Aged Fail

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DEFINITION

A contract between two broker-dealers that has not been settled within 30 days of the settlement date. Aged fails typically occur when a security is undelivered due to the failure of the selling client to deliver the security to his or her broker; the broker is then unable to deliver the security to the buying broker. This typically results in the receiving firm having to adjust its books accordingly, to account for the asset not being received.

INVESTOPEDIA EXPLAINS

Since brokers are continually buying, selling, receiving and delivering, a fail position may refer to a net delivery position where one broker owes more securities to other brokers on sell transactions, than are owed to the broker for buy transactions. According to U.S. Securities and Exchange Commission (SEC) regulations, parties failing to deliver cash or securities to settle a transaction in a timely fashion are subject to specific charges.


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