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Fail

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Dictionary Says

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 Says

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

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    Aged Fail

    A fail that has occurred between two or more parties to a securities transactions and has lasted for over 30 days.
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  • Clearing House

    An agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery and ...
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  • Fixed-Income Security

    An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. Unlike a variable-income security, where payments change ...
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    • Forward Contract

      A cash market transaction in which delivery of the commodity is deferred until after the contract has been made. Although the delivery is made in the future, the price is determined on ...
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    • Futures Contract

      A contractual agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a pre-determined price in the future. ...
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    • Option

      A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to ...
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    • Securities And Exchange Commission - SEC

      A government commission created by Congress to regulate the securities markets and protect investors. In addition to regulation and protection, it also monitors the corporate takeovers ...
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    • Settlement Date

      1. The date by which an executed security trade must be settled. That is, the date by which a buyer must pay for the securities delivered by the seller. 2. The payment date of benefits ...
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    • Trade Date

      The month, day and year that an order is executed in the market. The trade date is when an order to purchase, sell or otherwise acquire a security is performed. The trade date can apply ...
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