as OTC Bulletin Board
or Pink Sheet issues or issues trading below a designated dollar threshold (e.g.,
five dollars), or (y) amenable to generally accepted statistical analysis only in a
complex manner, other than municipal and corporate bonds. The amount of
Clearing Fund required with respect to such Net Unsettled Positions shall be
determined by multiplying the absolute value of such positions by a percentage
designated by the Corporation, which percentage shall be not less than 10% in
respect of the positions covered by subsection x of this paragraph and shall be
not less than 2% in respect of the positions covered by subsection y of this
paragraph. The Corporation shall exclude from the calculations in subsection (i)
above (A) municipal and corporate bonds, which are addressed in subsection (iii)
below, and (B) Family-Issued Securities, which are addressed in subsection (iv)
below.
(iii) The Corporation shall exclude from the calculations in subsection (i) above
Net Unsettled Positions in corporate and municipal bonds. The amount of
Clearing Fund required with respect to Net Unsettled Positions in corporate and
municipal bonds shall be determined by multiplying the absolute value of such
positions by a percentage designated by the Corporation, which shall be not less
than 2%, calculated as follows:
(A) Corporate bonds shall be categorized into groups according to the

bonds’ “remaining time to maturity” and credit rating. From time to time,
but not less frequently than annually, the Corporation shall establish for
each category of corporate bonds a percentage calculated using historical
market price volatility of a benchmark index. Such percentage shall be
based on (1) the historical returns of the applicable benchmark index; (2) a
pre-determined look-back period, which shall not be shorter than 10 years;
and (3) a pre-determined calibration percentile, which shall not be less
than 99%.
(B) Municipal bonds shall be grouped by “remaining time to maturity” and

credit rating, and municipal bonds that are rated BBB+ or lower, or that are
not rated, shall also be separately categorized by municipal sector. From
time to time, but not less frequently than annually, the Corporation shall
establish a percentage applicable to each grouping. Such percentage
shall be based on (1) the historical returns of applicable benchmark
indices, such as tenor-based indices (i.e., based on time to maturity),
municipal bond sector-based indices, and high-yield indices; (2) a pre-
determined look-back period, which shall not be shorter than 10 years;
than 99%. In extraordinary circumstances where the Corporation
289
(PROCEDURE XV)
determines that a certain municipality or issuer of municipal bonds

presents unique risks that are not captured by the grouping set forth
herein, NSCC may, in its discretion, apply the highest percentage being
applied to any municipal bond group pursuant to this subsection (B) to
municipal bonds issued by such municipality or issuer.
(iv) The Corporation shall exclude from the calculations in subsection (i) above
long Net Unsettled Positions in Family-Issued Securities. The amount of
Clearing Fund required with respect to long Net Unsettled Positions in Family-
Issued Securities shall be determined by multiplying the absolute value of such
positions by a percentage designated by the Corporation; such percentage shall
be (A) no less than 80% for long Net Unsettled Positions in fixed income
securities that are Family-Issued Securities, and (B) 100% for long Net Unsettled
Positions in equity securities that are Family-Issued Securities;
plus
(b) The net of each day’s difference between (x) the contract price of such
Member’s Regular Way, When-Issued and When-Distributed net positions for
transactions not submitted through the ID Net service that have not yet passed
Settlement Date and its fail positions, and (y) the Current Market Price for such
positions3 (such difference to be known as the “Regular Mark-to-Market”);
provided that: (i) the Corporation may, but shall not be required to, exclude from
this calculation any shares delivered by the Member in the night cycle to satisfy
all or any portion of a short position and (ii) that if the Member is an ID Net
Subscriber and if the value of the Regular Mark-to-Market as computed above is
a positive number, then the value of the Regular Mark-to-Market shall be zero;
plus
(c) If such Member is an ID Net Subscriber, the net of each day’s difference
between (x) the contract price of the net positions attributable to such Member’s
transactions submitted through the ID Net service, and (y) the Current Market
Price for such positions (such difference to be known as the “ID Net Mark-to-
Market”), provided that if the value of the ID Net Mark-to-Market as computed
above is a positive number, then the value of the ID Net Mark-to-Market shall be
zero;
plus
plus
(d) An additional payment (“special charge”) from Members in view of price

fluctuations in or volatility or lack of liquidity of any security. The Corporation
3
For fail positions, the contract price used for this purpose is the prior day’s Market Price.
290
(PROCEDURE XV)
shall make any such determination based on such factors as the Corporation
determines to be appropriate from time to time;
plus
(e) An amount that is calculated by multiplying the Current Market Value for such
Member’s aggregate CNS Fails Positions by (i) 5% for Members rated 1 through
4 on the Credit Risk Rating Matrix, (ii) 10% for Members rated 5 or 6 on the
Credit Risk Rating Matrix, or (iii) 20% for Members rated 7 on the Credit Risk
Rating Matrix;
plus
(f) a margin requirement differential component charge calculated as the sum of

the exponentially weighted moving average (“EWMA”) of the daily positive
changes over a 100-day look back period in the Member’s (i) Regular Mark-to-
Market component, (ii) ID Net Mark-to-Market component and (iii) volatility
component, times a multiplier calibrated based on backtesting results;
plus
(g) a coverage component charge calculated as the EWMA of the Member’s

daily backtesting coverage deficiency amount over a 100-day look back period;
the Member’s backtesting deficiency amount for each day is determined as the
difference between the simulated profit and loss on the Member’s portfolio and
the sum of the Member’s (i) volatility component, (ii) margin requirement
differential component and (iii) Illiquid Charge.
plus
(h) For Illiquid Positions, an amount (“Illiquid Charge”) equal to:
(1) for buy positions in sub-penny Illiquid Securities, the aggregate

shares in such positions multiplied by $0.01, or
(2) for sell positions,
(a) if the position has a Current Market Price equal to or below

$1.00, the product of the aggregate quantity of Illiquid Securities in
the position and either (i) the One Month High Price, or (ii) the
Current Market Price of the Illiquid Securities in the position
multiplied by a factor of between 2 and 10, based on the minimum
share price, which shall not be less than $0.01; and
(b) if the position has a Current Market Price that is greater than
291
(PROCEDURE XV)

rounded up to the next $0.50.
For purposes of (2)(a) and (b) above, in determining whether to use the
One Month High Price or the Current Market Price of the Illiquid Securities
in the Illiquid Position,
(A) if the share quantity in the Illiquid Position is less than

100 percent and greater than or equal to 25 percent
of the average daily volume (“ADV”), the calculation
shall use the lesser of the One Month High Price or
the Current Market Price of the Illiquid Securities
(rounded up to the next $0.50, if applicable); and
(B) if the share quantity in the Illiquid Position is greater

than or equal to 100 percent of the ADV, the
calculation shall use the greater of the One Month
High Price or the Current Market Price of the Illiquid
Securities (rounded up to the next $0.50, if
applicable).
Members that are not rated by the Credit Risk Rating Matrix are not subject to
the Illiquid Charge.
plus
(i) A Margin Liquidity Adjustment (“MLA”) charge shall apply to a Member’s Net
Unsettled Positions, other than long Net Unsettled Positions in Family-Issued
Securities.
For purposes of calculating this charge, Net Unsettled Positions shall be

categorized into the following asset groups: (1) equities (excluding Illiquid
Securities), (2) Illiquid Securities, (3) unit investment trusts (“UITs”), (4) municipal
bonds (including municipal bond ETPs), and (5) corporate bonds (including
corporate bond ETPs). The equities asset group shall be further segmented into
the following subgroups: (i) micro-capitalization equities, (ii) small capitalization
equities, (iii) medium capitalization equities, (iv) large capitalization equities, (v)
treasury ETPs, and (vi) all other ETPs.
The Corporation shall first calculate a measurement of market impact cost for Net
Unsettled Positions in each of the asset groups or subgroups, as described
below.
i. For Net Unsettled Positions in the market capitalization subgroups

of the equities asset group, by multiplying four components:
1. an impact cost coefficient that is a multiple of the one-day

market volatility of that subgroup,
292
(PROCEDURE XV)
2. the gross market value of the Net Unsettled Position in that

subgroup,
3. the square root of the gross market value of the Net

Unsettled Position in that subgroup in the portfolio measured
as a percentage of the average trading volume of that
subgroup, and
4. a measurement of the concentration of each Net Unsettled

Position in that subgroup.
ii. For Net Unsettled Positions in the Illiquid Securities, UIT, municipal
bond, and corporate bond asset groups and for Net Unsettled
Positions in the treasury ETP and other ETP subgroups of the
equities asset group, by multiplying three components:

market volatility of that asset group or subgroup,
2. the gross market value of the Net Unsettled Position in that

asset group or subgroup, and
3. the square root of the gross market value of the Net

Unsettled Position in that asset group or subgroup in the
portfolio measured as a percentage of the average trading
volume of that asset group or subgroup.
For each asset group and equities subgroup, the calculated market impact cost
shall be compared to a portion of the volatility charge applicable to Net Unsettled
Positions (as determined by Section I.(A)(1)(a) of this Procedure XV). If the ratio
of the calculated market impact cost to the portion of the volatility charge is
greater than a threshold, to be determined by the Corporation from time to time,
an MLA charge will be applicable to that asset group or subgroup. If the ratio of
these two amounts is equal to or less than the threshold, an MLA charge will not
be applicable to that asset group or subgroup.
All MLA charges for each of the equities subgroups shall be added together to
result in one MLA charge for the equities subgroup. All MLA charges for each of
the asset groups shall be added together to result in a total MLA charge.
The Corporation may apply a downward adjusting scaling factor to the total MLA
charge based on the ratio of calculated market impact cost to a portion of the
applicable volatility charge, where a higher ratio would trigger a larger downward
adjustment of the MLA charge and a lower ratio would trigger no downward
adjustment of the MLA charge.
293
(PROCEDURE XV)
(2) For Balance Order Transactions
(a) (i) The volatility of such Member’s net of unsettled Regular Way, When-
Issued and When-Distributed positions that have not yet passed Settlement
Date, hereinafter collectively referred to as Net Balance Order Unsettled
Positions, which shall be the highest resultant value among the following:
I. an estimation of volatility calculated in accordance with any

generally accepted portfolio volatility model, including, but not limited to,
any margining formula employed by any other clearing agency registered
under Section 17A of the Securities Exchange Act of 1934, provided,
however, that not less than two standard deviations’ volatility shall be
calculated under any model chosen. Such calculation shall be made
utilizing (1) such assumptions and based on such historical data as the
Corporation deems reasonable and shall cover such range of historical
volatility as the Corporation from time to time deems appropriate; and
(2) each of the following estimations:
A. an exponentially-weighted moving average volatility estimation

using a decay factor of less than 1, and
B. an evenly-weighted volatility estimation using a look-back

period of not less than 253 days.
The higher of the two estimations described in (A) and (B) above, shall be
the “Core Parametric Estimation”.
In calculating these estimations of volatility, the Corporation shall include

an additional bid-ask spread risk charge measured by multiplying the
gross market value of each Net Balance Order Unsettled Position by a
basis point charge, where the applicable basis point charge shall be
reviewed at least annually and shall be based on the following risk groups:
(i) large and medium capitalization equities, (ii) small capitalization
equities, (iii) micro-capitalization equities, and (iv) ETPs.
II. if the absolute value of the largest non-index position in the portfolio
represents more than 30 percent of the value of the entire portfolio (the
“concentration threshold”), an amount determined by multiplying the gross
market value of such position by a percentage designated by the
Corporation, which percentage shall be not less than 10 percent. Such
percentage shall be determined by selecting the largest of the 1st and
99th percentiles of three-day returns of a composite set of equities, using
a look-back period of not less than 10 years that includes a one-year
294
(PROCEDURE XV)
stress period,4 and then rounding the result up to the nearest whole
percentage.
The concentration threshold would be no more than 30 percent, and would

be determined by the Corporation from time to time and calibrated based
on the portfolio’s backtesting results during a time period of not less than
the previous 12 months.
III. the sum of:
A. the net directional market value of the portfolio, which shall be

the absolute difference between the market value of the long
positions and the short positions in the portfolio, multiplied by
a percentage; such percentage shall be determined by the
Corporation based on a percentile of the annual historical
volatility levels of relevant equity indices (which shall be no
less than the historical minimum volatility of the indices), as
determined by the Corporation from time to time; and
B. the balanced market value of the portfolio, which shall be the

lowest corresponding market value of long positions and short
positions in the portfolio, multiplied by a percentage; such
percentage shall be a fraction of the percentage used in (A)
above, determined by the Corporation from time to time by
considering the model backtesting performance of the
applicable balanced portfolios.
(ii) The Corporation shall have the discretion to exclude from the calculations in
subsection (i) above Net Balance Order Unsettled Positions in classes of
securities whose volatility is (x) less amenable to statistical analysis, such as
OTC Bulletin Board or Pink Sheet issues or issues trading below a designated
dollar threshold (e.g., five dollars), or (y) amenable to generally accepted
statistical analysis only in a complex manner, other than municipal and corporate
bonds. The amount of Clearing Fund required with respect to such Net Balance
Order Unsettled Positions shall be determined by multiplying the absolute value
of such positions by a percentage designated by the Corporation, which
percentage shall be not less than 10% in respect of the positions covered by
subsection x of this paragraph and shall be not less than 2% in respect of the
positions covered by subsection y of this paragraph. The Corporation shall
exclude from the calculations in subsection (i) above (A) municipal and corporate
bonds, which are addressed in subsection (iii) below, and (B) Family-Issued
Securities, which are addressed in subsection (iv) below.
4
If the one-year stress period overlaps with the ten-year look-back, only the non-overlapping period will
be combined with the look-back window.
295
(PROCEDURE XV)
(iii) The Corporation shall exclude from the calculations in subsection (i) above
Net Balance Order Unsettled Positions in corporate and municipal bonds. The
amount of Clearing Fund required with respect to Net Balance Order Unsettled
Positions in corporate and municipal bonds shall be determined by multiplying
the absolute value of such positions by a percentage designated by the
Corporation, which shall be not less than 2%, calculated as follows:
(A) Corporate bonds shall be categorized into groups according to the

bonds’ “remaining time to maturity” and credit rating. From time to time,
but not less frequently than annually, the Corporation shall establish for
each category of corporate bonds a percentage calculated using historical
market price volatility of a benchmark index. Such percentage shall be
based on (1) the historical returns of the applicable benchmark index; (2) a
pre-determined look-back period, which shall not be shorter than 10 years;
than 99%.
(B) Municipal bonds shall be grouped by “remaining time to maturity” and

