Question

A municipal dealer purchases securities and accepts them for delivery on settlement date. The dealer later finds that the delivery of the securities should not have been accepted as there were missing coupons. The municipal dealer can correct this error through the right of:

Answer 1

Answer: Reclamation.

When security or stock is badly delivered or with irregularities, the buyer has the right to reclaim the money they have paid.

Explanation: Reclamation is the right a buyer has to reclaim their money or property when there is a bridge of agreement in the delivery of security, or bond or when there are irregularities.

In order to reduce the situation of reclamation, the solution is to reduce bad delivery and this can be achieved by getting securities registered and transfer them online through the use of electronic form compared to making use of physical certificates, this tends to minimize bad delivery.