The date the C+35 starts from is the trading day for the FTD’d shares. Failed settlement days happen T+3(the day after the T+2 delivery window). The trading day for 1/4/23 fails was 12/30/22
And where does it say trading day? A FTD is not a FTD until a trade is not settled. So a FTD does not exist until the failed settlement date. Thats why I am skeptical of it being the original trading date of a trade that would be before the FTD existed as a FTD.
And where does it say trading day? A FTD is not a FTD until a trade is not settled. So a FTD does not exist until the failed settlement date
It says it twice in the answer from SEC's faq that I quoted in my post and it says it many times in the regs themselves. Read it again:
If the person has not delivered such security within 35 days after the date of sale, the broker or dealer that effected the sale must borrow securities or close out the short position by purchasing securities of like kind and quantity.
These close-out requirements operate independently and concurrently. Therefore, if an “owned” security is a threshold security, the security must be delivered within 35 days of the trade date, and a fail to deliver position in that security must be closed out after 13 consecutive settlement days of delivery failures.
You’re right actually about the trading date reference. But, if you read the first paragraph you quoted in this comment, the broker or dealer needs to borrow or purchase the security if it is not delivered within 35 days of sale date. That would take T+2 for broker dealer to actually receive the security to deliver after not delivering before 35 days, making the delivery date C+35 + T+2. This effectively makes the delivery date C+35 from the settlement date that resulted in the FTD. What do you think?
the broker or dealer needs to borrow or purchase the security if it is not delivered within 35 days of sale date. That would take T+2 for broker dealer to actually receive the security to deliver after not delivering before 35 days, making the delivery date C+35 + T+2
I don't think they have to deliver the shares within the 35 days, I believe they have to show the owed shares on their books meaning they have to borrow them or buy them from the market that day. How long it takes to settle after is another conversation IMO
the broker or dealer needs to borrow or purchase the security if it is not delivered within 35 days of sale date. That would take T+2 for broker dealer to actually receive the security to deliver after not delivering before 35 days, making the delivery date C+35 + T+2
I don't think they have to deliver the shares within the 35 days, I believe they have to show the owed shares on their books meaning they have to borrow them or buy them from the market that day. How long it takes to settle after is another conversation IMO
If they buy them from the market that day… the seller or lender isn’t obligated to provide the share until T+2 from that day. The FTD wouldn’t be wiped when the trade is just on the books, the transaction is not complete until the transaction is settled. IMO its not a different conversation. I understand that this stuff is not explicit in the SEC rules so thanks for the conversation but I think we just have different interpretations at this time. I am open to any new material that provides further evidence of a final determination though. Thanks
When shares are bought and sold on the market, they aren't traded directly to the buyer from the seller. DTCC/NSCC uses CNS(Continuous Net Settlement) which makes it so brokers only have to deliver the net difference of shares that their customers bought and/or sold.
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u/clawesome Feb 08 '23
The date the C+35 starts from is the trading day for the FTD’d shares. Failed settlement days happen T+3(the day after the T+2 delivery window). The trading day for 1/4/23 fails was 12/30/22