SIFMA urges early close for fixed income transactions
Hurricane Sandy has closed all equity and options exchange trading in the U.S. for Monday, Oct. 29 as the massive, life-threatening storm batters the East Coast of the U.S. The regulators and exchanges have not yet decided whether to resume trading on Tuesday.
In a related move, the CME Group will be closing its U.S. equity index futures and equity index options on futures markets on the trading floor and on CME Globex at 8:15 a.m., Central Time (CT), on Monday, Oct. 29, officials say.
“All other CME Group futures and options on futures markets will remain open. We will continue to monitor the situation as well as continue our coordination with other exchanges and will keep you updated as information becomes available,” according to CME Group officials.
Aside from the exchanges, DTCC officials say the utility will remain open on Monday, Oct. 29, for clearing, settlement and operational processes despite Hurricane Sandy.
Deadlines for clearing fund, settlement and other processes will be as usual, according to DTCC officials. All other services will proceed normally with the exception of all securities certificate processing services; all certificate-based services—deposits, withdrawals, envelope and New York Window services—will be suspended beginning on Monday.
Over the weekend, officials from New York City, the state of New York and New Jersey declared states of emergency that halted public transportation and caused multiple evacuations, particularly areas around the New York Stock Exchange (NYSE) building.
This is most wide-scale halt of trading since the terrorist attacks on the U.S. in September 2001.
“In consultation with other exchanges and market participants, NYSE Euronext will close its markets on Monday, Oct. 29 … and pending confirmation on Tuesday, Oct. 30,” according to NYSE Euronext officials.
In fact, NYSE Euronext officials reversed a decision on Sunday, Oct. 28, that would have closed the physical trading floor but allowed electronic trading via the NYSE Arca electronic exchange.
“We support the consensus of the markets and the regulatory community that the dangerous conditions developing as a result of Hurricane Sandy will make it extremely difficult to ensure the safety of our people and communities, and safety must be our first priority,” say NYSE officials. “We will work with the industry to determine the next steps in restoring trading as soon as the situation permits.”
NYSE officials say the last time the exchange suspended physical trading floor operations because of a storm was Friday, Sept. 27, 1985 when Hurricane Gloria closed U.S. markets.
NYSE rival, the NASDAQ OMX Group says the following affiliated U.S. exchanges and markets and the FINRA/NASDAQ Trade Reporting Facility will be closed on Monday due to Hurricane Sandy:
- 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 U.S. Commodities (NOCC)
- FINRA/NASDAQ Trade Reporting Facility (ACT)
The NASDAQ OMX exchanges outside the U.S. will be open for business on Monday and Tuesday as scheduled, officials say.
The trading halt followed a consultation among U.S. exchanges, government officials, the SEC and other regulators, say NASDAQ officials. “The continuity of our markets and a variety of factors related to Hurricane Sandy’s movement up the Eastern Seaboard were considered, including the state of emergencies declared by New York City, New York State and other state and local governments.”
While U.S exchanges agreed to suspend trading, SIFMA officials are recommending that U.S. markets agree to “an early close of 12:00 pm EST on Monday, October 29, 2012” for the domestic trading of US dollar-denominated fixed-income securities.
This recommendation covers transactions in US 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, say SIFMA officials.
“The early close will not affect the closing time for settlements,” SIFMA officials say. “SIFMA’s recommended early and full market closes are recommendations only; each member firm should decide for itself whether its fixed-income departments remain open for trading. All SIFMA recommendations are subject to change due to market conditions.”
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