9.4 Relationship Between Trading Member and Buying Customer
A buying customer must look only to its Trading Member, who executes the trade, in relation to all obligations in connection with that trade, including delivery of securities or in the case of deliverable futures contracts, the relevant underlying. A buying customer must pay its Trading Member who executes the trade.
A Trading Member shall, if informed by CDP or its Clearing Member that a right to receive securities pursuant to an Exchange Trade is to be replaced with a right to receive a monetary sum ("Cash Settlement Amount") pursuant to the Clearing Rules, immediately inform the relevant buying customer.
Unless a buying customer has in place arrangements to settle trades with its Trading Member on a delivery-versus-payment basis through the CDP Settlement Facility, the Trading Member must:(a) deliver securities to the buying customer on the same day that the securities are delivered by CDP; and(b) make payment, of any Cash Settlement Amount, corporate action entitlements or compensation for corporate action entitlements pursuant to the Clearing Rules, to the buying customer, on the banking day after the day that CDP makes payment to the Trading Member, save that the Trading Member may withhold delivery of securities or the payment of any Cash Settlement Amount, corporate action entitlements or compensation for corporate action entitlements until payment by the buying customer has been cleared and the proceeds received by the Trading Member.
In this Rule, "banking day" means a day on which the bank(s) used by the Trading Member for payment to its customer is(are) open for settlement.
A buying customer must pay its Trading Member for its trade as follows:(a) In the case of a buying customer who has in place arrangements to settle trades with its Trading Member on a delivery-versus-payment basis through the CDP Settlement Facility, the buying customer must:(i) submit delivery-versus-payment settlement instructions to CDP in time to make payment for the trade on Intended Settlement Day; and(ii) make payment for the trade when required by CDP under the CDP Settlement Rules.(b) In the case of any other buying customer, the buying customer must pay the Trading Member for its trade on Intended Settlement Day, regardless of whether securities have been delivered by CDP.
See Practice Note 9.4.3A(b).
9.4.4(1) If the Trading Member reasonably expects full payment from the buying customer, the Trading Member may defer force-sale for up to two Market Days.(2) Rule 9.4.3B does not apply if the Trading Member has allowed the buying customer to effect a corresponding sale position after the purchase but not later than the Intended Settlement Day of the purchase contract.
A Trading Member exercising its discretion under Rule 9.4.4 must not engage in imprudent credit practices.
The following rules apply to all force-sales by a Trading Member:—(1) The Trading Member has discretion as to the price, and volume put up for sale, at any time;(2) The Trading Member need not give notice of the force-sale to the buying customer;(3) The Trading Member is not liable to the buying customer for any loss or damage arising out of the exercise of its discretion; and(4) The Trading Member may recover the losses and expenses incurred in the force-sale from the buying customer.