U.S. Markets Stay Closed as ISDA, SIFMA and FINRA Provide Guidance
NYSE Euronext, the NASDAQ Stock Market and all other U.S. markets for equities, bonds, options and derivatives will stay closed for Tuesday, Oct. 30, because of the impacts of Hurricane Sandy, a storm estimated to affect 50 million Americans across eight states, including New York.
“Sandy has transitioned from a tropical to a post-tropical, or wintertime, cyclone and is in the process of making landfall,” according to an advisory from the National Weather Service. “At 7:00 PM EDT, maximum sustained winds were reported at 85 mph. As it moves inland, Sandy will continue to pose a significant threat to coastal areas in terms of high winds, storm surge and coastal flooding and heavy snow for the Appalachians.”
However, for the New York City area, the hurricane, which caused the closure of U.S. markets on Monday, Oct. 28, might subside enough to allow Wall Street and trading exchanges to reopen on Wednesday, Oct. 31, say exchange and public officials.
While NASDAQ OMX exchanges outside the U.S. stayed open on Monday and will remain open on Tuesday, the following venues and the FINRA/NASDAQ Trade Reporting Facility (TRF) will be closed:
- The NASDAQ Stock Market
- NASDAQ OMX BX
- NASDAQ OMX PSX
- The NASDAQ Options Market
- NASDAQ OMX PHLX
- NASDAQ OMX BX Options
- The NASDAQ OMX Futures Exchange
- NASDAQ OMX Commodities Clearing Company (NOCC)
- FINRA/NASDAQ Trade Reporting Facility (ACT)
“At this time, we expect all NASDAQ OMX-owned U.S. exchanges and markets and the TRF will open as normal on Wednesday, October 31. Additional information will be communicated shortly,” say NASDAQ officials.
For the fixed income markets, securities industry lobbyist SIFMA has recommended “a full market close” on Tuesday, Oct. 30, for the trading of US dollar-denominated fixed-income securities in the US; SIFMA recommended an early close for markets on Monday, Oct. 29.
The SIFMA recommendations encompass U.S. dollar-denominated government securities, mortgage- and asset-backed securities, over-the-counter (OTC) investment-grade and high-yield corporate bonds, municipal bonds and secondary money market trading in bankers’ acceptances, commercial paper and Yankee and Euro certificates of deposit.
“However, SIFMA notes that primary dealers will need to determine if they intend to provide limited staffing on funding desks on Tuesday, October 30, in order to accommodate any potential open-market operations by the Federal Reserve Bank of New York,” according to SIFMA.
SIFMA is also recommending full closes for the trading of US dollar denominated government securities in Tokyo and London for October 30.
SIFMA is also suggesting that firms “to the extent possible, limit settlements on Tuesday, October 30.”
On the derivatives front, officials from the International Swaps and Derivatives Association (ISDA) have issued a guidance to mitigate market risk and promote orderly valuation and settlement of positions by market participants. The guidance is for parties to OTC derivative transactions affected by the closing of US exchanges and bond markets on Monday, Oct. 29, and Tuesday, Oct. 30 because of the hurricane.
The ISDA guidance covers the operation of the following derivative transactions:
- Exercise, valuation and expiration of option transactions and observation days for Variance Swap Transactions under the 2002 ISDA Equity Derivatives Definitions;
- Options, rate resets and swaptions under the 2006 ISDA Definitions;
- Commodity derivative transactions under the 2005 ISDA Commodity Definitions and the 1993 ISDA Commodity Derivatives Definitions;
- Credit Derivative Transactions under the 2003 ISDA Credit Derivatives Definitions;
- And payments
ISDA officials say the guidance was based on information available to ISDA at 3:00 pm EST on Monday, Oct. 29.
Also with the derivatives markets in mind, CME Group officials reopened their U.S. equity index futures and options on futures markets at 5:00 p.m. CT on Monday, Oct. 29, for overnight electronic trading.
The equity index markets are slated to close Tuesday morning Oct. 30, at 8:15 a.m. CT for the physical trading floor and the electronic platform CME Globex in coordination with the announced closure of the U.S. equity markets, officials say.
In addition, the CME Group reopened trading in interest rate futures and options on futures including Treasury, Eurodollar and Fed Funds at 5:00 p.m. CT Monday, Oct. 29, which marked a return to normal trading hours. This will include trading on Tuesday, Oct. 30. The re-opening for interest rate markets applies to trading floor and CME Globex venues.
As for CME Group’s NYMEX World Headquarters, the evacuation of downtown New York caused the New York trading floor to be closed on Tuesday, Oct. 30, officials say. However, all New York floor-traded products will be available on ClearPort as well as via CME Globex during their regular market hours.
From the regulators, the SEC has closed to the public its offices in Washington, DC, New York, Philadelphia and Boston, officials say.
For those who are filing via the SEC’s EDGAR system, the platform is operating normally and the divisions of Corporation Finance and Investment Management Filer Support teams are available, officials say. “During this weather emergency, we understand that filers may be unable to submit their filings,” according to an SEC statement. “You should file when you are able. The divisions will handle requests for filing date adjustments on a case-by-case basis.”
Independent regulator the Financial Industry Regulatory Authority (FINRA) closed its offices in Washington, DC, Maryland, New York City, Long Island, N.Y., Woodbridge, Philadelphia and Boston on Monday and Tuesday because of the storm. However, FINRA is urging its members to take action.
“In light of the hurricane advisories in effect for the Mid-Atlantic and Northeastern United States, FINRA is encouraging member firms with offices in the affected areas to prepare to implement business continuity plans,” according to FINRA. “Rule 4370—FINRA’s emergency preparedness rule—requires firms to create and maintain business continuity plans (BCPs) appropriate to the scale and scope of their businesses, and to provide FINRA with emergency contact information.”
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