Rule on orderly liquidation of brokers, dealers in Federal Register Monday

A final rule on the orderly liquidation of certain brokers or dealers in the event the Federal Deposit Insurance Corp. (FDIC) is appointed receiver under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) is set to take effect on or about Oct. 30, according to a Federal Register notice slated to publish Monday.

The final rule was approved July 24 by the FDIC and the Securities and Exchange Commission (SEC). Developed in consultation with the Securities Investor Protection Corporation (SIPC), rule is “substantively similar” to the proposed rule issued in February 2016, the agencies said.

The agencies noted that by statute, the orderly liquidation of a covered broker-dealer must be accomplished in a manner that ensures that customers of the covered broker-dealer receive payments or property at least as beneficial to them as would have been the case had the covered broker-dealer been liquidated under the 1970 Securities Investor Protection Act.

The final rule, they said, describes the claims process applicable to customers and other creditors of a covered broker-dealer and clarifies the FDIC’s powers as receiver with respect to the transfer of assets of a covered broker-dealer to a bridge broker-dealer.

Reg lookup: Covered Broker-Dealer Provisions under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act

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