SIE practice questionhardFailure to Deliver
A seller fails to deliver securities by the settlement date. This is known as a:
- AFail to deliver✓ Correct answer
- BShort sale violation
- CRegulatory default
- DTrade cancellation
Explanation
Why A — Fail to deliver
When a seller does not deliver securities by the settlement date, it is called a 'fail to deliver' (FTD). This can happen for various reasons including operational issues or short selling without locating shares. Under SEC Regulation SHO, firms must close out fail-to-deliver positions. Persistent fails can trigger penalties and restrictions. It is not automatically a short sale violation (A) and does not mean the trade is canceled (C).
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