Closing Time

For most in Washington, SIFMA is known as a financial services trade association that advocates on a wide variety of issues on behalf of our members. For market participants in the global US-dollar denominated fixed-income markets, however, we’re the go to place for their vacation planning.

In addition to our advocacy work, we make recommendations to our members on when fixed-income markets should close. In fact, our recommendations calendar is the most visited page on …by a mile.

So, as we approach Memorial Day (both a recommended full-close on Monday and early close on Friday) and the start of summer, let’s discuss how SIFMA came to hold this responsibility, and how it makes its recommendations.

Unlike equity and futures markets, fixed-income markets (think: corporate bonds and commercial paper, Treasuries, agencies, munis, and securitizations) are generally traded over the counter, and not through exchanges. Without central exchanges for trading, one of our predecessors-the Bond Market Association-as the market’s main trade association was delegated the authority to make recommendations to its members on when markets would close around federal holidays. We also make specific recommendations for dollar-denominated fixed-income trading for London and Tokyo reflecting local holidays in those trading centers.

Since the merger of the Bond Market Association and the Securities Industry Association in 2006, to form SIFMA, we have retained that responsibility.

A SIFMA committee comprised of members representing all aspects of the fixed-income markets approves the recommendations, and we ensure that all stakeholders – regulators, futures exchanges, and other trade associations – are fully informed on recommendations.

Our role in making market closing recommendations has two components: the regular calendar, and unscheduled closing recommendations.

Every December, SIFMA issues its updated schedule of market closings for the upcoming two years. The schedule stays relatively the same from year to year, with full closes on most holidays, and an early close on days prior to those holidays. All recommendations are subject to change based on a number of factors. For example, Good Friday, which is normally a full market close, is sometimes changed to a recommended open with an early close of noon if the Bureau of Labor Statistics is scheduled to release monthly non-farm payroll numbers. This reflects market participants’ judgment that the fixed-income markets require the opportunity to trade on this potentially market moving information without a lag of a few days.

SIFMA confirms regular calendar recommendations about a week or prior to all holidays.

In other circumstances, SIFMA may need to make recommendations outside of the normal holiday schedule. These recommendations may be in response to significant weather-related incidents, National days of mourning, and other events requiring market closures. In order to allow market participants to plan accordingly, our bias is always to recommend normal market hours if it is safe for our members’ employees and if the market infrastructure can support expected market activity.

Again, this decision is ultimately approved by our Calendar Committee. Other market stakeholders are kept informed as the process of making a significant change to the regular calendar unfolds. The most recent example of a short notice change to our regular calendar recommendations was during super storm Sandy. Due to the strength of the storm and the possible harm to member employees, we recommended that the fixed-income markets close at noon on the Monday of the storm and for a full day on the Tuesday.

We hope everyone has a safe and happy Memorial Day weekend, and hope you’ve now gained a little insight into a key service SIFMA provides to its members and the markets.

Robert Toomey
Managing Director and Associate General Counsel