Fails-to-DeliverFTD
A fail to deliver happens when a seller does not deliver securities by the settlement date. US rules require brokers to close out persistent fails, and the SEC publishes fails data.
A fail-to-deliver happens when the seller does not hand over the securities on the settlement date. Fails can come from short sales or from ordinary long sales. Regulators publish data on them, and the rules differ by country.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- Failure to deliver, Fail
- Updated
FTDs in plain words
A fail happens when a seller doesn't hand over the securities by the settlement date.1
Fails can come from short sales or ordinary sales — often just errors or processing delays.1
So a fail on its own is not proof of short selling, let alone abusive or “naked” shorting.2
How to read FTD data
Know the event
Define it: the seller missed the delivery deadline.1
Know the causes
Remember it can follow a short sale or a normal sale.1
Read the number
Read the data as a running total: yesterday's open fails, plus new ones, minus those settled today.2
Don't age it
Don't try to infer how old the fails are — the figures can't tell you.2
Know the remedy
Know the buyer's remedy: from the third business day after the missed delivery, the buyer may close out the trade.3
Avoid conclusions
Don't treat fails as evidence of abusive shorting.2
Worked examples
Example 1 — Cumulative count
9,000Hypothetical: 10,000 open, 3,000 new, 4,000 settle.
| Today | 10,000 + 3,000 − 4,000 = 9,000 |
The daily figure is cumulative: open fails carried over, plus new fails, minus fails that settled.2
Example 2 — Processing delay
Not a shortA hypothetical long seller's transfer is late by one day.
| Cause | Operational |
Fails can come from human or mechanical errors or processing delays, not only shorts.1
Example 3 — Naked short
Likely buy-inA hypothetical seller never arranges a borrow.
| Result | Fail |
In a naked short sale, the seller never borrows or arranges to borrow the shares in time for settlement.1
FTD vs short interest
| Aspect | Fails-to-deliver | Short interest |
|---|---|---|
| Measures | Undelivered shares | Open short positions |
| Cause | Short or long sales | Short sales only |
| Frequency | Published twice monthly by SEC | Reported periodically |
| Signal | Settlement stress | Bearish positioning |
Where FTDs matter
Short risk
Context for Short Interest.
Squeezes
Persistent fails can precede a Short Squeeze.
Settlement
Monitoring Settlement health.
Counterparties
Gauging Counterparty Risk.
Advantages and disadvantages
Advantages
- Public SEC data in the US.
- Shows settlement stress.
- Helps spot persistent fails.
Disadvantages
- Age of fails cannot be seen.
- Not proof of naked shorting.
- Data are delayed.
- Rules differ by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Common mistakes
Calling all FTDs naked shorts
Many are operational.
Reading one day
Look at trends.
Ignoring cumulation
Numbers are cumulative.
Assuming US rules apply everywhere
Rules differ by country.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- A fail is late delivery at settlement.
- Long and short sales can fail.
- SEC numbers are cumulative.
- FTDs are not proof of naked shorting.
- Rules differ by country.
Frequently asked questions
Where is FTD data?
Do FTDs always lead to buy-ins?
Are FTDs bad for holders?
Further learning
- Settlement
How delivery works.
- Short Selling
Short selling basics.
- Short Interest
Related positioning data.
- Short Squeeze
When shorts cover.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- U.S. Securities and Exchange Commission. Key Points About Regulation SHO (opens in a new tab) Checked .
- U.S. SEC. Fails-to-Deliver Data (opens in a new tab) Checked .
- FINRA. Rule 11810. Buy-In Procedures and Requirements (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.