Fail
Definition of 'Fail'In common trading terms, if a seller does not deliver securities or a buyer does not pay owed funds by the settlement date, then the transaction is said to fail. In a stock exchange, this occurs if a stockbroker does not deliver or receive securities, within a specified time after a security sale or a security purchase. When a seller cannot deliver the contracted securities, this is called a short fail. If a buyer is unable to pay for the securities, this is called a long fail. |
|
Investopedia explains 'Fail'Presently, firms have three days after the date of a trade to settle stock transactions. Within this time frame, securities and cash must be delivered to the clearing house for settlement. If firms are unable to meet this deadline, a fail will occur. Settlement requirements for stock, options, futures contracts, forwards and fixed-income securities differ.Fail is also used as a bank term when a bank is unable to pay its debt to other banks. The inability of one bank to pay its debt to other banks in interbank fund transfer systems, can potentially lead to a domino effect, causing several banks to become insolvent. |
Related Definitions
Articles Of Interest
-
Understanding Order Execution
Find out the various ways in which a broker can fill an order, which can affect costs. -
Options Basics Tutorial
Discover the world of options, from primary concepts to how options work and why you might use them. -
The Nitty-Gritty Of Executing A Trade
Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out! -
Do I own a stock as of the trade date or the settlement date?
When it comes to buying shares, there are two key dates involved in the transaction. The first date is the trade date, which is simply the date that the order is executed in the market. The second ... -
Bond Basics Tutorial
Investing in bonds - What are they, and do they belong in your portfolio? -
Futures Fundamentals
For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them. -
6 Asset Allocation Strategies That Work
Your portfolio's asset mix is a key factor in whether it's profitable. Find out how to get this delicate balance right. -
American Vs. European Options
These two options have many similar characteristics, but it's the differences that are important. -
Pay Attention To The Proxy Statement
Don't overlook this overview of a company's well-being. -
How Risk Free Is The Risk-Free Rate Of Return?
This rate is rarely questioned - unless the economy falls into disarray.
Free Annual Reports