credit rating, and municipal bonds that are rated BBB+ or lower, or that are
not rated, shall be separately categorized by municipal sector. From time
to time, but not less frequently than annually, the Corporation shall
establish a percentage applicable to each grouping. Such percentage
shall be based on (1) the historical returns of applicable benchmark
indices, such as tenor-based indices (i.e., based on time to maturity),
municipal bond sector-based indices, and high-yield indices; (2) a pre-
determined look-back period, which shall not be shorter than 10 years;
than 99%. In extraordinary circumstances where the Corporation
determines that a certain municipality or issuer of municipal bonds
presents unique risks that are not captured by the grouping set forth
herein, NSCC may, in its discretion, apply the highest percentage being
applied to any municipal bond group pursuant to this subsection (B) to
municipal bonds issued by such municipality or issuer.
(iv) The Corporation shall exclude from the calculations in subsection (i) above
long Net Balance Order Unsettled Positions in Family-Issued Securities. The
amount of Clearing Fund required with respect to long Net Balance Order
Unsettled Positions in Family-Issued Securities shall be determined by
multiplying the absolute value of such positions by a percentage designated by
the Corporation; such percentage shall be (A) no less than 80% for long Net
Balance Order Unsettled Positions in fixed income securities that are Family-
Issued Securities, and (B) 100% for long Net Balance Order Unsettled Positions
in equity securities that are Family-Issued Securities;
plus
296
(PROCEDURE XV)
(b) The net of each day’s difference between the contract price of such
Member’s Net Balance Order Unsettled Positions, and the Current Market Price
for such positions;
plus
(c) An additional payment (“special charge”) from Members in view of price

fluctuations in or volatility or lack of liquidity of any security. The Corporation
shall make any such determination based on such factors as the Corporation
determines to be appropriate from time to time;
plus
(d) a margin requirement differential component charge calculated as the sum of

the EWMA of the daily positive changes over a 100-day look back period in the
Member’s (i) Regular Mark-to-Market component and (ii) volatility component,
times a multiplier calibrated based on backtesting results;
plus
(e) a coverage component charge calculated as the EWMA of the Member’s

daily backtesting coverage deficiency amount over a 100-day look back period;
the Member’s backtesting deficiency amount for each day is determined as the
difference between the simulated profit and loss on the Member’s portfolio and
the sum of the Member’s (i) volatility component, (ii) margin requirement
differential component and (iii) Illiquid Charge.
plus
(f) For Illiquid Positions, an Illiquid Charge equal to:
(1) for buy positions in sub-penny Illiquid Securities, the aggregate

shares in such positions multiplied by $0.01, or
(2) for sell positions,
(a) if the position has a Current Market Price equal to or below

multiplied by a factor of between 2 and 10, based on the minimum
share price, which shall not be less than $0.01; and
(b) if the position has a Current Market Price that is greater than
rounded up to the next $0.50.
297
(PROCEDURE XV)
For purposes of (2)(a) and (b) above, in determining whether to use the
One Month High Price or the Current Market Price of the Illiquid Securities
in the Illiquid Position,
(A) if the share quantity in the Illiquid Position is less than

100 percent and greater than or equal to 25 percent
of the ADV, the calculation shall use the lesser of the
One Month High Price or the Current Market Price of
the Illiquid Securities (rounded up to the next $0.50, if
applicable); and
(B) if the share quantity in the Illiquid Position is greater

than or equal to 100 percent of the ADV, the
calculation shall use the greater of the One Month
High Price or the Current Market Price of the Illiquid
Securities (rounded up to the next $0.50, if
applicable).
Members that are not rated by the Credit Risk Rating Matrix are not subject to
the Illiquid Charge.
plus
(g) An MLA charge shall apply to a Member’s Net Balance Order Unsettled
Positions, other than long Net Balance Order Unsettled Positions in Family-
Issued Securities.
For purposes of calculating this charge, Net Balance Order Unsettled Positions
shall be categorized into the following asset groups: (1) equities (excluding
Illiquid Securities), (2) Illiquid Securities, (3) UITs, (4) municipal bonds (including
municipal bond ETPs), and (5) corporate bonds (including corporate bond ETPs).
The equities asset group shall be further segmented into the following
subgroups: (i) micro-capitalization equities, (ii) small capitalization equities, (iii)
medium capitalization equities, (iv) large capitalization equities, (v) treasury
ETPs, and (vi) all other ETPs.
The Corporation shall first calculate a measurement of market impact cost for Net
Balance Order Unsettled Positions in each of the asset groups or subgroups, as
described below.
i. For Net Balance Order Unsettled Positions in the market

capitalization subgroups of the equities asset group, by multiplying
four components:

market volatility of that subgroup,
298
(PROCEDURE XV)
2. the gross market value of the Net Balance Order Unsettled

Position in that subgroup,
3. the square root of the gross market value of the Net Balance
Order Unsettled Position in that subgroup in the portfolio
measured as a percentage of the average trading volume of
that subgroup, and
4. a measurement of the concentration of each Net Balance

Order Unsettled Position in that subgroup.
ii. For Net Balance Order Unsettled Positions in the Illiquid Securities,
UIT, municipal bond, and corporate bond asset groups and for Net
Balance Order Unsettled Positions in the treasury ETP and other
ETP subgroups of the equities asset group, by multiplying three
components:

market volatility of that asset group or subgroup,
2. the gross market value of the Net Balance Order Unsettled

Position in that asset group or subgroup, and
3. the square root of the gross market value of the Net Balance
Order Unsettled Position in that asset group or subgroup in
the portfolio measured as a percentage of the average
trading volume of that asset group or subgroup.
For each asset group and equities subgroup, the calculated market impact cost
shall be compared to a portion of the volatility charge applicable to Net Balance
Order Unsettled Positions (as determined by Section I.(A)(2)(a) of this Procedure
XV). If the ratio of the calculated market impact cost to the portion of the volatility
charge is greater than a threshold, to be determined by the Corporation from time
to time, an MLA charge will be applicable to that asset group or subgroup. If the
ratio of these two amounts is equal to or less than the threshold, an MLA charge
will not be applicable to that asset group or subgroup.
All MLA charges for each of the equities subgroups shall be added together to
result in one MLA charge for the equities subgroup. All MLA charges for each of
the asset groups shall be added together to result in a total MLA charge.
The Corporation may apply a downward adjusting scaling factor to the total MLA
charge based on the ratio of calculated market impact cost to a portion of the
applicable volatility charge, where a higher ratio would trigger a larger downward
adjustment of the MLA charge and a lower ratio would trigger no downward
adjustment of the MLA charge.
299
(PROCEDURE XV)
(3) For Other Transactions
The greater of (i) 2-1/2% of such Member’s average daily settlement debits and
credits other than CNS, Mutual Fund Services and Envelope Settlement Service
debits and credits and (ii) 5% of such Member’s average daily settlement debits
other than CNS, Mutual Fund Services and Envelope Settlement Service debits,
for other transactions (Other Transactions) as determined by the Corporation
from time to time, adjusted for broker/dealer Members by a factor that shall be
calculated as follows:
Average Daily Settlement Debits As Determined by the Corporation

Excess Net Capital
The factor calculation shall be adjusted in order to provide a minimum of one with
a maximum of three.
(4) For Mutual Fund Transactions
(a) $5,000 if such Member has daily Mutual Fund Services settlement debits of
no more than $100,000 with respect to any one Fund Member;
or
(b) $10,000 if such Member has daily Mutual Fund Services settlement debits of
no more than $500,000 with respect to any one Fund Member;
or
(c) $20,000 if such Member has daily Mutual Fund Services settlement debits of
more than $500,000 with respect to any one Fund Member.
I.(B) Additional Clearing Fund Formula
(1) Additional Deposits for Members on the Watch List
Any Member or Limited Member who is placed on the Watch List shall be required to
make such additional Clearing Fund deposits as determined by the Corporation on the
same day as requested by the Corporation within such timeframe as required by the
(2) Excess Capital Premium
If a Member’s contribution to the Clearing Fund, as computed pursuant to Section I.(A)

of this Procedure (but excluding any charges as set forth in Subsections I.(A)(1)(d), (f),
(g), and (i); and I.(A)(2)(c), (d), (e), and (g) of this Procedure), plus any amount collected
pursuant to 1.(B)(1) above or Rule 15 (such aggregate amount referred to as the
“Calculated Amount”), when divided by its excess net capital or capital (as applicable),
as defined in the membership standards set forth in Addendum B, is greater than 1.0
300
(PROCEDURE XV)
(the “Excess Capital Ratio”), then the Corporation may require such Member to deposit,
within such timeframe as the Corporation may require, an additional amount (the
“Excess Capital Premium”) to the Clearing Fund equal to the product of: (a) the amount
by which the Calculated Amount exceeds its excess net capital or capital (as
applicable), as defined in the membership standards set forth in Addendum B, multiplied
by (b) its Excess Capital Ratio.
Notwithstanding the foregoing, the Corporation may: (i) collect an amount less than the
Excess Capital Premium (including no premium), and (ii) return all or a portion of the
Excess Capital Premium if it believes that the imposition or maintenance of the Excess
Capital Premium is not necessary or appropriate. 5
(3) Backtesting Charge
The Corporation may require a Member to make an additional Clearing Fund deposit to
mitigate exposures to the Corporation caused by settlement risks that may not be
adequately captured by the Corporation’s portfolio volatility model (“Backtesting
Charge”). The Corporation may assess this charge both on the start of the day portfolio
(the “Regular Backtesting Charge”) or on an intraday basis (the “Intraday Backtesting
Charge”), as needed, to enable the Corporation to achieve its backtesting coverage
target. The Backtesting Charge may apply to Members that have 12-month trailing
backtesting coverage below the 99 percent backtesting coverage target. The Regular
Backtesting Charge and the Intraday Backtesting Charge shall generally be equal to the
Member’s third largest deficiency and fifth largest deficiency, respectively, that occurred
during the previous 12 months. The Corporation may in its discretion adjust such
charge if the Corporation determines that circumstances particular to a Member’s
settlement activity and/or market price volatility warrant a different approach to
determining or applying such charge in a manner consistent with achieving the
Corporation’s backtesting coverage target.
(4) Bank Holiday Charge
For purposes of this section, “Holiday” means any day on which equities markets are
open for trading, but the Board of Governors of the Federal Reserve System observes a
holiday and banks are closed.
On the business day prior to any Holiday, the Corporation may require each Member to
make an additional Clearing Fund deposit (“Bank Holiday Charge”). The Bank Holiday
5
The Corporation has identified the following guidelines or circumstances, which are intended to be
illustrative, but not limited, where the premium will not be imposed: (a) where the premium results
from charges applied with respect to municipal securities trades settling in CNS, where the member
has offsetting compared trades settling on a trade-for-trade basis through DTC; and (b) management
will look to see whether the premium results from an unusual or non-recurring circumstance where
management believes it would not be appropriate to assess the premium. Examples of such
circumstances are a member’s late submission of trade data for comparison or trade recording that
would otherwise reduce the margined position if timely submitted, or an unexpected haircut or capital
charge that does not fundamentally change its risk profile.
301
(PROCEDURE XV)
Charge approximates the exposure that a Member’s trading activity on the applicable
Holiday could pose to the Corporation. Since the Corporation cannot collect margin on
the Holiday, the Bank Holiday Charge is due on the business day prior to the applicable
Holiday.
The methodology for calculating a Bank Holiday Charge shall be determined by the
Corporation in advance of each applicable Holiday. The Bank Holiday Charge
approximates each Member’s Required Fund Deposit to address the exposure that
such Member’s trading activity on the Holiday could pose to the Corporation. The
Corporation shall have the discretion to calculate the Bank Holiday Charge based on its
assessment of market conditions at the time the Bank Holiday Charge is calculated
(such as, for example, significant market occurrences that could impact market price
volatility). The Corporation shall inform Members of the methodology it will use to
calculate the Bank Holiday Charge by an Important Notice issued no later than 10
business days prior to the day on which the applicable Bank Holiday Charge is applied.
Examples of potential methodologies for the Bank Holiday Charge may include, but
shall not be limited to, time scaling of the volatility charge or a stress scenario that
reflects potential market price volatility on the Holiday.
(5) Intraday Mark-to-Market Charge

The Corporation may also collect a payment on an intra-day basis that is calculated as
the difference between (x) the most recent mark-to-market price of a Member’s net CNS
and Balance Order positions (including its CNS failed positions) and (y) the most
recently observed market price for such positions if such difference meets or exceeds
80 percent of the Member’s volatility component. The Corporation may reduce such
threshold during volatile market conditions if the Corporation determines that a
reduction of the threshold is appropriate to mitigate risks to the Corporation by
accelerating the collection of anticipated additional margin from Members whose
portfolios may present relatively greater risks to the Corporation on an overnight basis.
I.(C) Clearing Fund Formula for Mutual Fund/Insurance Services Members who use the
Mutual Fund Services.6
Each Mutual Fund/Insurance Services Member is required to contribute to the Clearing
Fund maintained by the Corporation an amount, in cash, approximately equal to:
(a) $5,000 if the Mutual Fund/Insurance Services Member has daily Mutual Fund
Services settlement debits of no more than $100,000 with respect to any one
Fund Member;
or
6
This section applies to entities whose use of the Corporation’s services are restricted to the Mutual
Fund Services and/or the Insurance & Retirement Services. Entities which use or are permitted to
use Services other than or in addition to the Mutual Fund Services and Insurance & Retirement
Services are covered by section I.(A).
302
(PROCEDURE XV)
(b) $10,000 if the Mutual Fund/Insurance Services Member has daily Mutual
Fund Services settlement debits of no more than $500,000 with respect to any
one Fund Member;
or
(c) $20,000 if the Mutual Fund/Insurance Services Member has daily Mutual
Fund Services settlement debits of more than $500,000 with respect to any one
Fund Member.
I.(D) Clearing Fund Formula for Fund Members, Insurance Carrier/Retirement Services
Members and Certain Mutual Fund/Insurance Services Members
The Clearing Fund Formula for each Fund Member, Insurance Carrier/Retirement
Services Member and those Mutual Fund/Insurance Services Members who use the
Corporation’s Insurance & Retirement Services shall be established at such time as the
Corporation determines appropriate.
II. Minimum Clearing Fund and Additional Deposit Requirements
(A) Each Member of the Corporation shall be required to contribute a minimum of

$10,000 (the “minimum contribution”). The first 40% (but no less than $10,000)
of a Member’s Required Fund Deposit must be in cash and the remaining
amount, may be evidenced by open account indebtedness secured by the pledge
of Eligible Clearing Fund Securities, which shall be valued, for collateral
purposes, as set forth in subsection III below. A Mutual Fund/Insurance Services
Member’s entire deposit is required to be in cash.
1. Special Provisions Related to Eligible Clearing Fund Securities:
(a) Any deposits of Eligible Clearing Fund Agency Securities 7 or

Eligible Clearing Fund Mortgage-Backed Securities8, respectively,
in excess of 25 percent of the Member’s Required Fund Deposit will
be subject to an additional haircut equal to twice the percentage as
specified in the proposed haircut schedule detailed in subsection III
below, and
(b) No more than 20 percent of a Member’s Required Fund Deposit

secured by pledged Eligible Agency Securities may be of a single
issuer.
7
A Member that is an Agency may not pledge Eligible Clearing Fund Agency Securities of which it is
the issuer.
8
With regard to a Member that pledges Eligible Clearing Fund Mortgage-Backed Securities of which it
is the issuer, such securities will be subject to a premium haircut, as set forth in subsection III below.
303
(PROCEDURE XV)
(B) All Clearing Fund requirements and other deposit requirements shall be made by
Members and Mutual Fund/Insurance Services Members, within one hour of
demand unless otherwise determined by the Corporation; provided, however,
that to the extent the Member and Mutual Fund/Insurance Services Member is
meeting such obligation with a (1) deposit of cash, such deposit shall be made by
Federal Funds wire transfer and be received no later than fifteen minutes prior to
the close of the Federal Funds wire, and (2) delivery of eligible securities, such
delivery shall be received within the deadlines established by DTC. At the
discretion of the Corporation, cash deposits may be included as part of the
Member’s or Mutual Fund/Insurance Services Member’s, daily settlement
obligation.
(C) Additional Clearing Fund deposits shall not be requested unless they exceed
such threshold as determined by the Corporation from time to time; provided that
the affected Member or Limited Member is not on the Watch List.
(D) Where the amount of a Member’s and Mutual Fund/Insurance Services

