FTD

• FTDs (fails-to-deliver) occur when a party in a stock transaction fails to deliver the security to the buyer by the settlement date

• Short selling without borrowing: A trader sells a stock short without borrowing or locating shares to deliver, leading to a failure to provide them when the buyer expects delivery.
• Administrative errors: Mistakes in processing trades, such as incorrect recording or communication between brokers, can cause a failure to settle.
• Stock recall or unavailability: Borrowed shares are recalled by the lender, or shares are unavailable for borrowing at settlement, causing a delivery failure.
• Insufficient inventory: The seller does not possess or cannot acquire the required securities due to a shortage in the market.
• Market disruptions: Technical glitches, trading halts, or other unforeseen events can prevent timely settlement of securities.

• Indicators of market manipulation: Persistent FTDs may result from practices like naked short selling, where traders sell shares they haven't borrowed, artificially increasing supply and pressuring the stock price downward.
• Liquidity and pricing issues: Ongoing FTDs can distort the true value of a security, creating supply and demand imbalances that harm market stability and investor confidence.
• Regulatory concerns: Regulators often view persistent FTDs as red flags, investigating these patterns to enforce compliance with trading rules and prevent market abuse.
• Impact on companies: Issuing companies may suffer from persistent FTDs due to depressed stock prices, reduced investor confidence, and limited access to capital.
• Investor awareness: For investors, persistent FTDs can signal potential risks, manipulation, or transparency issues in the trading of a specific security.

The T+35 settlement cycle: SEC Rule 204 gives market participants—like market makers or authorized participants—up to 35 calendar days to deliver securities after a sale. Various observations corroborate that this cycle can impact the price of a stock.