DEFINITION of Aged Fail
An aged fail is a transaction between two broker-dealers that has not been settled within 30 days of the trade date.
BREAKING DOWN Aged Fail
In financial markets, if a seller does not deliver securities or a buyer does not pay owed funds by the settlement date three days after the date of the trade, then the transaction is said to fail. Fails turn into aged fails, when the trade still has not settled 30 days after the trade date.
Aged fails typically occur when a security is not delivered because the selling client fails to deliver the security to his or her broker. As a result, the broker is 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.
Parties failing to deliver cash or securities to settle a transaction in a timely fashion are subject to specific charges by the U.S. Securities and Exchange Commission (SEC), to cover counterparty risk. Dealers have to maintain additional capital for fails to deliver five or more business days old and for fails to receive more than thirty calendar days old, under SEC Rule 15c3-1, often called the uniform net capital rule.