Member’s deficiency is in excess of $1,000 but less than $5,000, the Corporation
may require payment in multiples of $1,000. Where the amount of the deficiency
is in excess of $5,000, the Corporation may require payment in multiples of
$5,000.
III. Collateral Value of Eligible Clearing Fund Securities
(A) Eligible Clearing Fund Securities pledged to secure Clearing Fund deposits shall,
for collateral valuation purposes, be haircut as follows, or as otherwise
determined by the Corporation from time to time:
Security Type Remaining Maturity Haircut
1. Treasury
Bills, Notes, Bonds, TIPS Zero to 1 year 2.0%
1 year to 2 years 2.0%
2 years to 5 years 3.0%
15 years or greater 6.0%
Zero Coupon Zero to 1 year 5.0%

304
(PROCEDURE XV)
2. Agency*
Notes, Bonds Zero to 1 year 7.0%
Zero Coupon Zero to 1 year 7.0%

3. Mortgage-Backed Security
Pass-Throughs* Ginnie Mae 7.0%
Fannie Mae/Freddie Mac 7.0%
Self-issued** 14% (or 21% if

Concentration limit
is exceeded)
*
Any deposits of Eligible Clearing Fund Agency Securities or Eligible Clearing Fund Mortgage-Backed
Securities in excess of 25 percent of a Member’s Required Clearing Fund deposit will be subject to a
haircut that is twice the amount of the percentage noted in the haircut schedule. Eligibility
requirements will be announced by the Corporation from time to time.
**
A Member may deposit Eligible Clearing Fund Mortgage-Backed Securities of which it is the issuer,
however such securities will be subject to a premium haircut. This haircut shall be 14% as an initial
matter. If a Member also exceeds the 25% concentration limit, the haircut shall be 21%.
305
(PROCEDURE XVI)
PROCEDURE XVI. ID NET SERVICE
The ID Net Service utilizes the settlement and delivery services operated by a
Qualified Securities Depository for input and affirmation purposes related to transactions
qualifying for the ID Net Service as set forth in Rule 65. Certain transactions which are
between an ID Net Subscriber and a participant of the Qualified Securities Depository
are affirmed through: (i) a Registered Clearing Agency, (ii) other entities which have
obtained an exemption from such registration from the Commission, or (iii) Qualified
Vendors as defined in the rules of the New York Stock Exchange, the National
Association of Securities Dealers, or other self-regulatory organizations, as applicable,
(an “Affirming Agency”) in accordance with the applicable procedures of the Affirming
Agency and then confirmed by such Affirming Agency as eligible for processing in the
ID Net Service. If the transaction is affirmed and eligible for processing in the ID Net
Service, such Affirming Agency then forwards the appropriate delivery instructions to
the Qualified Securities Depository, which facilitates the movement of the transaction to
an account at the Qualified Securities Depository maintained by the Corporation as
agent on behalf of the ID Net Subscriber (the “ID Netting Subscriber Deliver Account”).
The transaction is then entered into the CNS Accounting Operation on the evening prior
to Settlement Date by the Corporation on behalf of the ID Net Subscriber. On the night
prior to Settlement Date, the ID Net Subscriber’s CNS position, if any, will be updated
for the quantity and value of the transaction versus creating an open obligation in the ID
Netting Subscriber Deliver Account. For transactions in which the ID Net Subscriber is
delivering securities to a participant at the Qualified Securities Depository, the ID Net
Subscriber’s position in the CNS Accounting Operation, if any, will be updated for the
quantity and value of the transaction versus creating an open obligation in an agency
account established for this purpose at the Qualified Securities Depository by the
Corporation on behalf of the ID Net Subscriber (the “ID Netting Subscriber Receive
Account”). Once the securities are credited to this account, the securities will be
delivered to the appropriate participant account at the Qualified Securities Depository.
The ID Net Subscriber’s counterparty settles transactions in the ID Net Service

through the depository against the ID Netting Subscriber Deliver Account or the ID
Netting Subscriber Receive Account, respectively, depending on whether it is delivering
or receiving shares from the ID Net Subscriber.
If for any reason the full amount of the Eligible ID Net Securities for any ID Net
transaction entered into the CNS Accounting Operation with respect to a particular
transaction are not delivered to the Corporation prior to the cut-off time established by
the Corporation from time to time or if before such cut-off time the securities delivered to
the Corporation with respect to a particular transaction pursuant to this Procedure XVI
no longer qualify as Eligible ID Net Securities the Corporation will make the following
entries in order to remove the transaction from the ID Net Service and the CNS
Accounting Operation, leaving the ID Net Subscriber and its counterparty to complete
(or terminate) the original trade: (i) the Corporation will create an offsetting position in
the ID Netting Receive Account versus the ID Net Subscriber position for the failed
delivery in order to “return” the securities to the CNS Accounting Operation for normal
allocation processing (pursuant to Section E.4. of Procedure VII), and (ii) the
306
(PROCEDURE XVI)
Corporation will post a long position to the ID Net Subscriber in the CNS Accounting
Operation.
With respect to a particular transaction in the ID Net Service, in the event (i) a
participant of the Qualified Securities Depository fails to deliver to the ID Netting
Subscriber Deliver Account, and this failure to deliver is allocated pursuant to Section
E.4. of Procedure VII to a Member other than the appropriate ID Net Subscriber, or (ii)
securities are returned to the Corporation after a cut-off time established by the
Corporation from time to time due to a failure of delivery from a ID Netting Subscriber
Receive Account to a participant of the Qualified Securities Depository, then the
Corporation shall post appropriate offsetting positions in order to exit the transaction
from the ID Net Service.
307
(PROCEDURE XVII)
PROCEDURE XVII. DTCC LIMIT MONITORING PROCEDURE
A. Introduction
DTCC Limit Monitoring is a risk management tool available to Members as

provided in Rule 54 and this Procedure.
Members required to register for DTCC Limit Monitoring include: (1) any NSCC
full service Member that clears trades for others; (2) any NSCC full service
Member that submits transactions to NSCC’s trade capture system either as a
Qualified Special Representative (QSR) or Special Representative, pursuant to
Procedure IV (Special Representative Service); and (3) any NSCC full service
Member that has established a 9A/9B relationship in order to allow another
NSCC Member (either a QSR or Special Representative) to submit locked in
trade data on its behalf.
Members registered for DTCC Limit Monitoring are required to create Risk
Entities (as defined in Rule 54 and more fully described below) and other
parameters that: (1) define the rules for the aggregation of trade data, (2) set
parameters for the monitoring of each Risk Entities’ activity in relation to such
data, and (3) trigger alerts to Members of parameter breaks.
B. DTCC Limit Monitoring Processing
1. Data Capture and Member Input
a. Data Capture
On each trade date, the Corporation may, within timeframes it may establish from
time to time, populate DTCC Limit Monitoring with LM Trade Date Data which
has been compared or recorded through trade capture mechanisms as it
determines from time to time.1
b. Member Input
Members may, in their sole discretion, input or load LM Member-provided Data to

DTCC Limit Monitoring. Such data shall be submitted by Members within such
timeframes as determined by the Corporation from time to time and in format(s)
deemed acceptable by the Corporation.
1
Such mechanisms include all new settling trades including trades compared and/or recorded by the
Real-Time Trade Matching service and the Universal Trade Capture system. Transaction details
submitted to the Obligation Warehouse are not forwarded to DTCC Limit Monitoring.
308
(PROCEDURE XVII)
2. Establishing Risk Entities
Within timeframes as permitted by the Corporation from time to time, Members

that are registered for DTCC Limit Monitoring shall establish Risk Entities.
Members shall define Risk Entities utilizing strings of data elements (referred to
as “trade arrays”) according to categories established for this purpose by the
Corporation from time to time. Members may utilize multiple trade arrays in the
definition of a single Risk Entity. Examples of data elements that a Member may
select to be included in a trade array are clearing broker account number (i.e.,
the Member’s own main account or sub-account number(s)), executing broker
symbol, market, and other identifying details as the Corporation may permit.
3. Processing
LM Transaction Data for each Member shall be aggregated and sorted by the
Corporation by Risk Entity and made available to that Member at the Member’s
own convenience. Intraday allocations in the settlement system are not taken
into consideration as they are not effective until the Effective Time (as defined in
Rule 12). LM Transaction Data may include values on a net notional basis, and
as calculated on other bases as determined by the Corporation from time to time.
LM Trade Date Data shall be carried at contract amount unless the Corporation
otherwise has added a pricing methodology for the relevant security, and LM
Member-provided Data shall include pricing as provided by the applicable
Member.
4. Parameter Breach Warnings
Members registered for DTCC Limit Monitoring are required to designate

parameters to associate with each Risk Entity from certain parameter types that
are established or permitted by the Corporation from time to time. DTCC Limit
Monitoring then sets “early warning” limits at 75% and 90% of the parameters set
by Members for each Risk Entity.
Members shall review reports and alerts on an on-going basis and, as necessary,
modify established parameters to reflect current trading activities within each of
their Risk Entities. While Members are ultimately responsible for ensuring that
the parameters set on trading activity are appropriate, NSCC staff may, in its sole
discretion, review trade activity reports and alerts, and may contact Members to
discuss any concerns if, for example, the parameters set are not aligned with
recent average trading activity.
The Corporation maintains totals of the relevant information which it compares to

the designated parameters. The identification of an early warning or parameter
breach triggers an alert by the Corporation to the Member. An alert shall be
issued within such timeframe as the Corporation deems reasonable and
necessary for it to process, validate, and report the relevant data or information.
309
(PROCEDURE XVII)
5. End of Day and Monthly Reporting
The Corporation may provide Members end of day and monthly reports, which
include Members’ current Risk Entity definitions, alert history, and other data or
information as the Corporation determines to make available from time to time.
6. Contacts for DTCC Limit Monitoring
Members are required to identify primary and secondary contacts within their firm
for DTCC Limit Monitoring.
310
(PROCEDURE XVIII)
PROCEDURE XVIII. ACATS SETTLEMENT ACCOUNTING OPERATION
The ACATS Settlement Accounting Operation provides settlement efficiencies for

eligible transactions as it may reduce the number of ACATS transactions a Member
may be obligated to settle on a given day, as applicable.
Items shall be eligible for processing by the ACATS Settlement Accounting Operation
that are: (i) staged for settlement processing in accordance with Rule 50 and are (ii): (a)
CNS-eligible items, or (b) otherwise eligible for DTC settlement services, unless such a
transaction is: (1) otherwise determined by the Corporation at its discretion to be
ineligible for the ACATS Settlement Accounting Operation, or (2) subject to a corporate
reorganization.
For items eligible for the ACATS Settlement Accounting Operation, the Corporation will
aggregate the receive and deliver instructions so that a Member will have only one
aggregate receive obligation and one aggregate deliver obligation on ACATS
Settlement Date in the given security processed into separate subaccounts established
with the Corporation for this purpose.
If on ACATS Settlement Date, a transaction within the ACATS Settlement Accounting

Operation is no longer eligible for processing by the ACATS Settlement Accounting
Operation, the transaction will be exited from the accounting system and instructions will
be issued to the Members to the transaction to settle directly among themselves. The
Corporation will debit and credit the Members’ settlement accounts as appropriate for
the value of the applicable items. The actual delivery and corresponding money
settlement of the underlying assets, regardless of whether a Member’s account has
been debited or credited pursuant to this subsection, shall be the responsibility of the
applicable Members and, to the extent applicable, shall be pursuant to the rules of the
Member’s DEA.
For transactions within the ACATS Settlement Accounting Operation on ACATS

Settlement Date, the Corporation will send an Instruction File to the Qualified Securities
Depository specifying the securities to be delivered and/or received, in each case
pursuant to the standing instructions filed with the Corporation by the Delivering
Member. Such deliveries and receives will be updated to the applicable subaccounts of
the Member established with the Corporation for this purpose.
At end of day on Settlement Date, any uncompleted transaction that is CNS eligible will
be entered into the CNS General Accounting process made pursuant to Rule 11.1 For
any uncompleted transaction that is not CNS eligible, the Corporation will issue
instructions to the Members to the transaction to settle directly with one another and the
transaction may be entered into the Obligation Warehouse in accordance with Rule 51
1
Any such transaction will become guaranteed on settlement day after the Member has paid their final
money settlement to NSCC and the transaction is entered into the CNS Accounting Operation. If the
Member has not paid final money settlement, the transactions will be reversed in accordance with the
provisions of Rule 18 and Rule 50.
311
(PROCEDURE XVIII)
and Procedure II.A. Additionally, the Corporation will debit and credit the Member’s
settlement account for the value of the applicable items. The actual delivery and
corresponding money settlement of the underlying assets, regardless of whether a
Member’s account has been debited pursuant to this subsection, shall be the
responsibility of the appropriate Member and, to the extent applicable, shall be pursuant
to the rules of the Member’s DEA. If a Member fails to make a delivery, such failure, to
the extent applicable, shall be subject to the rules of the Member’s DEA and not the
Rules of the Corporation.
Exemptions and Exemption Overrides
Except as described below, each Member has the ability to elect to deliver all or part of
any short position. It controls this process by establishing a “Level 1” Exemption. By
indicating a particular quantity as an Exemption, the Member directs the Corporation not
to settle certain short positions or portions thereof. Exemptions govern short positions
in this ACATS Settlement Accounting Operation and not Designated Depository
positions. All short positions or positions thereof for which no Exemption is indicated
are settled automatically to the extent that the Member has made such securities
available in the Member’s Designated Depository account or they become available in
its Designated Depository account through other depository activity.
By submitting a Level 1 Exemption, the Member indicates that the portion of the short
position exempted should not be automatically settled against its current Designated
Depository position or against any securities which may be received into its Designated
Depository account as a result of other depository activity.
With respect to same day settling transactions, Members may select a standing
Exemption override to permit all such short positions to be delivered. Additionally,
during the daytime cycle, a Member may override same day exemption entered by the
Member the previous evening. To do so, the Member should prepare a Delivery Order
(DO) and submit it to its Designated Depository in the normal manner. If the
Designated Depository is DTC, the receiving Member must be designated as 8902.
The securities designated to be delivered on the DO are applied to any quantity covered
by a Level 1 Exemption and the One Day Settling Exemption. If there is still a
remaining quantity, that quantity is not processed.
Allocation of ACATS Deliveries and Receives
After securities are received by the Corporation from Members with short ACATS
positions, they are allocated to other Members which have long ACATS positions. The
allocation of these securities is governed by an algorithm as formulated by the
Corporation from time to time as to not to benefit any one Member.
Transfers of securities from a Member’s account at the Member’s Designated

