Study Finds ‘Fails to Deliver’ Are Beneficial to Markets’ Quality

New research finds that ‘fails to deliver’ are not as detrimental to stock markets as widely believed and in fact, can be beneficial to markets’ quality. Vikas Raman, assistant professor at Warwick Business School, explains the findings from his research about ‘fails to deliver.’ He reveals that traders who ‘failed to deliver’ on trades during the 2007-2008 financial crisis and were blamed in part for the demise of Lehman Brothers did not actually cause declines in share prices, according to his research. While the Securities and Exchange Commission has had a strong regulatory focus on reducing ‘fails to deliver,’ Raman reveals what he recommends regulators consider in regard to FTDs.

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