Series 7: 17.5.2.5. Closing Out A Position: Buy-ins And Sellouts

17.5.2.5. Closing Out a Position: Buy-ins and Sellouts

Sometimes a seller will fail to deliver securities by the settlement date. When this happens, the seller is given three additional business days before the buying firm is allowed to close out the position—allowing the selling firm an extended settlement date of up to five business days after the trade (T + 5). If delivery has still not been made at this later date, the buyer may close out her position by purchasing the securities in the open market. This type of close-out is called a buy-in. When a buy-in occurs, the original seller will be responsible for any difference in price if the new shares prove more