Depository to NSCC will be deemed by the Corporation to satisfy a Member’s ACATS
deliver obligation prior to any CNS-related obligation of the Member in the same
312
(PROCEDURE XVIII)
security. This information shall be provided to the Member’s Designated Depository to

facilitate processing in accordance with the Designated Depository’s procedures.
Reporting
Final accounting reports in relation to the ACATS Settlement Accounting Operation shall
be made in conjunction with the CNS Accounting Summary provided for under
Procedure XVII. The inclusion of reporting of the accounting summary for the ACATS
Settlement Accounting Operation in conjunction with the CNS Accounting Summary has
no effect on the status of the reported ACATS transactions as non-guaranteed.
313
(ADDENDUM A)
ADDENDUM A
NATIONAL SECURITIES CLEARING CORPORATION
FEE STRUCTURE
I. TRADE COMPARISON AND RECORDING SERVICE FEES - represents the

fees to enter and correct original trade data.
A. Trade Comparison:
1. Each side of each bond trade submitted - $0.85 per side.
B. Trade Correction Fees:1
1. Listed Equity System Correction Fees:
Suggested Name Deletes submitted to the Corporation directly by

participants on T+1 - $0.40 to both sides.
2. Bond Correction Fees:
All supplemental input after T (Advisory, As Of, Reversal): $0.95 to the

submitter
C. Trade recording fees will be charged as follows on those items originally

compared by other parties, but cleared through the Corporation2:
1. Each side of each bond item entered for settlement, but not compared by
the Corporation - $0.85 per side.
2. Each side of a foreign security trade entered for settlement, but not
compared by the Corporation - $0.85 per side.
D. OBLIGATION WAREHOUSE
1. Warehouse Fee for each compared item $0.02
2. Matching Fee for each submission $0.85
3. Fee for each pending comparison advisory aged 5 days

or more $5.50
1
Trade Submission Fees (see I.A. above) will be charged in addition to the Trade Correction Fees
detailed in I.B. Trade Correction Fees will not be applied on OCS, IDC and ACT input.
2
Trade recording fees for equities are incorporated into the Clearance Activity Fee set forth in II.A.
below.
314
(ADDENDUM A)
4. Fee to apply mandatory corporate action events to

compared obligations warehoused in Obligation Warehouse $2.50
5. Fee for OW delivery notification request advisories aged

2 days or older $2.50
6. Fee for OW pending cancel request advisories aged

2 days or older $2.50
7. Fee for each obligation closed due to Envelope Settlement

Service (ESS) (charged per obligation side) $0.35
E. Index Receipts
Index Creation and Redemption Units - each side of each Index Creation
and Redemption instruction submitted – $35 per side.
II. TRADE CLEARANCE FEES - represents fees for trade recording, netting,
issuance of instructions to receive or deliver, effecting book-entry deliveries, and
related activity.
A. Clearance Activity Fee – The sum of: (a) a “value into the net” fee of $0.47 per
million of processed value (i.e. for CNS and Balance Order netting, the sum of
the contract amount and any CNS fail value), plus (b) a “value out of the net” fee
of $2.56 per million of settling value (i.e. the absolute value of the CNS Long and
Short Positions).
B. Fails to Deliver to CNS (Short-In CNS) –
1. $0.25 per item short in CNS for 1 to 30 days at close of business.
2. $3.00 per item short in CNS for more than 30 days at close of business.
C. Security orders generated3 - $0.40 per item.
D. CNS Buy-In (long Broker and short Broker) - $5.00 per item.
E. Clearing Interface Exemption or Inclusion Instruction to the Corporation - $0.75

per item.
3
A security order, or non-CNS settling item, is an instruction to deliver or receive securities outside of
the CNS system. These instructions will be generated when cleared securities are not eligible for
CNS or when both parties to a transaction wish to settle in this manner. Security orders may be
issued on an item-by-item basis or netted through balance order procedures.
315
(ADDENDUM A)
F. Reorganizations
1. Mandatory Reorganizations - $2.50 each
2. Voluntary Reorganizations –
a. Long Broker (per input submitted on $15.00 each

the business day prior to the protect
expiration date or, when there is no
protect period, the business day prior
to the expiration date)
Automated Input
b. Long Broker (per input or add $500.00 each

submitted on the protect expiration
date or, when there is no protect
period, on the expiration date)
c. Short Broker (per reorganization) $35.00 each
G. Dividends
CNS Stock Dividend, Cash Dividend, and Interest Payment (Long & Short) -
$1.85 per item
III. DELIVERY SERVICE FEES
A. Envelope Settlement Service:
ESS Deliveries or Receives4 $10.00 per envelope
B. New York State Transfer Taxes $175.00 per month
IV. OTHER SERVICE FEES
A. Reorganizations $10.00 per item
B. Non-CNS Buy-ins $10.00 per item
C. Check and Draft processing $165.00 per month
4
This fee applies to all ESS deliveries and receives (including intercity).
316
(ADDENDUM A)
D. Reconciliation and Proof of

Settlement $100.00 per month
E. Processing Daily Settlement $1.00 per item

activity entered on Settlement (minimum $25.00;
Statement maximum $250.00 per
month)
F. Automated Customer Account

Transfer Service
1. Account Transfers $0.50 per transfer initiation
2. Recording
Asset Receives $0.06 per asset which is received

by the receiving firm
3. Non-CNS Receive/Deliver Orders $0.12 per order issued
G. Fund/SERV®
1. Membership Fee: $50.00 per month

for each participating Member, Mutual
Fund/Insurance Services Member and Fund
Member regardless of activity level
2. Transaction Fee: $0.06 per side per order or

transfer request settling through
the Corporation
H. Networking7
1. Membership Fee: $200.00 per month

for each participating Member, Mutual
Fund/Insurance Services Member and Fund
Member regardless of activity level
2. Activity Fee (all types except for Networking $0.001 per record
Omnibus Activity Position Files (Omni/SERV))
3. Networking Omnibus Activity/Position Files $1,500.00 monthly file fee for

(Omni/SERV) omnibus file transmissions
317
(ADDENDUM A)
I. DTCC Payment aXis7
1. Commission & Fee Settlement
a. Membership Fee $50.00 per month
b. Transaction Fees
i. For the first 500,000 records $0.30 per hundred records, $50
submitted each month minimum
ii. For each record in excess of $0.20 per hundred records

500,000, but not
exceeding1,000,000 submitted each
month
iii. For each record in excess $0.10 per hundred records

of1,000,000 submitted each month
2. Invoicing & Fee Settlement
a. Membership Fee $500.00 per month
b. Transaction Fees (excluding Detail

Records):
i. For the first 500,000 records $0.10 per record

submitted each month
ii. For each record in excess of $0.08 per record

500,000, but not
exceeding1,000,000 submitted each
month
iii. For each record in excess of $0.06 per record

1,000,000 submitted each month
c. Detail Record Fees
i. For the first 500,000 records $0.30 per hundred records

submitted each month
ii. For each record in excess of $0.20 per hundred records

500,000, but not exceeding
iii. For each record in excess of $0.10 per hundred records

318
(ADDENDUM A)
J. Profile
a. Phase I (price and rate) only $325.00 per month
b. Phases I and II $1,250.00 per month 5
K. Insurance & Retirement Services6, 7
1. Membership Fee $250.00 per month (will be

waived if aggregate Transaction
and Other Service Fees in such
month equal or exceed $250.00)
2. Transaction Fees
a. (i) Positions (Full, New and Retirement

Plans)
• From 0 to 500,000 items/month $6.00 per 1,000 items
• From 500,001 to 2,000,000 items/month $3.50 per 1,000 items
5
Users of Profile II with 25 or fewer funds in their family will receive a $1,000.00 credit per month
against the base $1,250.00 per month fee. Thus, the net fee for fund families which meet this
criterion will be $250.00 per month.
6
Unless otherwise noted, all Insurance & Retirement Services transaction fees are per side, and both
sides are charged for each item. Volume is calculated on an aggregate basis among qualified carrier
members or qualified distributor members, as applicable.
Multiple destination fees apply. Participants directing NSCC to deliver Insurance & Retirement
Service files to more than two (2) destinations will be charged an additional monthly fee, per product,
as follows: (i) Participants directing NSCC to deliver Insurance & Retirement Service files to three (3),
four (4) or five (5) destinations will be charged an additional $50 per month, per product; and
(ii) Participants directing NSCC to deliver Insurance & Retirement Service files to more than five (5)
destinations will be charged an additional $100 per month, per product.
7
Extraordinary Event Pricing: if arranged in advance with NSCC, a Participant may qualify for a credit
on transaction fees incurred due to extraordinary events such as mergers or mass reconciliations that
generate unusually high transaction volume for a limited duration. With respect to transaction types
for which the participant has no history of prior usage, the credit is in the amount of 85% of the
transaction fees chargeable in respect of the transaction type, with an additional credit in the amount
of 5% if the participant continues use of the transaction type after the event. With respect to
transaction types for which the participant has a history of prior usage, the credit is in an amount
sufficient to produce an aggregate fee for the transaction type that is no more than 120% of the
average amount charged to the participant in respect of such transactions in the prior three months.
319
(ADDENDUM A)
• From 2,000,001 to 4,000,000 $3.00 per 1,000 items

items/month
• For 4,000,001 or more items/month $1.25 per 1,000 items
(ii) Positions (Focused)
• From 500,001 to 2,000,000 items/month $1.50 per 1,000 items
• From 2,000,001 to 4,000,000 $1.00 per 1,000 items

items/month
• For 4,000,001 or more items/month $0.50 per 1,000 items
b. Asset Pricing
• From 50,000 to 249,999 items/month $0.65 per 1,000 items
• More than 999,999 items/month $0.45 per 1,000 items
c. Commissions
• From 0 to 999 items/month $40.00 per 1,000 items
• More than 29,999 items/month $25.00 per 1,000 items
d. Initial Application Information (APP) 8
• From 0 to 1,999 items/month $1.50 per item
• From 2,000 to 3,499 items/month $1.00 per item
• More than 3,499 items/month $0.50 per item
8
Each initial application with a new business attachment will be subject to a $0.25 discount.
320
(ADDENDUM A)
e. Subsequent Activity (SUB) $0.50 per item
f. Financial Activity Report (FAR) $0.05 per zero to 100,000 items
$0.04 per 100,001 to 150,000

items
$0.03 per 150,001 to 200,000

items
$0.02 per 200,001 or greater

items
Subaccount Data access (for each $2,500.00 per month

participating asset manager)
g. Settlement Processing for Insurance
• 0 to 20,000 items/month $0.65 (per transaction / per side)
• 20,001 to 30,000 items/month $0.35 (per transaction / per side)
• 30,001 to 40,000 items/month $0.25 (per transaction / per side)
• More than 40,000 items/month $0.15 (per transaction / per side)
h. Producer Management Portal
1. Distributor Batch Service Fees $6,000 per month
2. Distributor Subscription Fee $1.25 per inquiry, $6,000

maximum per month
3. For Insurance Company providers of producer training completions
Band Number of Active Monthly Fee

Producers Managed
1 0-999 $0
2 1,000-9,999 $1,000
3 10,000-49,999 $3,000
4 50,000-99,999 $4,000
5 100,000-249,999 $5,000
6 250,000 + $5,000, plus $0.018 per active producer
managed
321
(ADDENDUM A)
i. Insurance Profile
(1) Insurance Carrier/Retirement Services Members
Subscription Monthly Fee
Full Data Subscription $3,000
Limited Data Subscription $1,500
(2) Members, Mutual Fund/Insurance Services Members

and Data Services Only Members
Subscription Monthly Fee
Full Data Subscription $3,000
Limited Data Subscription $1,500
Full Data Subscription $500, plus $1.25

(User Web Interface Only) per CUSIP download
transaction charge
Limited Data Subscription $250, plus $1.25

(User Web Interface Only) per CUSIP download
transaction charge
322
(ADDENDUM A)
j. Insurance Information Exchange (IIEX)
IIEX Fees for Members and Limited Members
Monthly subscription fee based on the number of policies that the Member,
Mutual Fund/Insurance Services Member, Insurance Carrier/Retirement
Services Member or Data Services Only Member, as applicable, would be
entitled to access from the IIEX data repository as follows:
Number of Policies Monthly Fee
0 – 50,000 $1,500
50,001 – 200,000 $2,000
200,001 – 400,000 $3,000
Greater than 400,000 $5,000
IIEX Fees for Service Providers (APIs only)
Monthly subscription fee based on the number of policies that the service
provider would be entitled to access from the IIEX data repository as follows:
Number of Policies Monthly Fee
0 – 50,000 $750
50,001 – 200,000 $1,000
200,001 – 400,000 $1,500
Greater than 400,000 $2,500
3. Other Service Fees
TIER FEE PRODUCT/SERVICE
TIER 1 $0.05 All Attachments (per attachment, per side)-
TIER 2 $0.15 Licensing and Appointments (L&A) Periodic

Reconciliation (per item)
323
(ADDENDUM A)
TIER 3 $0.35 Licensing and Appointments (L&A) Transaction (per

item)
Registered Representative Change Confirm (per

transaction, per side)
Registered Representative Change Request (per

Brokerage Identification Number Change Request

(per transaction, per side)
Brokerage Identification Number Change Confirm (per

Values Inquiry (per inquiry, per side)*
Policy Administration inquiry (per inquiry, per side)*
TIER 4 $0.65 Customer Account Transfer Output (per transaction,

charged to Insurance Carrier/Retirement Services
Member only)
Customer Account Transfer Confirm (per transaction,

per side)
Request for Replacement Status (a/k/a Pending Case

Status) – Receiving Carrier (per Request for
Replacement Status)
Request for Replacement Status (a/k/a Pending Case

Status) – Deliverer (per Request for Replacement
Status)
Time Expired Transaction (per transaction, per side)
Request for Replacement - Delivering Carrier (per

request)
Request for Replacement - Receiving Carrier (per

request)
Producer Management Portal (per inquiry)
Policy Administration Request (per request, per side)*
Death Notification Request (per request, per side)*
324
(ADDENDUM A)
Fund Transfer (per request, per side)*
Withdrawals (per request, per side)*
Arrangements (per request, per side)*
* For the transactions identified above with an asterisk (*) (“IFT Transactions”), entities must pay a minimum
monthly fee based on the chosen threshold level as set forth in the *IN FORCE TRANSACTIONS CHART
below. For a participant that has chosen Level 2, Level 3 or Level 4 for a month, when the transaction fees for
such month for IFT Transactions exceed the minimum monthly fee for such threshold level, the transaction fees
above the minimum monthly fee amount will be discounted at the rate specified for such threshold level as
reflected in the *IN FORCE TRANSACTIONS CHART below.
*IN FORCE TRANSACTIONS CHART
DISCOUNT FOR
MINIMUM MONTHLY TRANSACTIONS AFTER FEES
THRESHOLD LEVEL
FEE EXCEED MINIMUM MONTHLY
FEE AMOUNT
No Discount
Level 1 $250 (pay base price of $0.65/$0.35
for Requests/Inquiries)
Level 2 $500 5%
Level 3 $1,000 10%
Level 4 $3,000 20%
L. Global Clearance Network Service
1. Instruction Processing Fees
a. Receipt of transaction instructions $2.25 per item

from a Member via CPU/CPU or
I.P.C.
325
(ADDENDUM A)
b. Rejects - each instruction $.75 per item

submitted resulting in a rejection
c. Processing of Accepted $.75 per item

Instructions - forwarding of
instruction to agent bank
2. Reporting Fees
Receipt of Reports - fee charged each

day a Member is sent a set of reports,
per location, based on the method of
distribution
a. Machine Readable Output (MRO) $10.00 per item
b. Print Image Output $20.00 per item
c. Hardcopy or Mail $50.00 per item
M. International Link Service -Transaction Fees Per Agreement with Link Service
Participant
N. Account Information Transmission Service for $200.00 per month

each Member participating in the service
O. Alternative Investment Products
1. Higher Volume9 Eligible AIP Product

