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Information > Financial Terms > This page Trading Methods The
bases for payment and delivery for transactions in stocks on the New York
Stock Exchange are three: (1)
cash (for delivery on the same day), (2) regular way (for delivery on
the fifth full business day following the day of the transaction), and
(3) seller's option, wherein the seller may deliver from six days to not
more than sixty days from the day of the transaction, at his option, giving
notice to the buyer one business day in advance. The
pertinent rules from the New York Stock Exchange Directory and Guide
are as follows. Bonds, Rights, and 100-Share-Unit Stocks - Rule 64. Bids
and offers in securities admitted to dealings on an issued basis shall
be made only as follows, and may be made simultaneously as essentially
different propositions, but when made without stated conditions shall
be considered to be "regular way":
(1) "cash," i.e., for delivery on the day of the contract, (2)
"regular way," i.e., for delivery on the fifth business day following
the day of the contract, (3) "seller's option," i.e., for delivery within
the time specified in the option, which time shall be not less than six
business days nor more than sixty days following the day of the contract,
except that the exchange may provide otherwise in specific issues of stocks
or classes of stocks and except that on the second, third, fourth, and
fifth business days preceding the final day for subscription, bids and
offers in rights to subscribe shall be made only "next day," i.e., for
delivery on the next business day following the day of the contract, and
on the day preceding the final day for subscription shall be made only
for cash. Cash
delivery must be specified in an order.
It would be resorted to whenever there is need for maximum speed
in the sale of a stock, such as for tax purposes, or to obtain stock quickly,
such as for voting purposes. The
seller's option basis is a deferred delivery; pursuant to Rule 137, written
contracts (in forms approved by the exchange) must be exchanged between
the parties not later than the second business day following the transaction. Less than 100-Share-Unit Stocks - Rule 65. Stocks
having a unit of trading of less than 100 shares, not assigned by the
exchange for dealings by the use of cabinets as provided in Rule 85 (a
procedure, off the floor, for trading in inactive stocks), shall be dealt
in as provided in Rule 64 (above).
Anything contained in the rules to the contrary notwithstanding,
the following rule shall apply to deliveries of less than 100-share-unit
stocks dealt in pursuant to this rule: Unless
the exchange directs otherwise, an odd lot of stock sold by an odd-lot
dealer for his own account shall be delivered on the fourteenth day following
the day of the contract, and may be delivered on any business day prior
thereto, except that delivery shall not be made before the fifth business
day following the day of the transaction, unless otherwise agreed. Bids
and offers in securities of the United States government admitted to dealings
on an "issued" basis shall be made only as follows, and may be made simultaneously
as essentially different propositions, but when made without stated conditions
hall be considered to be "regular way":
(1) "cash," i.e., for delivery on the day of the contract, (2)
"regular way," i.e., for delivery on the business day following the day
of the contract, (3) "seller's option," i.e., for delivery within the
time specified in the option, which time shall be not less than two business
days nor more than sixty days following the day of the contract, except
that the exchange may provide otherwise in such securities. Because
regular way delivery is one day on Repeal of Former Rules. When
Rule 64 was amended on February 9, 1968, so as to pertain to bonds and
rights, as well as 100-share-unit stocks, former Rule 67 (pertaining to
convertible bonds), Rule 68 (pertaining to other bonds), and Rule 69 (pertaining
to fourth day or delayed delivery
and to disagreement) were repealed. |