Good Morning All, As I was preparing for todays Q&A I noticed a reoccurring question about Scott Trade being the only broker trading our stock and the legality of them doing so under the existing DTCC Global Lock. In laments terms a Global Lock terminated all settlement transactions with the DTCC. IMHO what Scott Trade is doing is manually physically settling all transactions which is totally legal. The following is an excerpt I found while researching: It’s a pretty powerful role because without DTC eligibility, it becomes much more difficult for an issuer to maintain an active market in its stock. Even after a security becomes DTC-eligible, the DTC can always decide to limit or terminate its services. If the DTC decides to “chill” an issuer, it can restrict some services such as limiting the ability of a bank or broker-dealer member to deposit or withdraw shares. If it decides to issue a “global lock” or freeze, it terminates all services. Either way, the chill or lock can be effective for a few days or longer. If the cause of the DTC’s actions cannot be rectified, the issuer’s securities will be removed from DTC’s depository, which practically speaking means that trades can only be processed through the physical delivery of stock certificates between a buyer and seller’s bank and brokerage firm. Bottom line: a trade which would normally take three days to settle will take several weeks. finops.co/operations/clearing/dtccs-issuer-chills-unfreezing-sparks-debate/
Posted on: Sat, 26 Jul 2014 11:49:12 +0000
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