Fees
i. Records
A. The first 2,999,999 records per $0.10 per record

calendar year
B. The next 1,000,000 records per $0.09 per record

calendar year10
9
Higher volume Eligible AIP Products are identified in subsection 3.
10
i.e., the 3,000,000th to 3,999,999th records submitted in a calendar year.
326
(ADDENDUM A)
C. The next 1,000,000 records per $0.08 per record

calendar year11
D. All additional records12 $0.07 per record
ii. Trades
A. The first 10,000 trades per $5.00 per trade

calendar year
B. The next 10,000 trades per $4.75 per trade

calendar year13
C. The next 10,000 trades per $4.50 per trade

calendar year14
D. All additional trades15 $4.00 per trade
iii. Transfers $0.50 per transfer
2. Lower Volume16 Eligible AIP Product

Fees
i. Records $1.00 per record
ii. Trades $10.00 per trade
iii. Transfers $5.00 per transfer
11
i.e., the 4,000,000th to 4,999,999th records submitted in a calendar year.
12
i.e., the 5,000,000th and higher records submitted in a calendar year.
13
i.e., the 10,001st to 20,000th trades submitted in a calendar year.
14
i.e., the 20,001st to 30,000th trades submitted in a calendar year.
15
i.e., the 30,001st and higher trades submitted in a calendar year.
16
Lower volume Eligible AIP Products are identified in subsection 3.
327
(ADDENDUM A)
3. Eligible AIP Product HIGHER LOWER FEE17 CAP

VOLUME VOLUME
Hedge Fund √
Fund of Funds √
Private Equity Fund √
Managed Debt Fund √
Private Debt Fund √
Managed Currency Fund √
Commodity Pool Fund √
REIT √ √
Managed Future Fund √ √
Business Development Corporation √ √

(BDC)
Registered Hedge Fund18 √
Oil & Gas Public √ √
Oil & Gas Private √ √
Equipment Leasing Public √ √
Equipment Leasing Private √ √
Futures Public √ √
Futures Private √ √
Notes Public √ √
Notes Private √ √
17
If column is checked, the applicable fees apply to all entities processing such products through AIP;
however, the maximum charge for AIP Distributors in this regard is a cumulative maximum (for
submission of records and trades) of $250,000 per calendar year.
18
For purposes of the Alternative Investment Products fee structure, “Registered Hedge Fund” shall
mean hedge funds that are registered under the Investment Company Act of 1940, as amended.
328
(ADDENDUM A)
Real Estate Public √ √
Real Estate Private √ √
Closed End Management Investment √ √

Company
All Other √
V. PASS-THROUGH AND OTHER FEES
A. Participant Fees - represents the monthly fee for each number assigned to a
Member or Municipal Comparison Only Member for participation by each
Member or Municipal Comparison Only Member under such number in one or
more of the specified services provided by the Corporation. The services and
their related base fees are:
1. Trade Processing System
For Members $300.00 per month, per

account
2. Global Clearance Network Service $100.00 per month
3. International Link Service Per Agreement with Link

Service Participant
B. Special Service Fees:
1. Output Fees
a. Machine Readable Output $10.00 per tape
b. Service Bureau Tapes $2.50 per tape
c. Magnetic Tape not returned $20.00 per tape
d. Printed Output Reports:
For Members with less than No charge

20,000 lines per month
For Members with 20,000 or $4.00 per each 1000 lines

more lines per month
2. Microfiche Reports $3.00 per fiche
329
(ADDENDUM A)
3. Special Research $25.00 per hour
4. Domestic Portfolio Composition File $125.00 per month per file
5. Foreign Portfolio Composition File $125.00 per month per file
6. Subscription-based Portfolio $4.00 per unit per month for

Composition File Reporting the first zero to 200 average
daily units19
$3.00 per unit per month for

the next 300 average daily
units (201st to 500th units)
$2.00 per unit per month for

all average daily units above
500 (501st and above)
$800 minimum; $1,800

maximum per month
C. Pass-Through Expenses:
1. Communications
a. Communications Access Cost
b. Telephone toll calls Cost
c. Failure to migrate from Cost 20

legacy networks to SMART
and/or SFTI
2. Forms Cost
19
“Units” refers to the number of portfolio subscriptions for each billing month.
Unit charges are calculated by applying the tiered fee structure to the average daily number of units
subscribed for by the Member in the billing month.
20
The entire cost of supporting the legacy network connections will be allocated among the remaining
users pro rata.
330
(ADDENDUM A)
3. Miscellaneous Expenses: Cost

Any other expense not specified
above, whether one-time or
recurring, which the Corporation may
incur on behalf of a Member at a
Member’s request
D. (1) Each item submitted in paper form $.50 per item

(except Envelope Settlement
Service, Funds Only Settlement
Service, Dividend Settlement
Service, Correspondent Delivery and
Collection Service, and Automated
Customer Account Transfer Service
Transfer Initiation Form)
(2) Each ACAT Transfer Initiation Form $1.00 per item

submitted in paper form
E. Line of Credit Commitment Fee Current month’s cost -- pro

rata monthly among Letter of
Credit users based upon
previous month’s utilization
F. Global Clearing Network Service P.C. $125.00 per month

Access/Hunt group Fee
G. Clearing Fund Maintenance Fee A monthly fee calculated, in

arrears, as the product of
(A) 0.25% and (B) the
average of each Member’s (or
Limited Member’s, if
applicable) cash deposit
balance in the Clearing Fund,
as of the end of each day, for
the month, multiplied by the
number of days for that month
and divided by 360.
VI. COLLECTION CHARGE
The Corporation may also bill Members and Mutual Fund/Insurance Services
Members for, and include on Members’ and Mutual Fund/Insurance Services
Members’ (referred to in this section collectively as “participants”) settlement
statements, fees and charges which may be imposed on such participants by
third parties such as: (a) other subsidiaries of The Depository Trust & Clearing
331
(ADDENDUM A)
Corporation (b) self-regulatory organizations and other security industry

organizations or entities, where such third party has represented to the
Corporation that it has an agreement with the participant allowing the
participant’s payment of such fees and charges; and (c) other organizations and
entities which provide services or equipment to participants which are integral to
services provided by the Corporation. Any amounts so collected will be remitted
to the appropriate organization or entity imposing such fee or charge.
Such fees and charges may include those of companies that identify themselves
as being an affiliate of the participant. Participants should check their settlement
statements, which shall reflect all such charges, and report any problems to the
Corporation immediately.
VII. APPLICATION OF FEES
With the exception of certain registered clearing agencies, all fees will be
charged uniformly to all participants and collected through the settlement system
if possible. Fees for other standard services provided to registered clearing
agencies will be the same as those charged to other participants. Special
services performed for registered clearing agencies will be contracted on an
individual basis.
VIII. NSCC REBATE POLICY
The Corporation may, in its discretion, provide Members with a rebate of its
excess net income, where “excess net income” shall mean either income of the
Corporation or income related to one business line of the Corporation, after
application of expenses, capitalization costs, and applicable regulatory
requirements.
All rebates shall be approved by the Board of Directors. In determining whether

a rebate is appropriate, the Board of Directors would consider one or more of the
following, as appropriate: the Corporation’s regulatory capital requirements,
anticipated expenses, investment needs, anticipated future expenses with
respect to improvement or maintenance of the Corporation’s operations, cash
balances, financial projections, and appropriate level of shareholders’ equity.
In the event the Board of Directors determines a rebate is appropriate, it shall

determine a rebate period and a rebate payment date. Members maintaining
membership during all or a portion of the applicable rebate period and on the
rebate payment date shall be eligible for the rebate.
Rebates shall be applied to all eligible Members on a pro-rata basis based on

such Members’ gross fees paid to the Corporation within the applicable rebate
period, excluding pass-through fees and interest earned on Required Fund
Deposits. Rebates shall be applied to eligible Members’ invoices on the rebate
332
(ADDENDUM A)
payment date as either a reduction in fees owed or, if fees owed are lower than
the allocated rebate amount, a payment of such difference. Rebate amounts
may be adjusted for miscellaneous charges and discounts.
333
(ADDENDUM B)
ADDENDUM B
QUALIFICATIONS AND STANDARDS OF FINANCIAL RESPONSIBILITY,

OPERATIONAL CAPABILITY AND BUSINESS HISTORY
MEMBERS (Section 1);
MUTUAL FUND/INSURANCE SERVICES MEMBERS (Section 2);
FUND MEMBERS (Section 3);
INSURANCE CARRIER/RETIREMENT SERVICES MEMBERS (Section 4);
MUNICIPAL COMPARISON ONLY MEMBERS (Section 5);
DATA SERVICES ONLY MEMBERS (Section 6);
SETTLING BANK ONLY MEMBERS (Section 7);
THIRD PARTY ADMINISTRATOR MEMBERS (Section 8);
INVESTMENT MANAGER/AGENT MEMBERS (Section 9);
AIP MEMBERS (Section 10); and
AIP SETTLING BANK ONLY MEMBERS (Section 11)
THIRD PARTY PROVIDER MEMBERS (Section 12)
Each applicant for membership in the Corporation shall meet the qualifications, financial
responsibility, operational capability and business history as applicable to its
membership type.
An applicant must demonstrate (i) that it has sufficient financial ability to meet all of its
anticipated obligations to the Corporation and, (ii) if applicable to its membership type,
that it has sufficient financial ability to make anticipated contributions to the Clearing
Fund.
334
(ADDENDUM B)
In addition to the above, the applicant must satisfy the following requirements:
SEC. 1. MEMBERS
A. Qualification
To qualify for membership, a Member shall be:
(i) a Registered Broker-Dealer; or
(ii) a bank or trust company, including a trust company having limited

power, which is a member of the Federal Reserve System or is
supervised and examined by state or federal authorities having
supervision over banks; or
(iii) a Registered Clearing Agency; or
(iv) an Insurance Company or an Insurance Entity; or
(v) an Investment Company registered under Section 8 of the

Investment Company Act of 1940, as amended; or
(vi) if it does not qualify under paragraphs (i) through (v) above, an
entity that has demonstrated to the Board of Directors that its
business and capabilities are such that it could reasonably expect
material benefit from direct access to the Corporation’s services.
B. Financial Responsibility
The applicant shall satisfy the following minimum financial requirements:
1. Registered Broker-Dealers:
have excess net capital over the minimum net capital requirement
imposed by the SEC or such higher minimum capital requirement imposed
by the brokers/ dealer’s designated examining authority in the amount of
(i) $500,000, or (ii) $100,000, if such applicant is a Municipal Securities
Brokers’ Brokers (as defined in Rule 15c3-1(a)(8) of the Exchange Act) or
(iii) $1,000,000 if such applicant clears for other broker/dealers; and
Members that are Municipal Securities Brokers’ Broker sponsored account

applicants shall be in compliance with SEC Rule 15c3-1(a)(8).
335
(ADDENDUM B)
2. Bank or trust companies:
(a) Banks:
(i) have at least $50 million in equity capital;1 or
(ii) have furnished to the Corporation a guarantee2 of its

parent bank holding company respecting the payment of any
and all obligations of the bank applicant, and such parent
bank holding company shall have total consolidated capital
of at least $50 million; or
(b) Trust Companies:
in the case of a trust company that is not a bank, but is a member

of the Federal Reserve System or is an institution insured under the
Federal Deposit Insurance Act, have consolidated capital of at least
$10 million and that is adequate in the judgment of the Corporation
to the scope and character of the business conducted by such trust
company.
3. Others:
be required to satisfy such minimum standards of financial responsibility

as determined by the Corporation.
C. Operational Capability 3
An applicant shall be qualified for membership if it is able to satisfactorily

communicate with the Corporation and fulfill anticipated commitments to and meet the
operational requirements of the Corporation with necessary promptness and accuracy
and to conform to any condition and requirement that the Corporation reasonably
deems necessary for its protection.
1
For the purpose of the membership standards and surveillance status rules applicable to banks,”
equity capital” is defined as defined on the Consolidated Report of Condition and Income (“Call
Report”).
2
See also Rule 2A, Section 4 (Ongoing Monitoring (Surveillance Status)).
3
An applicant must have the operational capability for membership or have an agreement, concerning
the provision of operational support services to such applicant, with an entity acceptable to the
Corporation and which may not be replaced without prior approval by the Corporation.
336
(ADDENDUM B)
D. Business History
An applicant must have an established business history of a minimum of six

months or personnel with sufficient operational background and experience to ensure
the ability of the firm to conduct such a business.
SEC. 2. MUTUAL FUND/INSURANCE SERVICES MEMBERS
A. Qualification
To qualify for membership, a Mutual Fund/Insurance Services Member shall be:

(v) an investment company registered under Section 8 of the

have $50,000 in excess net capital over the minimum net capital
requirement imposed by the SEC or such higher minimum capital
requirement imposed by the broker-dealer’s designated examining
authority.
2. Banks and trust companies:
have a Tier 1 Risk Based Capital (“RBC”) ratio of 6% or greater or, with
respect to trust companies which do not calculate a Tier 1 RBC ratio, have
at least $2 million in equity capital.
337
(ADDENDUM B)
3. Insurance Companies:
have a Risk Based Capital (“RBC”) Ratio, as derived from annual statutory
financial statements filed by it with its supervisory or regulatory entity (or,
between filings of such annual statutory financial statements, an RBC
Ratio derived in a similar manner from then-current financial data), of
250% or greater.
4. Others shall:
be required to satisfy such minimum standards of financial responsibility

as determined by the Corporation.

D. Business History

SEC. 3. FUND MEMBERS
A. Qualification
To qualify for membership, a Fund Member shall be:
(i) a Principal Underwriter as defined in Section 2(a)(29) of the

Investment Company Act of 1940, as amended, or a co-distributor,
sub-distributor, or is otherwise authorized to process transactions
through the Corporation’s Mutual Fund Services, and is a
Registered Broker-Dealer; or
(ii) an Investment Company registered under Section 8 of the

4
338
(ADDENDUM B)
(iii) an Investment Adviser as defined in Section 202(a)(11) of the

Investment Advisers Act of 1940, as amended; or
(iv) an Insurance Company; or
(v) a bank or trust company, including a trust company having limited

(vi) if it does not qualify under paragraphs (i) through (v) above, it is an
material benefit from direct access to the Corporation’s Services.
have $50,000 in excess net capital over the minimum net capital
requirement imposed by the Securities and Exchange Commission or
such higher requirement imposed by the broker-dealer’s designated
examining authority.
2. Banks or trust companies:
have a Tier 1 Risk Based Capital (“RBC”) ratio of 6% or greater or, with
respect to trust companies that do not calculate a Tier 1 RBC ratio, have
at least $2 million in equity capital.
3. Investment Companies:
have a minimum of $100,000 in assets under management.
4. Investment Advisers:
have a minimum of $25,000,000 in assets under management and

$100,000 in total net worth.
5. Insurance Companies:
have a Risk Based Capital Ratio (“RBC”), as derived from annual

statutory financial statements filed by it with its supervisory or
regulatory entity (or, between filings of such annual statutory financial
339
(ADDENDUM B)
statements, an RBC Ratio derived in a similar manner from then-

current financial data), of 250% or greater.
6. Others shall:
be required to satisfy such minimum standards of financial

responsibility as determined by the Corporation.

