# ASC 320-940-05: Investments—Debt Securities — Financial Services—Brokers and Dealers — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/320/940/#05-overview-and-background) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:35:35.402Z to 2026-09-09T23:35:35.402Z Record version: sha256:1ea6da8672c2b55483e1d06f305bfd382f697a7aa18dec2391b662ce8756fc33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 320-940-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/320/940/#05-overview-and-background) SEC content: no ##### [320-940-05-1](https://asc.understandingaccounting.org/asc/320/940/#320-940-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:35:35.402Z to 2026-09-09T23:35:35.402Z Record version: sha256:56ce04913e2aeffc2068f7f12bec1f1c28b9215b3df454e137587bd36c765813 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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: 1. a General 2. b Proprietary Trading Securities. ##### [320-940-05-2](https://asc.understandingaccounting.org/asc/320/940/#320-940-05-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:35:35.402Z to 2026-09-09T23:35:35.402Z Record version: sha256:b8f0f211b95bce9afa94c186ddac41999d131a04c8942e813c27a80b93e1227a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsections provide guidance relating to clearance and settlement activities. ### Proprietary Trading Securities ##### [320-940-05-3](https://asc.understandingaccounting.org/asc/320/940/#320-940-05-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:35:35.402Z to 2026-09-09T23:35:35.402Z Record version: sha256:27c795fb9e66fd81efc8b5b00d9e39c22087ab7abd90c97eec0cc54eb6d20afe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Proprietary Trading Securities Subsections provide guidance on accounting for [proprietary transactions](https://asc.understandingaccounting.org/glossary/p/#proprietary-transactions "Transactions in financial instruments that broker-dealers execute for their own account."). A broker-dealer may buy and sell securities for its own account. Broker-dealers frequently enter into matched-stock borrow and loan transactions as a finder or conduit, or enter into [repurchase](https://asc.understandingaccounting.org/glossary/r/#repurchase-agreement "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.") and reverse repurchase transaction agreements as part of a matched-book trading strategy. 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, [box spreads](https://asc.understandingaccounting.org/glossary/b/#box-spread "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."), conversions, and reversals). #### Regular-Way Trades ##### [320-940-05-4](https://asc.understandingaccounting.org/asc/320/940/#320-940-05-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:35:35.402Z to 2026-09-09T23:35:35.402Z Record version: sha256:91085638990ab1645f3bfcc154846d6d78b491f8146b245a7d12d5d393a3d5bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The risk of nonperformance of [regular-way trades](https://asc.understandingaccounting.org/glossary/r/#regular-way-trades "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).") is minimal given all of the following: 1. a They are fully collateralized on the trade date. 2. b The period of time between trade date and settlement date is reasonably short. 3. c 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.