A security lands on the list when fails reach a set level for five consecutive settlement days, commonly defined as at least 10,000 shares and 0.5% of shares outstanding. Once listed, a broker with a fail aged past the threshold period must buy in the position rather than let it run.
The list is public and free, which makes it one of the few direct windows into settlement stress on a specific name. Appearance is a plumbing signal, not proof of manipulation.
Example: a stock with 40M shares outstanding needs fails above 200,000 shares for five straight days to qualify. It appears on the list, and within days the fails drop as clearing firms execute a buy-in.
Related: fail-to-deliver, regulation-sho, buy-in, naked-short-selling, short-selling