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The minimum Dealer Member inventory margin requirement for a commitment in respect of a new issue of securities or a secondary issue of securities where a new issue letter has not been obtained is calculated in accordance with subsections 5520(2) through 5520(5).
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No out clauses in effect - Where the commitment is not subject to a market out clause or a disaster out clause (by the exclusion of these clauses from the related underwriting agreement), the margin required is:
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from the commitment date to 20 business days after settlement date, normal new issue margin,
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thereafter, normal margin.
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Disaster out clause in effect - Where the commitment is subject to a disaster out clause (by the inclusion of this clause in the related underwriting agreement), the margin required is:
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from the commitment date to the settlement date of the offering or the expiry date of the disaster out clause, whichever is earlier, 50% of normal new issue margin, and
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thereafter, the same as in subsection 5520(2).
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Market out clause in effect - Where the commitment is subject to a market out clause (by the inclusion of this clause in the related underwriting agreement), the margin required is:
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from the commitment date to the settlement date of the offering or the expiry date of the market out clause, whichever is earlier, 10% of normal new issue margin is required, and
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thereafter, the same as in subsection 5520(2).
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Disaster out clause and market out clause in effect - Where the commitment is subject to a disaster out clause and a market out clause (by the inclusion of these clauses in the related underwriting agreement), the margin required is:
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from the commitment date to the settlement date of the offering or the expiry date of the market out clause, whichever is earlier, 10% of normal new issue margin is required, and
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thereafter:
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where the disaster out clause is still in effect, the same as in subsection 5520(3), or
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where the disaster out clause is also no longer effect, the same as in subsection 5520(2).
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There is no history log for this rule.