Sifma cuts number of early close recommendations to five days per year

By Jennifer Chiou

New York, April 3 - The Securities Industry and Financial Markets Association announced that it will reduce the number of recommended early market closes it issues each year to five from 12, effective immediately.

Sifma noted that its recommended early market closes apply to the dollar-denominated, fixed-income markets. The calendar recommendations are subject to change due to market conditions.

"Sifma's board of directors and membership reassessed the early close policy, recognizing that additional access to the liquidity provided by our members would benefit all market participants," Randy Snook, executive vice president at Sifma, said in a news release.

"The interconnected, global nature of the fixed income markets and the significant - and nearly round the clock - access to liquidity that many members provide would be enhanced by this change. Since shortened trading days may limit the liquidity window and create possible market risks which could be mitigated with a full functioning fixed-income market on days when liquidity could be normal, we have determined eliminating some of the early closes is a better solution."

Early close recommendations were eliminated for the following holidays:

• Friday before Martin Luther King, Jr. Day;

• Friday before Presidents Day;

• Day before Independence Day;

• Friday before Labor Day;

• Day before Columbus Day;

• Day before Veterans Day; and

• Day before Thanksgiving.

Sifma added that the early close recommendations around the Good Friday, Memorial Day, day after Thanksgiving, Christmas and New Year's Day holidays will remain unchanged in recognition of the very limited global activity late on those days.

The new policy does not affect full market closes.

On Feb. 26, the Regional Bond Dealers Association requested that Sifma end its practice of recommending early bond market closes on the business days preceding U.S. holidays, stating that early closings severely hamper market liquidity and that this is particularly challenging in the face of the difficult credit conditions investors continue to encounter.

The U.S. Treasury Department previously asked Sifma to reduce the number of early closes, the release added.

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