Replies to post #44808 on The Golden Lounge

[Jim Bishop]

The National Association of
Securities Dealers, Inc. (NASD®)
Uniform Practice Code (UPC)
governs, among other things, the
designation of “ex-dividend dates”
(ex-dates) for securities. The exdate
is the date on or after which a
security is traded without a specific
dividend or distribution. Under
NASD rules, there are two different
methods used to determine the exdate
of a security, depending upon
the size of the dividend or
distribution. This Notice reviews
differences in the way ex-dates are
determined and cautions members
and their associated persons to be
cognizant of these differences
when providing ex-date information
to customers.

Questions/Further Information

Questions or comments concerning
this Notice may be directed to
Dorothy L. Kennedy, Director, Market
Operations, The Nasdaq Stock
Market, Inc. (The Nasdaq Stock
Market®), at [phone]; and
Shirley Weiss, Associate General
Counsel, Office of General Counsel,
NASD Regulation, Inc. (NASD
RegulationSM), at [phone].

Background

NASD member firms or their
registered representatives from
time to time respond to customer
inquiries regarding ex-dates relating
to dividend and other distributions.
In some cases, customers have
drawn erroneous conclusions
regarding ex-dates. In particular,
large dividends that result in the
designation of ex-dates after the
record and payable dates have
caused confusion in the case of
customers who effect sales
transactions after the record date
but before the payable date and
believe therefore that they are
entitled to keep the dividend.

Securities and Exchange
Commission (SEC) Rule 10b-17
requires issuers to give notice of
dividends and distributions to the
NASD no later than 10 days prior to
the record date.1 The NASD then
establishes the ex-date for the
distribution and makes this
information publicly available on a
Daily Dividend List on the Nasdaq
TraderSM Web Site
(www.nasdaqtrader.com/dailylist/
dl_di_ind.stm), which shows the
issuer name and symbol,
declaration date, amount of
dividend, the ex-date, the record
date, and the payable date.

Determining The Ex-Date

UPC Rule 11140 governs the
designation of ex-dates for
securities. The ex-date is the date
on or after which a security is
traded without a specific dividend or
distribution. The payable date is the
date that the dividend is sent to the
record owner of the security. Under
the UPC, two methods are used to
determine the ex-date of a security,
depending on the size of the
dividend or distribution.