Fails

Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order it here)                  

In security markets, a fail-to-deliver arises when the selling broker or dealer fails to deliver securities as contracted.  On the position book of the selling broker or dealer, a fail-to-deliver increases the long security position; on the money books of account, it gives rise to a debit balance (due from the purchasing broker or dealer upon delivery).

A fail-to-receive arises when the purchasing broker or dealer fails to receive securities as contracted.  On the position book of the purchasing broker or dealer, a fail-to-receive increases the short security position; on the money books of account, it gives rise to a credit balance (due the selling broker or dealer upon receipt of the securities.)

One of the important measures undertaken to improve deliveries has been inauguration of Central Certificate Service (CCS), an electronic method for delivering stock between brokers.

Establishment of the DEPOSITORY TRUST COMPANY, new procedures for settlement and clearing, and the growing size of the average trade were also credited by the NEW YORK STOCK EXCHANGE with reducing total fails to normal levels.

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