How are fails handled?
Loans that are not returned on the maturity date are considered fails. Failure to return loaned securities will result in the assessment of a penalty fee equivalent to the general collateral rate, as determined by the New York Fed, as well as any applicable Fails Charge. The penalty fee is collected in lieu of the previously contracted lending fee, but is in addition to the applicable Fails Charge. Dealers should notify New York Fed Domestic Account Services as soon as possible if they are unable to return borrowed securities via their direct lines, or at 212-720-5901. Failed loans must be extended (i.e., the loan re-booked for an additional day) and subsequently recollateralized prior to the close of Fedwire. Dealers also must notify the New York Fed if they are unable to deliver the pledged Treasury collateral against a loan on the loan date. If a firm fails to deliver collateral, the New York Fed will hold the cash collateral overnight, and assess a penalty fee equivalent to the gen
