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A failed delivery of a stock occurs when the seller did not actually deliver it to the buyer before the settlement date. This might occur for a number of reasons.
One reason is that the seller may not actually own the stock they are selling. This can occur if the seller engages in a practice called “naked short selling,” in which they sell stock they do not have in their possession in the hope that they will be able to acquire the stock at a lower price before the settlement date. Naked short selling is illegal in many countries, including the United States.
APE STOCK FAIL TO DELIVERS IN DECEMBER
As seen about APE Stock failed to deliver millions of times in the month of December alone. At the height of the recording of this, APE Stock failed to deliver over 7.1 million times on December 2nd.
Things to note with failure to delivers (FTD) *Source Investopedia*
- Failure to deliver (FTD) refers to not being able to meet one’s trading obligations.
- In the case of buyers, it means not having the cash; in the case of sellers, it means not having the goods.
- The reckoning of these obligations occurs at trade settlement.
- Failure to deliver can occur in derivatives contracts or when selling short naked.
Traders and small-time investors generally pay close attention to failure-to-deliver statistics. Many investors have the suspicion that some businesses have been the victims of fraudulent short-selling techniques like naked shorting, which have negatively impacted the performance of their stocks. This is something that retail investors known as apes are watching closely.
A fail to deliver is a situation in which a seller is unable to deliver the securities that they have sold to a buyer by the settlement date. This can occur for a variety of reasons, including a lack of available securities, a mistake in the settlement process, or a failure to transfer the securities in time.
Fails to deliver are closely tied to the practice of naked shorting, which is the illegal sale of securities without first borrowing or arranging to borrow the securities. Naked shorting can create fails to deliver, as the seller is unable to deliver the securities that they have sold. This can drive down the price of the securities and potentially harm the company whose stock is being sold.
To address the issue of fails to deliver, regulators have implemented rules and regulations designed to prevent naked shorting and other forms of illegal stock sales. These include the “uptick rule,” which requires that a stock must be sold at a price above the previous trade before it can be sold short, and the “locate and close-out” rule, which requires that short sellers must have a reasonable belief that the securities can be borrowed before selling them short.
Overall, fails to deliver are closely tied to the practice of naked shorting, and regulators have put in place rules and regulations to prevent this illegal activity and protect the integrity of the stock market.