MSRB Reports -- (Volume 17, Number 1) JANUARY 1997

(Volume 17, Number 1) JANUARY 1997

Attention! Attention

Use of Facsimile Transmissions for Close-Outs: Rule G-12(h)

Route To: Manager, Muni Department Operations Compliance

Notice of Interpretation The Board has interpreted rule G-12(h) to allow dealers to send written notices required by the rule by facsimile transmission.

Rule G-12(h) on close-outs requires that a dealer taking action in a close-out must provide telephonic notice to the appropriate party, followed no later than the next business day with a written notice.[1] The rule further requires that written notices be sent "return receipt requested." The Board previously has interpreted this provision to allow the use of certified mail, registered mail, messenger services, and Depository Trust Company's Participant Exchange Service (PEX) system. Use of these procedures allows the sender to obtain acknowledgment of delivery of the notice from the recipient.

Dealers have asked whether the use of a facsimile transmission would satisfy the requirement in the rule that written notices be sent "return receipt requested." The Board has determined that the requirements of the rule would be satisfied by the facsimile transmission of written notices as long as the facsimile transmission provides the sender with an acknowledgment of successful delivery of the notice. The Board emphasizes that, prior to the sending of written notices, dealers are required to notify the appropriate parties by telephone of their intention to take action under Board rule G-12(h) on close-outs.

December 20, 1996


[1] Telephone and written notices are required when dealers (i)originate a close-out; (ii)retransmit a close-out; (iii) extend delivery dates; and (iv) execute a close-out. The Board's Manual on Close-Out Procedures contains a detailed explanation of the procedures required by rule G-12(h).


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