Failed Trades
The settlement of trades and the associated issues around failed and unsettled trades is one of the most significant issues facing the Lehman Brothers administrations (where this term refers to the legal entities for which PwC have been appointed as administrators in the UK).
A failed / unsettled trade is a trade that fails to settle on the previously agreed settlement date. Failure to settle principally arises if one counterparty is unable to deliver all or part of the security, or if the other counterparty fails to provide sufficient funds to meet the settlement consideration.
As with any similar organisation, Lehman Brothers was involved in high volume trading activities. There are over 140,000 failed trades across global markets involving Lehman Brothers International (Europe) (in administration). These global markets introduce their own complexity with regards to different approaches, legal requirements and rules when dealing with failed trades, including suspending and defaulting trade activity. The process for resolving these trades will therefore vary by jurisdiction and will take considerable time to complete.
In addition, there are in the region of half a million potentially failed trades in markets involving Lehman Brothers International (Europe) (in administration) settling via an Agent where there is currently no availability of the market side activity data. We are working closely with the parties involved to resolve these issues and seek resolution on all the failed and unsettled trades. The process for resolving these trades is subject to other competing complexities and will also take considerable time to complete.
The Administrators are working closely with the exchanges, clearing houses, intercompany entities and other relevant market participants involved, to resolve the failed and unsettled trades issues. We appreciate that this issue presents a significant amount of uncertainty to all parties involved, and we are therefore treating this matter as one of our highest priority issues.
We appreciate your patience and we will continue to update this website with news concerning the approach towards the resolution of the issues as they become available.
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