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How Will A DTC Chill or Global Lock Impact Trading?

A DTC Chill restricts DTC’s services, including limiting a DTC participant’s ability to deposit or withdraw chilled securities. A DTC Chill may last a few days or for an extended period of time depending upon the problems that caused the chill and the issuer’s willingness to address them. A  “Global Lock” is a termination of all of DTC’s services to an issuer. Like a DTC Chill, a Global Lock may last a few days or for an extended period of time, depending on the reason for the action. If the fundamental issue cause cannot be corrected, then the security will be removed from DTC’s depository, and transactions in the security subject to the Global Lock will no longer be eligible for clearing at any registered clearing agency. When this happens, clearance and settlement of open market trades is significantly delayed because trades can only occur upon physical delivery of stock certificates between the buyer and seller’s brokerage firms. In such circumstances it could take weeks for trades to clear and settle.