The Fully-Paid-for-Account

The Fully-Paid-for-Account is a special sub-account within NSCC's Continuous Net Settlement (CNS) System that assists participants in maintaining compliance with possession and control requirements pursuant to Rule 15c3-3 of the Securities Exchange Act.


About

The Fully-Paid-for-Account allows Members to deliver institutional transactions via DTC using customer fully-paid-for securities in anticipation that they will receive these securities from CNS.

Who Can Use the Service

All NSCC full-service Members

Benefits

  • Enables Members to deliver securities to institutional clients on settlement day using customer fully-paid-for securities.
  • Reduces the number of institutional fails.
  • Allows Member to maintain good relationships with institutional customers.
  • The Fully-Paid-for-Account is a good control location for compliance with the requirements under Section 15c3-3 of the Exchange Act.

How the Service Works

Members instruct NSCC to move their expected long allocations from the general CNS “A” subaccount into a fully-paid-for location (the “E” subaccount) and are then permitted to use customer fully-paid-for positions to complete institutional deliveries in DTC.

As Members instruct NSCC to move expected long allocations to the fully-paid-for location, NSCC reclassifies the relevant long allocations as a fully-paid-for long allocation and debits the Member the market value of the relevant securities in the NSCC settlement system. These long allocation reclassifications and corresponding settlement debits are posted intraday by NSCC. The funds associated with the fully-paid-for process are collected via NSCC’s end-of-day settlement process and are held by NSCC and used to ensure the customer fully-paid-for positions can be replaced should the Member become insolvent. Upon completion of a fully-paid-for long allocation, the relevant funds are used to pay for the securities received from CNS via NSCC’s end-of-day settlement process.

Additionally, if the Member replaces the customer fully paid for securities in inventory at DTC prior to the receipt of the CNS long allocation, the Member can move the expected long allocation from the fully-paid-for location (the “E” subaccount) back to the general CNS “A” subaccount. Upon completion, the relevant funds are credited back to the Member through NSCC’s end-of-day settlement process.

For More Information / Who to Call

For more information regarding this service, please call Client Support, 1-888-382-2721, Option 2 then Option 2.

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