DTC has been working proactively with the industry to increase awareness of our global lock process, to eliminate these difficulties in future. DTC also enhanced its procedures to expedite the release of any Important Notice reflecting a global lock, so firms can promptly halt trading in affected securities. Additionally, DTC implemented on June 10, 2011 a global lock reason [code] on its security master file and related outputs (ELIS and DWIZ files - see important notice B-0811-11 dated May 24, 2011 - http://www.dtcc.com/downloads/legal/imp_notices/2011/dtc/ope/0811-11.pdf) to allow Participants to receive an automated notification in the event a global lock occurs. This enhancement provides Participants the ability to update their systems to automatically block future trading of affected securities, as well as alerting Compliance areas of the Participants so that they may investigate activity related to these securities. Despite these improvements, Participants and DTC have a legacy issue of accumulated trade fails that occurred prior to these enhancements. Proposed Solution Working with the Participants, DTC identified a number of options and determined that the preferred solution is to lift the global lock on designated CUSIPs for a limited period of time, to allow Participants to take appropriate steps (including any appropriate segregation updates) to make deliveries that will resolve outstanding fails in the designated CUSIPs. DTC will report all such deliver orders during the specified period to the Securities and Exchange Commission. DTC cautions participants that, if a participant were to make or receive deliveries to or from a party other than the original counterparty or the NSCC assigned counterparty, which resulted in the fails in the designated CUSIP, change of such counterparty to the transaction likely would be deemed to be effecting a new transaction. Securities subject to a trading halt by the Commission will be excluded from this program. The attached list will be re-verified during the Amnesty period and if any securities are subsequently found to be subject to a trading halt, they will be excluded at that time and Participants will be informed via a subsequent important notice. As to these designated CUSIPs, however, DTC will not lift the related deposit chill. If there are failed deliveries in these CUSIPs that are dependent upon physical securities held outside of DTC, settlement of those trades must be effected by physical delivery outside of DTC.
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