Failure to Deliver?

When you start out with investing and trading, there are a lot of technical terms and abbreviations that will make your head spin, at first. Just like FTDs, what are FTDs?

One of the key takeaways of FTDs is that it can occur in derivatives contracts or when selling short naked. That’s right. Naked shorts… I am sure you can find a ton of references on the illegal practice of Naked Shorting, esp. after the GME and AMC media coverage these past months.

So what are FTDs?

Failure to deliver (FTD) refers to a situation where one party in a trading contract (whether it’s shares, futures, options, or forward contracts) does not deliver on their obligation. Such failures occur when a buyer (the party with a long position) does not have enough money to take delivery and pay for the transaction at settlement.

A failure can also occur when the seller (the party with a short position) does not own all or any of the underlying assets required at settlement, and so cannot make the delivery.


How this can be interesting is up for interpretation and the fact that the official reported data is incomplete (Dark pools anyone?) leaves even more room for speculation.

Out of curiosity, I made a visualization of the SEC’s official data on FTDs. You can select any security and choose a time frame (Jan – June 2021 at the time of this post) to view the FTD quantity and total amount in USD per calendar day.

FTD Viz (Tableau)

Between Regular Shorts, Naked Shorts, IOUs and FTDs one does wonder what’s next for AMC? Short Squeeze? Gamma Squeeze? Who knows… I wish all the retail investors best of luck and may the MOASS be with them!

Disclaimer: This is not financial advice and I am not a financial advisor.

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