Series 24: 5.11.1.2. Close-Outs Of Sales Of Threshold Securities

5.11.1.2. Close-Outs of Sales of Threshold Securities

Rule 203’s close-out provisions apply specifically to short sales of threshold securities. Threshold securities are equity securities for which there are fails-to-deliver of 10,000 shares or more at the exchange’s clearing agency for five consecutive business days, with the fails exceeding 0.5% of the issuer’s total outstanding shares. A seller with any fails-to-deliver for a threshold security must complete a close-out by T + 13.

As with Rule 204, the deadline is extended to 35 days in cases such as Rule 144 sales and other sales involving the transfer of restricted securities. Also like Rule 204, if a fail-to-deliver is not closed out by the required date, the seller is prohibited from any short sal