OTC Threshold data is published daily by FINRA to identify OTC equity securities with fails to deliver that are required to be closed out pursuant to Rule 203(b)(3) of Regulation SHO or FINRA Rule 4320. Firms must utilize the OTC Threshold list to ensure full compliance with the rules. While threshold status is based on the aggregate fail in a specific equity security, the obligation to close-out fail to deliver positions under both rules is at the participant level. Learn more about equities.
About the Data
|OTC Threshold is a list of Over-the-Counter equity securities that are subject either to Rule 203(b)(3) of Regulation SHO or FINRA Rule 4320. Regulation SHO applies to equity securities where the issuer is registered pursuant to Section 12 of the Exchange Act and for which the issuer is required to file reports pursuant to Section 15(d) of the Exchange Act. FINRA Rule 4320 applies to equity securities where the issuer is not registered pursuant to Section 12 of the Exchange Act and for which the issuer is not required to file reports pursuant to Section 15(d) of the Exchange Act. To qualify as a threshold security under Regulation SHO, an equity security must have an aggregate fail to deliver position at a registered clearing agency (i.e., National Securities Clearing Corporation) for five consecutive settlement days of 10,000 shares or more that is equal to at least .5% of the security’s total shares outstanding. To qualify as a threshold security under FINRA Rule 4320, an equity security must have an aggregate fail to deliver position at a registered clearing agency of 10,000 shares or more, and an aggregate fail to deliver position valued at $50,000 or more based on the last sale price for the security, or, if not available, the closest last sale price reportedfor five consecutive settlement days. A security ceases to be a Threshold Security under both Rule 203(c)(6) of Regulation SHO and FINRA Rule 4320 if it does not meet the relevant requirements for five consecutive settlement days. Participants of a registered clearing agency are also subject to the requirements of Rule 204 of Regulation SHO, which generally require fail positions in any equity security be closed prior to 13 consecutive settlement days.
|A participant of a registered clearing agency that has a fail to deliver position at a registered clearing agency in a Threshold Security for 13 consecutive settlement days must immediately close out that fail to deliver position by purchasing shares of like kind and quantity as stipulated in Regulation SHO Rule 203(b)(3) or FINRA Rule 4320. Firms must analyze the OTC Threshold list to ensure full compliance with the rules. FINRA reviews the OTC Threshold list as part of its efforts to conduct surveillance with respect to the SEC and FINRA rules.
|Be aware that in situations where the OTC Threshold list was posted late, or was amended by FINRA on a subsequent date, that list will be reflected in the archives with a date/timestamp that is later than the date contained in the name of the list.
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