Fails to deliver

What it is

When a stock is sold, the seller's broker is supposed to deliver the shares to the buyer's broker by the settlement date. When it does not, the trade "fails". Twice a month the SEC publishes, for every settlement date, the balance of shares that had been failed and not yet delivered, with the stock's previous closing price. This feed ranks the largest balances on the latest settlement date by their value, by shares, by share of the stock's average daily trading volume, or by share of its shares outstanding.

Who files it

The National Securities Clearing Corporation reports the balances to the SEC, which publishes them in two files a month.

How current

The SEC posts the first half of a month around the end of that month and the second half around the 15th of the next, without a guarantee, so the latest settlement date is usually two to six weeks old. We check every night.

Terms

Fail to deliverA fail to deliver happens when the seller of a stock has not delivered the shares to the buyer's broker by the settlement date (one business day after the trade, for most stocks). It can be a paperwork or processing delay, a market maker filling orders, or a shortage of shares to borrow.BalanceThe figure is a running balance: all the shares that were still undelivered at the end of that settlement date, including fails carried over from earlier days. It is not the number of new fails that day, and the file does not say how old they are. The same fail is counted again on every day it stays open.Naked short sellingThe SEC says these numbers are not evidence of abusive or "naked" short selling, and are not necessarily the result of short selling. Fails have many causes, and most are cleared within days. A large balance in one stock is a reason to look closer, not a conclusion.

Worth knowing

These are running balances, not new fails: a share that stays undelivered for ten days is counted on each of the ten days, and the file does not say how old a fail is. The SEC says the numbers are not evidence of abusive or "naked" short selling, and are not necessarily the result of short selling. Fails have many causes, such as processing delays, market makers filling orders and hard-to-borrow shares, and most are cleared within days. The biggest balances are often in funds (ETFs), which have their own creation and redemption process, so the list covers listed companies unless you ask for everything. The value uses the previous day's close from the SEC's file, which may differ from other sources. Before September 2008 the SEC listed only balances of 10,000 shares or more.

Not to be confused with

Short interest: the shares investors have sold short and not yet bought back, reported by FINRA. A fail to deliver is a different thing: a trade whose shares have not arrived. The Short interest page shows both side by side.

This comes from the SEC's fails-to-deliver files.