11-02-2013, 09:06 AM
So T+3 (trade date + 3 business days) is when trades are settled. Law. But it doesn't always happen. A certain firm may not want to force a buy in(deliver the shares you shorted to me) from a particular broker (even a big like MS) who may have an important hedge fund client. It can be considered "bad form" to do so. Depends on the parties involved but I have personally seen traders afraid to force a buy in on a failed trade. This doesn't include obviously the intraday naked shorting that occurs.