5521. Margin requirements for underwriting commitments where a new issue letter has been obtained

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    1. 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 been obtained is calculated in accordance with subsections 5521(2) through 5521(6).

    2. 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:

      1. from the effective date of the new issue letter to the business day prior to the settlement date of the offering:

        1. where the new issue letter has not expired, 10% of normal new issue margin, and

        2. where the new issue letter has expired, normal new issue margin,

      2. from settlement date of the offering:

        1. where the new issue letter has been drawn:

          1. from settlement date to five business days after settlement date or when the new issue letter expires, whichever is earlier, 10% of normal new issue margin,

          2. for the next succeeding five business days or when the new issue letter expires, whichever is earlier, 25% of normal new issue margin,

          3. for the next succeeding five business days or when the new issue letter expires, whichever is earlier, 50% of normal new issue margin,

          4. for the next succeeding five business days or when the new issue letter expires, whichever is earlier, 75% of normal new issue margin, and

          5. thereafter, normal margin, and

        2. where the new issue letter has not been drawn:

          1. from settlement date to 20 business days after settlement date or when the new issue letter expires, whichever is earlier, 100% of normal new issue margin, and

          2. thereafter, normal margin.

    3. 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:

      1. from the effective date of the new issue letter to the business day prior to the settlement date of the offering:

        1. where the new issue letter has not expired, 10% of normal new issue margin,

        2. where the disaster out clause has not expired, 50% of normal new issue margin, and

        3. where the new issue letter and the disaster out clause have expired, normal new issue margin,

      2. from settlement date of the offering, the same as in clause 5521(2)(ii).

    4. 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:

      1. from the effective date of the new issue letter to the business day prior to the settlement date of the offering:

        1. where the new issue letter and the market out clause have not expired, 5% of normal new issue margin,

        2. where the new issue letter has expired and the market out clause has not expired, 10% of normal new issue margin,

        3. where the new issue letter has not expired and the market out clause has expired, 10% of normal new issue margin, and

        4. where both the new issue letter and the market out clause have expired, normal new issue margin,

      2. from settlement date of the offering, the same as in clause 5521(2)(ii).

    5. 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:

      1. from the effective date of the new issue letter to the business day prior to the settlement date of the offering:

        1. where the new issue letter and the market out clause have not expired, 5% of normal new issue margin,

        2. where the new issue letter has expired and the market out clause has not expired, 10% of normal new issue margin,

        3. where the new issue letter has not expired and the market out clause has expired, 10% of normal new issue margin,

        4. where both the new issue letter and the market out clause have expired and the disaster out clause has not expired, 50% of normal new issue margin, and

        5. where the new issue letter, the market out clause and the disaster out clause have all expired, normal new issue margin,

      2. from settlement date of the offering, the same as in clause 5521(2)(ii).

    6. If the margin rates prescribed in subsections 5521(2) through 5521(5)in respect of commitments for which a new issue letter is available are less than the margin rates required by the issuer of such letter, the higher rates required by the issuer shall be applied.

    There is no history log for this rule.

    There is no history log for this rule.