D. Business History

E. Other Considerations:
In addition to the above, the following shall apply:
Fund Members –
(i) if an Insurance Company, be in good standing in those states in

which it is licensed as an insurance company and in its state of
organization.
SEC. 4. INSURANCE CARRIER/RETIREMENT SERVICES MEMBERS
A. Qualification
To qualify for membership, an Insurance Carrier/Retirement Services Member

shall be:
(i) an Insurance Company.
5
340
(ADDENDUM B)
have a Risk Based Capital Ratio (“RBC”), as derived from annual

statutory financial statements filed by it with its supervisory or
regulatory entity (or, between filings of such annual statutory financial
statements, an RBC Ratio derived in a similar manner from then-
current financial data), of 250% or greater.

D. Business History
An applicant to become an Insurance Carrier/Retirement Services Member must

have an established business history of a minimum of six months or personnel with
sufficient operational background and experience to ensure the ability of the firm to
conduct such a business.
E. Other Considerations:
In addition to the above, the following shall apply:
Insurance Carrier/Retirement Services Members –
shall be in good standing in those states in which it is licensed as

an insurance carrier and in its state of organization.
SEC. 5. MUNICIPAL COMPARISON ONLY MEMBERS
A. Qualification
To qualify for membership, a Municipal Comparison Only Member shall be:

6
341
(ADDENDUM B)

(v) an Investment Company registered under Section 8 of the

The Corporation shall approve an application to become a Municipal Comparison

Only Member only upon a determination by the Corporation that the applicant meets the
standards of financial responsibility as the Corporation may promulgate.
SEC. 6. DATA SERVICES ONLY MEMBERS
A. Qualification
To qualify for membership, a Data Services Only Member shall be:

(v) it is an investment company registered under Section 8 of the

(vi) a Principal Underwriter as defined in Section 2(a)(29) of the

Investment Company Act of 1940, as amended, or a co-distributor,
sub-distributor, or is otherwise authorized to process mutual fund
transactions; or
(vii) an Investment Adviser as defined in Section 202(a)(11) of the

Investment Advisers Act of 1940, as amended; or
342
(ADDENDUM B)
(viii) an organization or entity that acts as a third-party administrator on

behalf of a retirement or other benefit plan; or
(ix) an investment manager to a managed account or similar program

or agent acting on behalf of such an investment manager; or
(x) an organization or entity that acts as a routing platform that

manages transactions on behalf of its customers; or
(xi) if it does not qualify under paragraphs (i) through (x) above, it is an
The Corporation shall approve an application to become a Data Services Only

Member only upon a determination by the Corporation that the applicant meets the
SEC. 7. SETTLING BANK ONLY MEMBERS
A. Qualification
To qualify for membership, a Settling Bank Only Member shall be a bank or trust
company, including a trust company having limited power, which is a member of the
Federal Reserve System or has direct access to the Federal Reserve System.
The Corporation shall approve an application to become a Settling Bank Only

C. Operational Capability

standards of operational capability as the Corporation may promulgate.
SEC. 8. THIRD PARTY ADMINISTRATOR MEMBERS
A. Qualification
To qualify for membership, a Third Party Administrator Member shall be an entity

that demonstrates to the Corporation that its business and capabilities are such that it
could reasonably expect material benefit from direct access to the Corporation’s
services.
343
(ADDENDUM B)
B. Operational Capability7

C. Business History

SEC. 9. INVESTMENT MANAGER/AGENT MEMBERS
A. Qualification
To qualify for membership, an Investment Manager/Agent Member shall be an

entity that is or acts on behalf of one or more Investment Managers to a managed
account or similar program.

C. Business History
An applicant must have an established business history of a minimum of six months or

personnel with sufficient operational background and experience to ensure the ability of
the firm to conduct such a business.
7
8
344
(ADDENDUM B)
SEC. 10. AIP MEMBERS
A. Qualification
To qualify for membership, an AIP Member shall be:
(i) a Registered Broker-Dealer;
(ii) a broker/dealer organized or established under the laws of a country

other than the United States that is subject to the oversight of, and regulated by,
the appropriate financial services regulator in its home jurisdiction;
(iii) a bank or trust company, including a trust company having limited

power, which is a member of the Federal Reserve system or is supervised and
examined by State or Federal authorities having supervision over banks;
(iv) a bank organized or established under the laws of a country other

than the United States that is subject to the oversight of, and regulated by, the
appropriate financial services regulator in its home jurisdiction;
(v) an investment company registered under section 8 of the Investment

Company Act of 1940, as amended;
(vi) an issuer (structured as a fund or other pooled investment vehicle)

that is exempt from the definition of investment company under the Investment
Company Act;
(vii) an investment adviser as defined under the Investment Advisers Act

of 1940, as amended (“Advisers Act”), regardless of whether such investment
adviser is registered pursuant to the Advisers Act or is exempt from registration
thereunder;
(viii) a commodity pool operator or a commodity trading advisor as defined

in the Commodity Exchange Act, as amended, regardless of whether such
commodity pool operator or commodity trading advisor is registered pursuant to
Commodity Exchange Act or is exempt from registration thereunder;
(ix) an Insurance Company;
(x) an insurance company organized or established under the laws of a

country other than the United States that is subject to the oversight of, and
regulated by, the appropriate insurance regulator in its home jurisdiction; or
(xi) with respect to an AIP Manufacturer, an entity engaged under

contract to provide administrative services with respect to one or more Eligible AIP
Products (as defined under Section 4 of this Rule), including but not limited to, fund
administrators.
345
(ADDENDUM B)

C. Business History

SEC. 11. AIP SETTLING BANK ONLY MEMBERS
A. Qualification
To qualify for membership, An AIP Settling Bank Only Member shall be a bank or
trust company, including a trust company having limited power, which is a member of
the Federal Reserve System or has direct access to the Federal Reserve System.
The Corporation shall approve an application to become an AIP Settling Bank

Only Member only upon a determination by the Corporation that the applicant meets the
C. Operational Capability

standards of operational capability as the Corporation may promulgate.
SEC. 12. THIRD PARTY PROVIDER MEMBERS
A. Qualification
To qualify for membership, a Third Party Provider Member shall demonstrate to

the Corporation that its business and capabilities are such that it could reasonably
expect material benefit from direct access to the Corporation’s services.
9
346
(ADDENDUM B)

C. Business History

7
347
(ADDENDUM C)
ADDENDUM C
(ADDENDUM LETTER RESERVED FOR FUTURE USE)
348
(ADDENDUM D)
ADDENDUM D
STATEMENT OF POLICY
ENVELOPE SETTLEMENT SERVICE, MUTUAL FUND SERVICES, INSURANCE &
RETIREMENT SERVICES AND OTHER SERVICES OFFERED BY THE
CORPORATION
As authorized by Rule 9, the Corporation provides at its facilities (at locations as it

determines from time to time) an Envelope Settlement Service (“ESS”) for the delivery
and receipt between Members of envelopes containing securities, money- only
settlement items and dividend and interest settlement items. As provided in Rule 9,
ESS is not a guaranteed service of the Corporation and the Corporation does not and
will not stand behind any credit of any payment amount appearing on any credit list
attached to any envelope delivered by a Member under Rule 9.
Paragraph 2 of Section 1 of Rule 9 further provides that:
An envelope delivered to the Corporation shall contain only such securities as permitted
by the Corporation from time to time; tickets relating to such securities contained in the
envelope; or such other items as the Corporation may from time to time permit,
including but not limited to, documentation by a delivering Member necessary for the
receiving Member to identify the reason for a money-only charge, and notices of intent
and claim forms associated with claims for dividends and interest. Envelopes which
contain items other than as permitted by the Corporation are subject to return by the
Corporation to the delivering Member and the related payment amount debits and
credits may be reversed in accordance with Section 4 of Rule 9.
Paragraph 3 of Section 1 provides that the credit list attached to an envelope shall show
“the total money value, if any, of the items contained in that envelope”. Since
Paragraph 2 of Section 1 of Rule 9 authorizes the Corporation to permit Members to
include “other items” (i.e., items relating to money-only settlement and settlement of
dividends and interest) in envelopes, credit lists may also include charges other than for
securities contained in the envelope. Pursuant to Paragraph 7 of Section 1, the
Corporation credits the delivering Member’s account with the payment amount shown
on the credit list and debits the receiving Member’s account. Under Paragraph 10 of
Section 1, payment amounts so debited and credited are included in the settlement for
that day pursuant to Rule 12, subject to the rights of the Corporation under Section 2 of
Rule 12 and Section 4 of Rule 9.
The Corporation will not stand behind any charges appearing on a credit list attached to
envelopes delivered by a Member pursuant to Rule 9. In the event of the default of a
Member, the Corporation, within such time frame as determined by the Corporation
from time to time, may reverse all ESS debits and credits of that Member due for
settlement.
In the absence of a showing, satisfactory to the Corporation, that the charges appearing
on the credit list are for permitted securities or pertain to other permitted items actually
349
(ADDENDUM D)
contained in such envelopes to which such credit lists are attached, the Corporation in
its discretion, may promptly reverse credits previously given to delivering Members. For
the purpose of Rule 9 and this Addendum, it shall be presumed that charges appearing
on a credit list attached to an envelope shall not be for permitted securities contained in
such envelope if the charges are not approximately equal to either the current market
price or contract price of the securities so included.
Furthermore, to the extent that the Corporation offers or will offer any other service not
covered herein whether to Members or others (e.g., Mutual Fund/Insurance Services
Members, Fund Members or Insurance Carrier/Retirement Services Members or AIP
Members), through or pursuant to which the Corporation permits charges, unless the
Corporation specifically provides otherwise, the Corporation shall also not stand behind
such charges. The Corporation shall stand behind final Cash Amount charges
submitted by an Index Receipt Agent pursuant to Rule 7 and the Procedures. (For the
purposes of this Rule, the Corporation has determined that due bills are not securities.)
Specifically, but not in limitation of the foregoing, Members, Mutual Fund/Insurance

Services Members, Insurance Carrier/Retirement Services Members and Fund
Members are hereby advised that with respect to the Mutual Fund Services and
Insurance & Retirement Services, if at any time the Corporation fails to receive payment
from a Member, Mutual Fund/Insurance Services Member, Insurance
Carrier/Retirement Services Member or Fund Member which payment was to be used
to make payment to the contra side of the Mutual Fund Services or Insurance &
Retirement Services transaction, the Corporation, in its discretion, may reverse in whole
or in part any credit previously given to any Member, Mutual Fund/Insurance Services
Member, Insurance Carrier/Retirement Services Member or Fund Member who is the
contra side to the Mutual Fund Services or Insurance & Retirement Services transaction
within such time frame as determined by the Corporation from time to time.
Notwithstanding the foregoing, the Corporation may, in its discretion, apportion on a pro
rata basis, to delivering Members or any other Member, Mutual Fund/Insurance
Services Member, Insurance Carrier/Retirement Services Member or Fund Member
whose credit positions have been reversed, any excess credit position remaining, after
all liabilities to the Corporation are satisfied, of a receiving Member or other Member,
Member or Fund Member for whom the Corporation has ceased to act.
With respect to the AIP Service, at any time the Corporation fails to receive payment
from an AIP Member (including an AIP Fund Administrator with respect to its AIP
Settling Sub-Accounts) which payment was to be used to make payment to the contra
side AIP Member (including an AIP Fund Administrator with respect to a contra side AIP
Settling Sub-Account), the Corporation will reverse any credit previously given to any
AIP Member (including an AIP Fund Administrator with respect to its AIP Settling Sub-
350
(ADDENDUM D)
Accounts) who is the contra side to the AIP Member whose payment was not received
by the Corporation.
This statement of policy is not inconsistent with the Corporation’s policy on Member-to-
Member adjustments which, while permitted by the Corporation generally, are subject to
reversal in the Corporation’s discretion.
351
(ADDENDUM E)
ADDENDUM E
352
(ADDENDUM F)
ADDENDUM F
STATEMENT OF POLICY
IN RELATION TO SAME DAY FUNDS SETTLEMENT
I. Liquidity Contingency Plans
The Corporation recognizes its responsibility to meet its same day funds
settlement obligations. The Corporation fully expects that its short-term funding
resources are adequate and that it has the capability to meet its short-term funding
needs in the event of the insolvency of a major participant. Nevertheless, the
Corporation has determined to adopt the liquidity contingency plans described herein to
cover the extraordinary unlikely event that its short-term funding resources are
inadequate to cover its funding needs in the event of a major member insolvency.
A. Non-Guaranteed Services
In the event that the Corporation has or believes that it will have a liquidity
problem, the Corporation may:
1. Prior to the issuance of the settlement statement, reverse debits and credits
for non-guaranteed services to the extent necessary to eliminate the liquidity
problem, as determined by the Corporation and/or
2. Spread the Corporation’s obligation to make payment or payments over such

period of time as is necessary for the Corporation to eliminate the liquidity
problem.
B. Guaranteed Services
To the extent that the Corporation has a liquidity problem as a result of CNS
securities allocated to the account of an insolvent member and the Corporation has
exhausted all of its liquidity resources, until such time as the Corporation has the
resources to pay the delivering member for such securities, the Corporation may
temporarily return such securities back to the delivering Member. At such time as the
Corporation has the resources to pay for the delivery, the Corporation shall designate
the date upon which such securities are to be redelivered to the Corporation. The
Corporation shall reimburse Members whose securities have been returned for
financing costs incurred as a result of such return during the intervening period.
II. Settling Bank Exceptions
Notwithstanding anything in the Rules to the contrary, the Corporation, in its sole
discretion upon application by an Insurance Carrier/Retirement Services Member, a
Mutual Fund/Insurance Services Member, a Fund Member or an AIP Member, may
waive the requirement that it appoint a Settling Bank for such Insurance
Carrier/Retirement Services Member, Mutual Fund/Insurance Services Member or Fund
Member, (or an AIP Settling Bank in the case of an AIP Member) if the Corporation
353
(ADDENDUM F)
determines that to require such use would create an undue burden on such Insurance
Carrier/Retirement Services Member, Mutual Fund/Insurance Services Member, Fund
Member or AIP Member, as determined by the Corporation in each instance.
354
(ADDENDUM G)
ADDENDUM G
FULLY-PAID-FOR ACCOUNT
I. MOVEMENT OF SECURITIES INTO THE FULLY-PAID-FOR ACCOUNT
The expansion of the Fully-Paid-For application will be of benefit to Members making

