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Transactions can recycle because of Risk Management Controls or insufficient position. A transaction may recycle under any of the following circumstances:

  1. The deliverer has insufficient position to complete the transaction.

  2. Completing the transaction would make the deliverer's collateral monitor negative, that is, the total remaining collateral in the deliverer’s account is less than the resulting net settlement obligation. This could happen if the collateral value of the securities to be delivered exceeds the settlement value that would be credited to the deliverer’s account, or if the delivery is free and the deliverer’s collateral monitor is not sufficient to absorb the decrease.

  3. Completing the transaction would cause the total value in the receiver's account, including the securities involved in the transaction, to be less than the resulting net settlement obligation, that is, the receiver’s collateral monitor would be made negative. This could happen if the amount that would be charged against the receiver’s account exceeds the collateral value of the applicable securities and the receiver’s collateral monitor is not sufficient to absorb the decrease.

  4. Completing the transaction would cause the receiver's net settlement obligation to exceed its net debit cap.

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