If you enter a transaction to deliver or pledge securities, (such as a transaction to remove securities from your account) and you do not have enough position to complete the entire transaction, DTC will pend the transaction until you have enough position to cover the entire delivery.
Note- An exception to this rule: DTC does allow for partial NSCC Continuous Net Settlement (CNS) and ACATS deliveries.
DTC offers you two options for recycling your insufficient position transactions:
- Option 1- Automatic Prioritization
- Option 2- First In, First Out (FIFO) with Blockage
To select a recycle option, you must complete a Recycle Option Instruction form, which you can obtain by calling the Compliance Department at (212) 855-4931.
Option 1: Automatic Prioritization
If you select option 1, DTC will recycle your transactions using the same criteria used for Risk Management Control recycles. See the Prioritization Schedule for the priority order.
Note- If DTC cannot complete the first transaction on the queue due to Risk Management Controls, the position is immediately made available to complete other transactions. Therefore, once the Risk Management Control requirements have been met, position may no longer be available for the transaction and the transaction will then recycle because of insufficient position.
If you wish to control the order in which your transactions recycle, option 1 may not suit your needs.
Option 2: First In, First Out With Blockage
The difference between option 2 and option 1 is that with option 2 the recycle processor maintains the order in which transactions are entered into the Account Transaction Processor (ATP), meaning FIFO ordering. Except for CNS deliveries, which are always given the highest priority, transactions are not prioritized by transaction type or size.
Note- If the first transaction in the recycling queue cannot complete, DTC does not attempt to complete any other transactions in the recycling queue, even if there is sufficient position available, until it has completed the first transaction in the queue. This feature is known as "blockage.”
To further allow you to control the order in which your transactions complete, once a transaction for a specific security recycling exists, DTC automatically recycles all subsequent transactions for that security. This ensures that after sufficient position exists for the first transaction, it will complete.
Note- Segregations do not recycle, so DTC uses the existing position to complete those transactions regardless of what transactions are recycling.