Series 52: 9.2.7.1. Close-Out By Purchaser

Taken from our Series 52 Top Off Online Guide

 9.2.7.1.  Close-Out by Purchaser

If the purchaser elects to close out a transaction, it must notify the seller by telephone of its intention no earlier than the fifth business day following the settlement date (except for same-day settlement). The fifth day past settlement is seven business days after the trade date, so is often represented by T + 7. The notice will demand that the transaction be completed by a specified date and time or it will be closed out. The date specified must be no earlier than ten business days following the date of the telephonic notice. The close-out may be executed any time within a five-day window following the specified date.

Example Question

Jones Co. broker-dealer wants to close out a transaction that traded on Monday, June 1, because its securities were not delivered by the settlement date, Wednesday, June 3. What is the earliest date on which Jones Co. can notify the seller that it wishes to close out the transaction

Answer: Wednesday, June 10. The earliest date that Jones Co. can notify the seller of its intention to close out the transaction is five business days past the settlement date, or T + 7.

Monday, June 1

Tuesday, June 2

Wednesday, June 3

Thursday, June 4

Friday, June 5

Monday, June 8

Tuesday, June 9

Wednesday, June 10

T + 0

T + 1

T + 2

T + 3

T + 4

T + 5

T + 6

T + 7

Trade date

Settlement date

Since you're reading about Series 52: 9.2.7.1. Close-Out By Purchaser, you might also be interested in:

Solomon Exam Prep Study Materials for the Series 52
Please Enable Javascript
to view this content!