deliveries during DTC’s evening and daytime processing on settlement date by
permitting deliveries in anticipation of CNS allocation.
On the morning of settlement date and during the day cycle on settlement date, DTC
will indicate to the Member what securities have been delivered out via DTC. Similarly
the CNS Settlement Activity Report will be made available indicating what has been
allocated in the night cycle, and information is also provided regarding allocations made
in the day cycle.
Based on this information, the Member can determine what unallocated CNS long
valued positions must be moved from the CNS General Account A to the CNS Fully-
Paid-For sub account E to maintain compliance with SEC Rule 15c3-3.
The Corporation will accept instructions to make such movements through such time on
each settlement date as it shall determine, and such instructions will be applied
promptly thereafter during the day cycle through such cutoff time. The amount that will
be moved from the A Account to the E Sub-account will be the lesser of: (i) the number
of shares covered by the instruction that remain in the Member’s A Account at the time
the instruction is received and applied, and (ii) the number of shares subject to the
instruction.
Members should be aware that shares allocated during the day cycle, after instructions
have been received to move a position from the CNS General Account A to the Fully-
Paid- For Account E, will result in a reduction of the amount of shares in the Fully-Paid-
For Account by the amount of the allocation.
At the end of the day, the Corporation will charge the Member’s settlement account the
value of the positions residing in the Fully-Paid-For Account at the close of the CNS
processing cycle.
The value charged to the Member’s settlement account will appear on that day’s
settlement statement.
The following day, the amount debited the previous day (i.e., value of closing position
Fully-Paid-For Account) will be credited to the Member’s settlement. The credit will
appear on the settlement statement.
The process will be repeated daily to the extent a Member has any positions in its Fully-
Paid-For Account.
355
(ADDENDUM G)
II. MOVEMENTS OUT OF THE FULLY-PAID-FOR ACCOUNT
Positions that have been established in the Fully-Paid-For Account will be returned to
the Member through normal allocation to the Member’s E sub account.
However, in the event a Member which has previously given instructions to move a
position into its Fully-Paid-For Account finds that the position no longer needs to be
segregated, it may issue instructions to return the position to its General Account, thus
reestablishing the position in the General Account and reducing the Fully-Paid-For
Account.
III. MOVEMENT INSTRUCTIONS
Instructions to move positions into or out of the Fully- Paid-For Account are to be
submitted to the Corporation prior to such time as established by the Corporation from
time to time.
IV. FULLY-PAID-FOR ACTIVITY REPORTS
The Corporation will provide Members with the following reports detailing the movement
of security positions between the CNS General Account (A) and the Fully-Paid-For Sub
Account (E).
• Miscellaneous Activity Reports
• CNS Accounting Summary
356
(ADDENDUM H)
ADDENDUM H
INTERPRETATION OF THE BOARD OF DIRECTORS

RELEASE OF CLEARING DATA
Pursuant to Rule 33, the Board of Directors is authorized to prescribe Procedures and
other regulations in respect of the business of the Corporation. The Board of Directors
hereby adopts the following interpretation as a regulation of the Corporation:
RELEASE OF CLEARING DATA TO REGULATORY

AND SELF-REGULATORY ORGANIZATIONS
The purpose of this interpretation is to limit the extent to which Clearing Data pertaining
to municipal bond transactions may be obtained by regulatory or self-regulatory
organizations and others pursuant to Rule 49.
Pursuant to Rule 49, the Corporation may release Clearing Data to regulatory and self-
regulatory organizations and others. The Corporation has determined at this time that,
due to the current nature of municipal data within the Corporation’s possession and
control, release without restriction could be susceptible to misunderstanding and/or
misuse. In order to avoid problems that such release, in general, could cause to the
municipal securities industry, the Corporation has determined that at this time Municipal
Clearing Data in general shall only be released to regulatory organizations and self-
regulatory organizations who have demonstrated to the Corporation the necessity for
obtaining such data in furtherance of the regulatory purpose of such organization.
The Corporation, consistent with this interpretation, has determined to facilitate the
provision of inter-dealer and customer (i.e., institutional and retail) municipal securities
transaction data to the Municipal Securities Rulemaking Board (AMSRB@), who has
advised the Corporation that the provision of this data serves regulatory purposes,
namely to provide transparency in the municipal securities market and to assist
compliance by participants with the MSRB’s Rules.
The Corporation will also permit the release of Municipal Clearing Data to other
responsible entities for non-regulatory purposes but only in the limited format as
described below.
Regulatory and self-regulatory organizations to whom the Corporation has consented to

release data may, in writing, request that Municipal Clearing Data be provided to a third
party in addition to or in lieu of themselves, upon a demonstration satisfactory to the
Corporation, that such release to a third party would further the regulatory purpose of
the regulatory organization or the self-regulatory organization.
With respect to the release of Municipal Clearing Data other than for regulatory
purposes, the Corporation will release only a ranking of a pre-selected group of
municipal bonds compared by the Corporation during a predetermined period of time to
responsible entities. Such ranking shall be based upon the aggregate total of the par
value of bonds compared by the Corporation during such period. The Corporation
357
(ADDENDUM H)
specifically reserves the right to deny any request where it has determined that with
regard to providing data with respect to the pre-selected group of bonds, the provision
of such data could disclose, whether patently or in easily discernible format, proprietary
and/or confidential financial, operational or trading data of a particular participant.
The foregoing notwithstanding, this interpretation is not intended to, nor shall it be
deemed to be in contravention, or a limitation, of the Corporation’s obligations pursuant
to its Shareholders Agreement.
358
(ADDENDUM I)
ADDENDUM I
359
(ADDENDUM J)
ADDENDUM J
STATEMENT OF POLICY
LOCKED-IN DATA FROM SERVICE BUREAUS
Rule 7, Section 6 permits the Corporation
to accept, from self-regulatory organizations (either directly or through a

subsidiary or affiliated organizations) and/or service bureaus, initial or
supplemental trade data on behalf of Members for input into the Corporation’s
Comparison Operation or compared trade data, which may reflect the netted
results of other transactions, on behalf of Members for input into the
Corporation’s Accounting Operation provided that a Member is a party to the
trade or transaction.
Pursuant to the provisions of this Rule, the Corporation presently accepts from the
NYSE, NYSE Alternext, and National Association of Securities Dealers, locked-in trade
data on a Member’s behalf for input into the Corporation’s comparison system. The
Corporation has received requests from Members to accept, in addition to locked-in
trade data, two sided trade data from service bureaus. Two sided trade data would
encompass the complete details of both sides of a trade.
The NYSE, NYSE Alternext and the National Association of Securities Dealers are self-
regulatory organizations (“SROs”) which are regulated by the Securities and Exchange
Commission. Consequently, they operate pursuant to recognized standards and
therefore, the integrity of their operations is subject to periodic examination and review.
Service bureaus, which are not SROs, are not subject to regulatory control.
Accordingly, in order to assure that the integrity of the Corporation’s systems would not
be jeopardized by the acceptance `of two sided trade data from service bureaus that are
not SRO’s, the Corporation has determined to adopt the following criteria which such a
service bureau must meet in order to be approved to submit two sided trade data
pursuant to Rule 7, Section 6:
(1) Service bureau would have to: (a) be or become a Member of the Corporation; or
(b) be affiliated with a Member of the Corporation. The Member would have to
make a Clearing Fund deposit with the Corporation and have adequate
capitalization to insure its continuing ability to honor its commitments to the
Corporation.
(2) Service bureau would have to have an established business history of at least
two years.
(3) Service bureau would have to be able to submit the following data for each trade:
(a) buy or sell;

(b) parties to trade;
(c) quantity;
360
(ADDENDUM J)
(d) CUSIP number;

(e) executing price;
(f) net money;
(g) trade date;
and any additional data the Corporation may be called upon to provide to a regulatory
body in connection with the Corporation’s regulatory responsibilities (e.g., additional
data required by a SRO for audit trail purposes).
(4) Service bureau would be required to have at least ten (10) of the Corporation’s
Members as its subscribers.
(5) Service bureau would be required to furnish to the Corporation such information
and make available such books and records as the Corporation, in its sole
discretion, deems necessary to evaluate service bureau’s financial responsibility
and operational capability.
In addition to the foregoing, service bureau would be required to enter into an

Agreement, in writing, with the Corporation whereby service bureau would agree:
(1) To maintain the following insurance coverage in an appropriate amount,

depending upon the size of the service bureau’s operation: (a) Broker Blanket
Bond or equivalent; (b) Errors and Omissions; and, (c) General Liability.
(2) To submit detailed plans respecting its automated execution system which at a
minimum would detail: a description of the system; the physical safeguards of the
system; and, the integrity, backup, recovery ability, and contingency plans of the
service bureau in the event of an emergency or disaster.
(3) (a) To obtain, on a yearly basis, an independent audit of its financial

statements and an opinion prepared by its independent auditors as to
service bureau’s internal controls for its automated system and to submit
such audit and opinion annually to the Corporation; and
(b) to perform internal interim six month reviews of the internal controls of the
automated execution system, and to submit the results of this internal
review to the service bureau’s independent auditors.
(4) To have the Member submit monthly financial statements to the Corporation.
(5) To notify the Corporation upon any material change in any of the criteria required
for acceptance as an approved service bureau or of the management or
operation of the service bureau (e.g. cancellation of insurance, changes in the
automated execution system, major change in stock ownership or management,
outstanding law suits).
(6) To indemnify and hold harmless the Corporation, its Clearing Fund,
Shareholders, Directors, Officers, Employees, and Agents from and against any
361
(ADDENDUM J)
and all claims, losses, costs, damages, or liabilities, including reasonable

attorney’s fees, which may be asserted against, suffered, or incurred by the
Corporation arising from entering into such Agreement and/or providing or failing
to provide trade data to the Corporation, except that the foregoing indemnification
shall not be required to cover any claims, losses, costs, damages, or liabilities
which may be asserted against, suffered, or incurred by the Corporation arising
from the Corporation’s willful misconduct or gross negligence.
(7) That in the event of a disagreement between subscribers of the service bureau
and/or non-subscribers concerning the trade data submitted or failed to be
submitted by the service bureau to the Corporation, the Member of the
Corporation will interpose itself in the trade and take responsibility for the trade.
(8) To pay to the Corporation the costs, if any, of the Corporation’s changing any of
its systems to be able to receive trade data from service bureau.
(9) To submit to the Corporation, for each subscriber of the service bureau which is
a Member of the Corporation on whose behalf the service bureau may submit
trade data, evidence of the service bureau’s authority to submit to the
Corporation trade data on behalf of such subscriber.
The Corporation may waive one or more of the foregoing criteria if the Corporation
determines that it is in the best interests of the Corporation and its Members to approve
a service bureau so as to assure the prompt, accurate, and orderly processing and
settlement of securities transactions or to otherwise carry out the functions of the
Corporation.
362
(ADDENDUM K)
ADDENDUM K
THE CORPORATION’S GUARANTY
The Corporation guarantees the completion of compared and locked-in CNS and
balance order transactions from a fixed point in the clearance and settlement process. 1
CNS transactions are guaranteed as of the point they have: (i) for bilateral submissions
by Members, been validated and compared by the Corporation pursuant to these Rules
and Procedures, and (ii) for locked-in submissions, been validated by the Corporation
pursuant to these Rules and Procedures. Balance order transactions are guaranteed
as of the point they have: (i) for bilateral submissions by Members, been validated and
compared by the Corporation pursuant to these Rules and Procedures, and (ii) for
locked-in submissions, been validated by the Corporation pursuant to these Rules and
Procedures, and, in either case, through the close of business on T+2. If the contra
party to a same day or one day settling trade is a member of an interfacing clearing
corporation, such guaranty shall not be applicable unless an agreement to guarantee
such trade exists between the Corporation and the interfacing clearing corporation. The
Corporation has also adopted a policy of guaranteeing the completion of when-issued
and when-distributed trades, as of the point they have: (i) for bilateral submissions by
Members, been validated and compared by the Corporation pursuant to these Rules
and Procedures, and (ii) for locked-in submissions, been validated by the Corporation
pursuant to these Rules and Procedures and will consider all when-issued and when-
distributed trades of Members as if they were CNS transactions for surveillance
purposes regardless of the accounting operation in which they ultimately settle.
1
The trade guaranty of obligations arising out of the exercise or assignment of options that are settled
at the Corporation is addressed in a separate arrangement between the Corporation and The Options
Clearing Corporation, as referred to in Procedure III of the Rules and Procedures, and is not
addressed in these Rules and Procedures.
363
(ADDENDUM L)
ADDENDUM L
STATEMENT OF POLICY
PERTAINING TO INFORMATION SHARING
Rule 49 recognizes the obligation of the Corporation to share clearing data with other
SEC regulated self-regulatory organizations for regulatory purposes. Rule 15 provides
the Corporation with the authority to examine the financial and operational conditions of
its participants, and to receive information relevant to such examination from any other
SEC regulated self-regulatory organization. Rule 15 also requires the Corporation to
maintain the same degree of confidentiality regarding such financial and operational
information that the appropriate regulatory body, having jurisdiction over the participant
would maintain. Section 17A(b)(3) of the Securities Exchange Act of 1934, as amended
(the “Act”), provides among other things, that rules of clearing agency self-regulatory
organizations must be designed to foster cooperation and coordination with persons
engaged in the clearance and settlement of securities transactions and to protect
investors and the public interest. Section 19(g)(1) of the Act requires clearing agencies
to enforce compliance by their members with their rules.
In accordance with its responsibilities under its rules, and consistent with the
requirements of a clearing agency under the Act, the Board of Directors has approved
the entering into of an agreement by the Corporation with other SEC registered clearing
agencies to share, for regulatory purposes, with such other SEC registered clearing
agencies financial and operational information relating to participants who are also
participants of such other SEC registered clearing agencies. The Board of Directors
has also approved the filing of such agreement with the Securities and Exchange
Commission, pursuant to Rule 19(b). Such agreement is not intended to limit the ability
under the Act of registered clearing agencies, for regulatory purposes, to share data on
dual or sole participants when such is deemed appropriate. It is, however, a first step in
formalizing certain minimum levels of information sharing, with the intent to standardize
such reporting.
364
(ADDENDUM M)
ADDENDUM M
365
(ADDENDUM N)
ADDENDUM N
(ADDENDUM HEADER RESERVED FOR FUTURE USE)
366
(ADDENDUM O)
ADDENDUM O
ADMISSION OF NON-US ENTITIES AS DIRECT NSCC MEMBERS
Admission of Non-US Entities 1
Policy Statement on the Admission of Non-U.S. Entities as Direct Clearing

