On November 15, 2022, FINRA adopted amendments to revise the syndicate account settlement timeframe for offerings of corporate debt securities. The amendments to FINRA Rule 11880 establish a two-stage syndicate account settlement approach for public offerings of corporate debt securities. The amendments will become effective for public offerings of debt securities that commence on or after January 1, 2023, and will exclude any such offering that commences prior to January 1, 2023.
FINRA added a new paragraph (b)(2) to Rule 11880. The addition provides that the final settlement of syndicate accounts for any public offering of a corporate debt security must be effected by the syndicate manager by remitting to each syndicate member at least 70 percent of the gross amount due to such syndicate member within 30 days, with any final balance due remitted within 90 days following the syndicate settlement date. The amended timeframe is limited to public offerings of “corporate debt securities,” which as defined in the rule is a “debt security that is U.S. dollar-denominated and issued by a U.S. or foreign private issuer, including a ‘securitized product,’ as defined by Rule 6710(m).” For purposes of Rule 11880, a “corporate debt security” does not include a “money-market instrument” as defined in Rule 6710(o). For purposes of clarification, public offerings of convertible debt securities are not within the scope of “corporate debt security” for the amendments to Rule 11880.