{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/320/940/#05-overview-and-background","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"320","topic_title":"Investments—Debt Securities","subtopic":"320-940","subtopic_title":"Financial Services—Brokers and Dealers","section":{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"320-940-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic addresses investments in debt and equity securities by brokers and dealers in securities (broker-dealers). The guidance in this Subtopic is presented in the following two Subsections:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\">General</div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\">Proprietary Trading Securities.</div></li></ol></div></div>","snippet":"This Subtopic addresses investments in debt and equity securities by brokers and dealers in securities (broker-dealers). The guidance in this Subtopic is presented in the following two Subsections:\n(a) General\n(b) Propri…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:56ce04913e2aeffc2068f7f12bec1f1c28b9215b3df454e137587bd36c765813","downloaded_from":"2026-09-09T23:35:35.402Z","last_downloaded_at":"2026-09-09T23:35:35.402Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477524","source_sha256":"b82e1293c6224e8787d23e24c3b0c058e4ef8bcd54f9785b683bb7e786d70077"}},{"citation":"320-940-05-2","para":"05-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">The General Subsections provide guidance relating to clearance and settlement activities.</div></div>","snippet":"The General Subsections provide guidance relating to clearance and settlement activities.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b8f0f211b95bce9afa94c186ddac41999d131a04c8942e813c27a80b93e1227a","downloaded_from":"2026-09-09T23:35:35.402Z","last_downloaded_at":"2026-09-09T23:35:35.402Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477524","source_sha256":"b82e1293c6224e8787d23e24c3b0c058e4ef8bcd54f9785b683bb7e786d70077"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ad2d9c61719f94c74922fddbf57fbf2b11a0b02f893d8d583ba2f1d0a18a2e87","downloaded_from":"2026-09-09T23:35:35.402Z","last_downloaded_at":"2026-09-09T23:35:35.402Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477524","source_sha256":"b82e1293c6224e8787d23e24c3b0c058e4ef8bcd54f9785b683bb7e786d70077"}},{"block":"Proprietary Trading Securities","heading":null,"paragraphs":[{"citation":"320-940-05-3","para":"05-3","html":"<div class=\"asc-body\"><div class=\"norm-text\">The Proprietary Trading Securities Subsections provide guidance on accounting for <a href=\"/glossary/p/#proprietary-transactions\" class=\"term\" title=\"Transactions in financial instruments that broker-dealers execute for their own account.\"><span>proprietary transactions</span></a>. <span class=\"sfragment\" id=\"sfr_EDC9F5E6-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A broker-dealer may buy and sell securities for its own account. </span></span><span class=\"sfragment\" id=\"sfr_EDC9F788-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Broker-dealers frequently enter into matched-stock borrow and loan transactions as a finder or conduit, or enter into <a href=\"/glossary/r/#repurchase-agreement\" class=\"term\" title=\"An agreement under which the transferor (repo party) transfers a financial asset to a transferee (repo counterparty or reverse party) in exchange for cash and concurrently agrees to reacquire that financial asset at a future date for an amount equal to the cash exchanged plus or minus a stipulated interest factor. Instead of cash, other securities or letters of credit sometimes are exchanged. Some repurchase agreements call for repurchase of financial assets that need not be identical to the financial assets transferred.\"><span>repurchase</span></a> and reverse repurchase transaction agreements as part of a matched-book trading strategy. </span></span><span class=\"sfragment\" id=\"sfr_EDC9F90C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Further, complex trading strategies often involve numerous long and short positions in different products, so that those positions reflect a trading position that is different from its individual components (for example, <a href=\"/glossary/b/#box-spread\" class=\"term\" title=\"A combination of long calls and short puts (identical with respect to the underlying security issue, number of shares, exercise price, and expiration date) coupled with long puts and short calls (identical with respect to the underlying security issue, number of shares, exercise price, and expiration date). In boxing (coupling), the long calls and short puts with the long puts and short calls, the underlying security issue, the number of shares, and the expiration date remain identical. However, the exercise price of each combination is at a different amount.\"><span>box spreads</span></a>, conversions, and reversals). </span></span></div></div>","snippet":"The Proprietary Trading Securities Subsections provide guidance on accounting for proprietary transactions. A broker-dealer may buy and sell securities for its own account. Broker-dealers frequently enter into matched-st…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:27c795fb9e66fd81efc8b5b00d9e39c22087ab7abd90c97eec0cc54eb6d20afe","downloaded_from":"2026-09-09T23:35:35.402Z","last_downloaded_at":"2026-09-09T23:35:35.402Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477524","source_sha256":"b82e1293c6224e8787d23e24c3b0c058e4ef8bcd54f9785b683bb7e786d70077"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:693f9f1f402b58971af616f255f47a9ebe4926a2aa977c76127154b189806ab1","downloaded_from":"2026-09-09T23:35:35.402Z","last_downloaded_at":"2026-09-09T23:35:35.402Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477524","source_sha256":"b82e1293c6224e8787d23e24c3b0c058e4ef8bcd54f9785b683bb7e786d70077"}},{"block":"Proprietary Trading Securities","heading":"Regular-Way Trades","paragraphs":[{"citation":"320-940-05-4","para":"05-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDC9FA71-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The risk of nonperformance of <a href=\"/glossary/r/#regular-way-trades\" class=\"term\" title=\"Regular-way trades include both of the following: All transactions in exchange-traded financial instruments that are expected to settle within the standard settlement cycle of that exchange (for example, three days for U.S. exchanges) All transactions in cash-market-traded financial instruments that are expected to settle within the time frame prevalent or traditional for each specific instrument (for example, for U.S. government securities, one or two days).\"><span>regular-way trades</span></a> is minimal given all of the following: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_EDC9FBE6-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">They are fully collateralized on the trade date. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_EDC9FD66-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The period of time between trade date and settlement date is reasonably short. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_EDC9FECA-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Most equity, U.S. government, and mortgage-backed agency securities are affirmed by both parties to the trade and settle net through a clearing entity. </span></span></div></li></ol></div></div>","snippet":"The risk of nonperformance of regular-way trades is minimal given all of the following:\n(a) They are fully collateralized on the trade date.\n(b) The period of time between trade date and settlement date is reasonably 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