Corporation Members, Mutual Fund/Insurance Services Members, Fund Members or
Insurance Carrier/Retirement Services Members: The policy permits entities that are
organized in a country other than the United States and that are not otherwise subject to
U.S. federal or state regulation (“non-U.S. entities”) to be eligible to become direct
NSCC Members, Mutual Fund/Insurance Services Members, Fund Members or
Insurance Carrier/Retirement Services Members. Under the policy, NSCC will require
that the non-U.S. entity execute the standard NSCC membership agreement and enter
into an additional series of undertakings and agreements and provide additional
certifications and other assurances that are designed to address jurisdictional and
certain tax concerns, and to assure that NSCC is provided with audited financial
information that is acceptable to NSCC.
Certain of these criteria may be waived where inappropriate to a particular

applicant or class of applicants (e.g., a foreign government, international or national
central securities depositories).
Requirements in addition to Standard Requirements for US Entities:
• Undertakings and Agreements –
At a minimum such Non-US entity would have to agree to:
(a) in respect of any action brought by NSCC to enforce the entity’s

obligations under the membership agreement:
(i) irrevocably waive all immunity from NSCC’s attachment of the

entity’s own assets in the U.S.;
(ii) irrevocably submit to the jurisdiction of a court in the U.S.;
(iii) irrevocably waive any objection to the laying of venue in a court in

the U.S.; and
(iv) state that any judgment obtained against the foreign entity by
NSCC may be enforced in the courts of any jurisdiction where the
foreign entity or its property may be located, and that the foreign
entity will irrevocably submit to the jurisdiction of each such court.
1
This policy statement excludes Non-U.S. entities that are insurance companies.
367
(ADDENDUM O)
(b) designate a person in New York as its agent to receive service of process;
(c) provide to NSCC, for financial monitoring purposes, audited financial

statements prepared in accordance with either U.S. generally accepted
accounting principles or other generally accepted accounting principles
that are satisfactory to NSCC. In order to address the risk presented by
the acceptance of financial statements prepared in non-U.S. GAAP, the
existing minimum financial requirements for non-U.S. GAAP standards will
each have a specific premium applied as follows:
(i) for financial statements prepared in accordance with International

Financial Reporting Standards (“IFRS”), the Companies Act of 1985
(“UK GAAP”), or Canadian GAAP – a premium of 1 ½ times the
existing requirement;
(ii) for financial statements prepared in accordance with a European

Union (“EU”) country GAAP other than UK GAAP – a premium of 5
times the existing requirement; and
(iii) for financial statements prepared in accordance with any other type
of GAAP a premium of 7 times the existing requirement.
(d) provide all financial reports or other information requested by NSCC in

English, with monetary amounts stated in U.S. dollar equivalents
indicating the conversion rate and date used.
(e) not conduct any transaction or activity through NSCC if the Non-US entity
is not FATCA Compliant, unless such requirement has been explicitly
waived in writing by NSCC with respect to the specific Non-US entity,
provided, however, that no such waiver will be issued if it shall cause
NSCC to be obligated to withhold under FATCA on gross proceeds from
the sale or other disposition of any property.
(f) indemnify NSCC for any loss, liability or expense sustained by NSCC as a
result of the Non-US entity failing to be FATCA Compliant.
• FATCA Compliance and FATCA Certification – Beginning on the FATCA

Compliance Date, the Non-US entity must be at all times FATCA Compliant, and
must certify and periodically recertify to NSCC, as applicable under FATCA, that it is
FATCA Compliant by providing to NSCC a FATCA Certification, unless such
requirements have been explicitly waived in writing by NSCC, provided, however,
that no such waiver will be issued if it shall cause the Corporation to be obligated to
withhold under FATCA on gross proceeds from the sale or other disposition of any
property.
• Foreign Legal Opinion – obtain an opinion of reputable foreign counsel satisfactory

to NSCC providing, among other things, that the agreements described above may
368
(ADDENDUM O)
be enforced against the foreign entity in the courts of its home country or other
jurisdictions where the entity or its property may be found.2
• Regulatory Status of Foreign Entity
(a) The Non-US entity would have to be subject to regulation in its home
country and its home country regulator must have entered into a Bilateral
Information Sharing Arrangement or Memoranda of Understanding with
the U.S. Securities and Exchange Commission regarding the sharing or
exchange of information.
(b) The Non-US entity must be in compliance with the financial reporting and
responsibility standards of its home country regulator.
• AML Review - The Non-US entity must provide sufficient information to NSCC in
order to evaluate AML risk, including whether the Non-US entity is subject to
comparable AML requirements (to those imposed in the US) in its home country
jurisdiction.
2
NSCC reserves the right to require the entity to deposit additional amounts to the Clearing Fund and
to post an Eligible Letter of Credit in an instance where NSCC, in its sole discretion, believes the
entity presents legal risk.
369
(ADDENDUM P)
ADDENDUM P
FINE SCHEDULE
1) SDFS Failure-to-Settle and Late Acknowledgment Fines
NET DEBIT FOR APPLICABLE

MEMBER, MUTUAL/FUND
FIRST SECOND THIRD FOURTH
INSURANCE SERVICES MEMBER,
OCCASION OCCASION OCCASION OCCASION
FUND MEMBER OR SETTLING
BANK ONLY MEMBER
$0 - 100,000 $ 100 $ 200 $ 500 $ 1,000
Greater than $100,000 - 900,000 300 600 1,500 3,000
Greater than $900,000 - 1,700,000 600 1,200 3,000 6,000
Greater than $1,700,000 - 2,500,000 900 1,800 4,500 9,000
Greater than $2,500,000 - UP 1,000 2,000 5,000 10,000
NOTES: a) In addition to the fine, interest is charged to the Member, Mutual

Fund/Insurance Services Member, Fund Member or the Settling Bank Only
Member, that failed to settle for the cost of borrowing to complete settlement.
b) The number of occasions will be determined over a moving three-month

period.
c) If the Corporation determines that it had significantly affected a Member’s,

Mutual Fund/Insurance Services Member, Fund Member or a Settling Bank
Only Member’s, ability to settle (because of a Corporation system delay, for
example), the Corporation may determine to waive failure-to-settle fines for
that occurrence.
d) If the number of occasions within the rolling period exceeds four, the
Corporation shall obtain the concurrence of the Board of Directors as to the fine
amount.
e) A lateness of more than one hour will result in a fine equal to the amount
applicable to the next highest occasion for the specific deficiency amount. If a
member is late for more than one hour and it is the member’s fourth occasion,
the Corporation shall obtain the concurrence of the Board of Directors as to the
fine amount.
2) General Continuance Standards-Fine for failure to notify pursuant to Section

2(B)(a)(i) of Rule 2B: Each single offense, $1,000 fine. If the Member’s failure to notify
applies to more than one DTCC clearing agency subsidiary DTC, NSCC and/or FICC),
the fine amount will be divided equally among the clearing agencies. Where the
370
(ADDENDUM P)
Member is a participant of DTC and is a common member of one or more of the other
clearing agencies, the fine would be collected by DTC and allocated equally among
other clearing agencies, as appropriate. If the member is not a DTC participant, but is a
common member between NSCC and FICC, NSCC will collect the fine and allocate the
appropriate portion to FICC.
3) Failure to notify and supply required data as provided for under these Rules &
Procedures (other than as provided in items one, two, four, five, six, and seven of this
addendum): Each single offense, $5,000.00 fine. If the Member’s failure to notify
applies to more than one DTCC clearing agency subsidiary (DTC, NSCC and/or FICC),
the fine amount will be divided equally among the clearing agencies. Where the
Member is a participant of DTC and is a common member of one or more of the other
clearing agencies, the fine would be collected by DTC and allocated equally among
other clearing agencies, as appropriate. If the member is not a DTC participant, but is a
common member between NSCC and FICC, NSCC will collect the fine and allocate the
appropriate portion to FICC.
4) Late Satisfaction of Clearing Fund Deficiency Call 1
Fourth
First Second Third
Amount Occasion
Occasion Occasion Occasion
(or greater)
Up to $100 M * $100 $ 200 $ 500
Greater than $100 M to $900 M * 300 600 1,500
Greater than $900 M to $1.7 MM * 600 1,200 3,000
Greater than $1.7 MM to $2.5 MM * 900 1,800 4,500
Greater than $2.5 MM * 1,000 2,000 5,000
* First occasions result in a warning letter issued to the Member.
If the number of occasions within the rolling period exceeds four, the Corporation shall
obtain the concurrence of the Board of Directors as to the amount of the fine.
A lateness of more than one hour will result in a fine equal to the amount applicable to
the next highest occasion for the specific deficiency amount. If a member is late for
more than one hour and it is the member’s fourth occasion, the Corporation shall obtain
the concurrence of the Board of Directors as to the amount of the fine.
1
The number of occasions is determined over a moving three-month period beginning with the first
occasion.
371
(ADDENDUM P)
5) Failure to Timely Provide Financial and Related Information
First Second Third Fourth

Request For Information*
Occasion Occasion Occasion Occasion
Reports/Information** $300 $600 $1,500 ***
* Fines to be levied for offenses within a moving twelve-month period beginning with the first occasion.
** For purposes of this Fine Schedule, “Reports/Information” shall mean the financial, regulatory and
other information required to be submitted within a specified deadline to the Corporation.
*** Fourth or more occasion fines will be determined by the Corporation with the concurrence of the
Board of Directors.
If the Member’s late submission applies to more than one DTCC clearing agency
subsidiary (DTC, NSCC and/or FICC), the fine amount will be divided equally among
the clearing agencies. Where the Member is a participant of DTC and is a common
member of one or more of the other clearing agencies, the fine would be collected by
DTC and allocated equally among other clearing agencies, as appropriate. If the
member is not a DTC participant, but is a common member between NSCC and FICC,
NSCC will collect the fine and allocate the appropriate portion to FICC.
6) Business Continuity Testing for Top Tier Firms - Fines for Failure to Test
Fine for failure to complete testing by December 31st: $10,000

Fine for failure to complete testing for two successive years: $20,000
NOTES: 1) Failure to complete testing for more than two successive years will result
in disciplinary action taken by NSCC, up to and including termination of
membership.
372
(ADDENDUM Q)
ADDENDUM Q
373
(ADDENDUM R)
ADDENDUM R
374
(ADDENDUM S)
ADDENDUM S
375
(ADDENDUM T)
ADDENDUM T
376
(ADDENDUM U)
ADDENDUM U
GLOBAL CLEARANCE NETWORK SERVICE

DATA PROCESSING PROCEDURES
1. Global Clearance Network Service (“GCN Service”) participants may submit, in a

format and by a communication vehicle acceptable to the Corporation, on a
schedule determined by the Corporation, which may be changed from time to
time, data relative to their GCN Service accounts.
2. Data received by the Corporation will be validated and edited for such
information as required by the Corporation from time to time. Data which does
not pass the validation or edit shall be rejected and the participant shall be
required to resubmit the data. Acceptable data shall be converted, if necessary,
into ISO 7775 format (or such other format as determined by the Corporation
from time to time) prior to routing to the appropriate GCN Service provider
through telecommunication vehicles selected by the Corporation from time to
time.
3. The Corporation will receive confirmation that the data has been received by the
GCN Service providers or that it has been transmitted through the Society For
Worldwide Interbank Financial Telecommunication S.C. (“S.W.I.F.T”).
4. If a service provider is unable to process data, the service provider will contact
the participant directly.
5. Each day, at such times as specified by the service provider, reports will be
transmitted to the Corporation on behalf of the participants’ accounts. The
Corporation will retransmit the reports to participants at such times as determined
377
(ADDENDUM V)
ADDENDUM V
BY-LAWS AND CERTIFICATE OF INCORPORATION
The By-Laws of the Corporation and the Certificate of Incorporation of the Corporation
are incorporated by reference.
378

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NATIONAL

RULES & PROCEDURES

Effective January 1, 2021

NATIONAL SECURITIES CLEARING CORPORATION RULES ................................... 1

RULE 1. DEFINITIONS AND DESCRIPTIONS ............................................................. 1

RULE 2. MEMBERS AND LIMITED MEMBERS ......................................................... 20

RULE 2A. INITIAL MEMBERSHIP REQUIREMENTS ................................................ 24

RULE 2B. ONGOING MEMBERSHIP REQUIREMENTS AND MONITORING ........... 31

RULE 3. LISTS TO BE MAINTAINED ......................................................................... 38

RULE 4. CLEARING FUND ......................................................................................... 41

RULE 4(A). SUPPLEMENTAL LIQUIDITY DEPOSITS ............................................... 52

RULE 5. GENERAL PROVISIONS .............................................................................. 59

RULE 6. (RULE NUMBER RESERVED FOR FUTURE USE) ..................................... 61

RULE 7. COMPARISON AND TRADE RECORDING OPERATION

RULE 8. BALANCE ORDER AND FOREIGN SECURITY SYSTEMS ........................ 67

RULE 9. ENVELOPE SETTLEMENT SERVICE.......................................................... 68

RULE 10. FAILURE TO DELIVER ON SECURITY BALANCE ORDERS .................. 74

RULE 11. CNS SYSTEM ............................................................................................. 75

RULE 12. SETTLEMENT............................................................................................. 81

RULE 13. EXCEPTION PROCESSING ....................................................................... 86

RULE 14. TRANSFER TAXES .................................................................................... 87

RULE 15. ASSURANCES OF FINANCIAL RESPONSIBILITY AND

RULE 16. (RULE NUMBER RESERVED FOR FUTURE USE) ................................... 90

RULE 17. FINE PAYMENTS ....................................................................................... 91

RULE 18. PROCEDURES FOR WHEN THE CORPORATION DECLINES OR

RULE 20. INSOLVENCY ............................................................................................. 99

RULE 21. HONEST BROKER ................................................................................... 100

RULE 22. SUSPENSION OF RULES ........................................................................ 101

RULE 23. ACTION BY THE CORPORATION ........................................................... 102

RULE 24. CHARGES FOR SERVICES RENDERED ................................................ 103

RULE 25. CROSS-GUARANTY OBLIGATION ......................................................... 104

RULE 26. BILLS RENDERED ................................................................................... 105

RULE 27. ADMISSION TO PREMISES OF THE CORPORATION – POWERS

RULE 28. FORMS...................................................................................................... 107

RULE 29. QUALIFIED SECURITIES DEPOSITORIES ............................................. 108

RULE 32. SIGNATURES ........................................................................................... 111

RULE 33. PROCEDURES ......................................................................................... 112

RULE 34. INSURANCE ............................................................................................. 113

RULE 35. FINANCIAL REPORTS ............................................................................. 114

RULE 36. RULE CHANGES ...................................................................................... 115

RULE 37. HEARING PROCEDURES ........................................................................ 116

RULE 38. GOVERNING LAW AND CAPTIONS ....................................................... 120

RULE 39. RELIANCE ON INSTRUCTIONS .............................................................. 121

RULE 40. (WIND-DOWN OF A MEMBER, FUND MEMBER OR INSURANCE

RULE 41. (CORPORATION DEFAULT).................................................................... 124

RULE 42. WIND-DOWN OF THE CORPORATION................................................... 128

RULE 44. DELIVERIES PURSUANT TO BALANCE ORDERS ................................ 139

RULE 45. NOTICES................................................................................................... 141

RULE 46. RESTRICTIONS ON ACCESS TO SERVICES ......................................... 143

RULE 47. INTERPRETATION OF RULES ................................................................ 145

RULE 48. DISCIPLINARY PROCEEDINGS .............................................................. 146

RULE 50. AUTOMATED CUSTOMER ACCOUNT TRANSFER SERVICE .............. 148

RULE 51. OBLIGATION WAREHOUSE ................................................................... 158

RULE 52. MUTUAL FUND SERVICES ..................................................................... 160

RULE 53. ALTERNATIVE INVESTMENT PRODUCT SERVICES AND

RULE 54. DTCC LIMIT MONITORING RISK MANAGEMENT TOOL....................... 188

RULE 57. INSURANCE & RETIREMENT SERVICES .............................................. 195

RULE 58. LIMITATIONS ON LIABILITY ................................................................... 202

RULE 59. ACCOUNT INFORMATION TRANSMISSION SERVICE ......................... 204