Monday, October 29, 2012

Division of Trading and Markets Issues FAQ on Hurricane Sandy

The SEC’s Division of Trading and Markets has issued a FAQ dealing with the close out of fail to deliver positions under Regulation SHO due to financial markets being closed for Hurricane Sandy. The FAQ said generally that registered clearing agency participants, or broker-dealers allocated fail to deliver positions by a participant, “may delay closing out fail to deliver positions that have become due on a day major U.S. equity exchanges are closed as a result of Hurricane Sandy until no later than the beginning of trading on the day that major U.S. equity exchanges re-open.” The FAQ noted that Regulation SHO Rule 204 allows the result because of the “unique circumstances” presented by the storm. The FAQ also clarifies several other points and offers an example of how Regulation SHO may apply to hypothetical facts.