Close-Out Requirements for Fails to Deliver

What this video covers

• How a participant must deliver on a long or short sale in any equity security by settlement date, and how the baseline fail must be closed out by borrowing or purchasing like kind and quantity
• Why the baseline deadline is the beginning of regular trading hours on the settlement day following settlement date, with regular trading hours running from 9:30 a.m. to 4 p.m. Eastern Time
• How the long-sale and bona fide market making provisos extend the deadline to the third consecutive settlement day, while allowing borrowing or purchasing
• Why the deemed-owner proviso runs for 35 consecutive calendar days from the trade date and requires purchasing only
• How books and records must demonstrate that a fail resulted from a long sale before the long-sale proviso applies
• What the pre-borrow bar prevents, why a borrow can satisfy an initial close-out but cannot lift the bar, and why a purchase must clear and settle
• How certifications, required notices, fail allocations, and the bona fide escape hatch affect liability, including the full-fail, timing, net-position, and no-sham requirements