Buy-in

The International Capital Market Association describes a buy-in as a contractual remedy available to the purchasing counterparty to a financial transaction in the event that the selling counterparty fails to deliver the purchased securities. It restores the counterparties to the economic position they would have been in if the original transaction had settled, delivering the required securities to the purchasing counterparty (rather than the failed seller). The bought-in counterparty can incur the cost of the ‘buy-in premium’ i.e. the difference between the buy-in price and the current market ‘fair value’.