finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...

, a failure to deliver (also FTD, plural: fails-to-deliver or FTDs) is the inability of a party to deliver a tradable asset, or meet a contractual obligation. A typical example is the failure to deliver is when a purchaser of an security does not have the cash, or shares as part of a

short transaction In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional "long" position, where the investor will profit if the value of the ...

. The

Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

publishes "fails-to-deliver" data regarding transactions in the United States. As a remedy for this in the United States,

Regulation SHO Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed. When the seller does not obtain the asset and deli ...

was designed. Stocks bought and sold in transaction must be

settled A settler is a person who has migrated to an area and established a permanent residence there, often to colonize the area. A settler who migrates to an area previously uninhabited or sparsely inhabited may be described as a pioneer. Settle ...

within

2 days ''Two Days'' (russian: Два дня, Dva dnya) is a 2011 romantic comedy-drama film directed by Avdotya Smirnova. Cast *Fyodor Bondarchuk - Pyotr Drozdov, Deputy Minister of Economy and Development *Kseniya Rappoport - Maria Ilinichna *Evgeny Mu ...

. The buyer must deliver the cash and the seller the stock. If either party fails, a failure-to-deliver takes place. Sometimes deliberate fails-to-deliver are used to profit from falling stocks (see

Bear market A market trend is a perceived tendency of financial markets to move in a particular direction over time. Analysts classify these trends as ''secular'' for long time-frames, ''primary'' for medium time-frames, and ''secondary'' for short time-fram ...

), so that the stock can later be purchased at a lower price, then delivered, e.g. in the week of March 10, 2008, just before the failure of

Bear Stearns The Bear Stearns Companies, Inc. was a New York-based global investment bank, securities trading and brokerage firm that failed in 2008 as part of the global financial crisis and recession, and was subsequently sold to JPMorgan Chase. The com ...

, the fails-to-deliver increased by 10,800 percent. According to CNN in the US markets, fails-to-deliver had reached $200 billion a day in September 2011, but no similar data has been available for Europe. A study of fails to deliver, published in the Journal of Financial Economics in 2014, found no evidence that FTDs "caused price distortions or the failure of financial firms during the 2008 financial crisis." Researchers studied 1,492 New York Stock Exchange stocks over a 42-month period from 2005 to 2008, and found that "greater FTDs lead to higher liquidity and pricing efficiency, and their impact is similar to our estimate of delivered short sales." A 2016 Journal of Empirical Finance study broader in scope than that by Fotak, et al., found that indeed pricing abnormalities of Russell 3000 stocks with high delivery failures can be attributed to the market distorting effect of the sustained fails. As part of the research effort for

HBO Max HBO Max is an American subscription video on-demand over-the-top streaming service owned by Warner Bros. Discovery. Launched in the United States on May 27, 2020, the service is built around the libraries of HBO, Warner Bros., Cartoon Ne ...

docu-series

Gaming Wall Street ''Gaming Wall St'' is a HBO Max Original documentary miniseries directed by Tobias Deml and narrated by Kieran Culkin. The 2-episode series explores the causes that lead to the 2021 GameStop short squeeze, and the dark underbelly of Wall Stree ...

, the production company

Prodigium Pictures Max Deml (born 1957) is a German-Austrian writer for environmental and financial magazines, publisher and entrepreneur. Since October 1991 he has been editor-in-chief of ''Ökoinvest'', a bi-weekly German-language stock market newsletter conce ...

built
SEC FTD data scraping tool
to ingest all files of the SEC Fails-to-Deliver website into a central database, and published its findings, the aggregated data as of February 2022, as well as the tool itself under an

Open source Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use the source code, design documents, or content of the product. The open-source model is a decentralized so ...

license via

GitHub GitHub, Inc. () is an Internet hosting service for software development and version control using Git. It provides the distributed version control of Git plus access control, bug tracking, software feature requests, task management, cont ...

References

{{Reflist Financial markets