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Regulation and Compliance > Federal Regulation > FINRA

FINRA Offers Guidance to BDs on 'Unexpected' Market Closings

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The Financial Industry Regulatory Authority is providing guidance to broker-dealers on how to comply with various rules during an unexpected close in the markets — pointing to the national day of mourning declared in memory of President George H.W. Bush on Wednesday.

The Regulatory Notice 18-39 addresses, among other things, the circumstances under which the day of the unexpected close should be considered a regular business day versus a non-business day for various rules, including net capital and customer protection rules as well as Regulation SHO.

For instance, the notice states that regarding Rule 204 under Regulation SHO, “the day of closure” should be treated as a non-business day.

Participants of registered clearing agencies or firms that have been allocated a fail-to-deliver position by a participant of a registered clearing agency pursuant to the rule may delay closing out fail-to-deliver positions that have become due on “the day of closure” since U.S. equity exchanges would be closed, FINRA explains.

“Close-out would be required no later than the beginning of trading on the day that major U.S. equity exchanges reopen,” FINRA states. “A participant of a registered clearing agency should not count the days that major U.S. equity exchanges are closed for purposes of determining the relevant time period for its close-out obligations.”

The FINRA notice issued Tuesday replaces the guidance previously set forth in Notice 05-47.

— Check out FINRA Files to Allow BDs to Receive E-Signatures on ThinkAdvisor.


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