Series 99: 2.2.1 Close-Out Requirements For NSCC Participants

2.2.1  Close-Out Requirements for NSCC Participants

A broker-dealer that is a participant in a registered clearing agency such as the NSCC must deliver the securities for its long or short sales on the settlement date. If a fail to deliver occurs, then it must close out its fail to deliver positions for long and short positions by the first business day following the settlement date.

If a participant can demonstrate that its failure to deliver resulted from a long sale, or if it relates to a bona fide market making activity in the over-the-counter market, close-out must be made by T + 5. A “deemed to own” participant must close out its position by the 35th calendar day following the trade date. A deemed to own security is one that an investor owns, but that