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Fails to deliver (FTD)
Also called: FTD, FTDs, failure to deliver, Regulation SHO, threshold list
Shares that a seller did not deliver to the buyer by the settlement date, which the SEC publishes twice a month.
Explanation
US stock trades settle one business day after the trade (T+1, since May 2024). If the seller’s broker has not delivered the shares by then, the trade becomes a fail to deliver. Fails happen for mundane reasons, such as paperwork, timing or a long seller’s late delivery, and for less innocent ones, such as short sales made without first locating shares to borrow.
Regulation SHO governs short selling. Rule 204 requires brokers to close out fails quickly; for a short sale, by the start of trading on the settlement day after the settlement date. A stock lands on the threshold list when fails of at least 10,000 shares, which are also at least 0.5% of shares outstanding, persist for five consecutive settlement days.
The SEC publishes the aggregate fails balance per security for each settlement date, twice a month and with a delay. The numbers are running balances, not new fails per day, and they cannot tell you why the fails occurred.
Why it matters
Persistent, large fails can point to heavy shorting in a hard-to-borrow stock, which can come before a squeeze. Isolated fails are usually noise.
How Equity Dictionary measures it
Equity Dictionary pulls each company’s SEC fails-to-deliver records, most recent first, alongside its short interest and ownership data.
Related terms
- Short interest: The number of a company’s shares that have been sold short and not yet bought back, usually shown as a percentage of the float.
- Days to cover: Short interest divided by average daily trading volume: roughly how many days it would take short sellers to buy back their shares.
- Public float: The market value of shares held by non-affiliates, meaning everyone except officers, directors and controlling holders: the SEC’s yardstick for company size.
Plain-English summary for research; not legal or investment advice.