Settlement Failures and Close-Out Procedures

What this video covers

• Why a fail to deliver (FTD) or fail to receive (FTR) does not cancel the trade, and why the contract stays binding with a buy-in or sell-out as the only remedy
• The inter-dealer buy-in timeline: the 3-business-day floor for execution, and the written notice delivered by 12:00 PM ET at least 2 business days before execution
• How buy-in cost allocation works, and why the failing seller is always liable for the difference when the market price is higher than the original contract price
• The customer protection rule's 10-business-day buy-in for a customer's undelivered long sale, and why this rule is suspended for exempt securities such as U.S. government and municipal obligations
• Why a sell-out is the mirror image of a buy-in, triggered by a buyer's failure to pay rather than a seller's failure to deliver
• The purpose of a Don't Know (DK) notice during trade comparison, and the critical distinction between a settlement fail (parties agree the trade happened) and a DK dispute (parties do not recognize the trade)
• Regulation T payment deadlines in a cash account, the extension process through a self-regulatory organization (SRO), and the 90-day freeze for free riding violations including what trading privileges remain available