has several meanings:
- In the securities market it refers to
a process by which the buyer of securities, whose seller fails to
deliver the securities contracted for, can
'buy in' the securities from a third party with the defaulting
seller to make good.
- In poker it signifies the up-front payment required to
participate in a given game or tournament.
- In management and decision making, buy-in (as
a verb or noun) signifies
the commitment of interested or affected parties to a decision
(often called stakeholders) to
'buy in' to the decision, that is, to agree to give it support,
often by having been involved in its formulation.
Securities market use
Buy-in rule on the UK equity market
English stock exchange, a
transaction by which, if a member has sold securities which he fails to deliver on settling
day, or any of the succeeding ten days following the settlement,
the buyer may give instructions to a stock exchange official to
"buy in" the stock required.
The official announces the
quantity of stock, and the purpose for which he requires it, and
whoever sells the stock must be prepared to deliver it immediately.
The original seller has to pay the difference between the two
prices, if the latter is higher than the original contract price. A
similar practice, termed "selling out
prevails when a purchaser fails to take up his securities.
The practice is not limited to the UK Stock Exchange but is found
in various forms on most stock exchanges. The rules vary according
to the local regulations, and the party which fails to deliver is
usually penalised and may even be suspended.
Buy-in rule on the German equity market
Trade date (TD) = x Settlement date (SD)= x + 2 trading days
If you are short a stock, buy-in can occur if trade has not settled
The market is not obliged to send a buy in notice.
You have until 1:15 p.m. German time to settle the trade on TD +7
If you did not manage to deliver the shares at 1:15 p.m. on SD+5
the 'market' tries to buy back your short sale (buy in).The buy-in
occurs on an internet based auction between 4 p.m. and 4:30 p.m.
(and not on the exchange)Price limit is set at + and - 200% of the
stocks previous day close.
A buy-in is successful
if the market manages to find the
total size to cover the short sale (it is a matter of size not
price). The cost for the short seller can be very high but will
remain successful for the market regulators.
A buy-in is unsuccessful
if the market does not manage to
find the total size to cover the short sale.if
, the next possible buy in date is ST+ 10
Buy-in rule on the Spanish equity market
Trade date (TD) = x Settlement date (SD) = x + 3 trading days /
example: TD: Thursday 23 feb 06 / SD= Tuesday 28 feb 06
TD + 4 (SD +1): if trade has not been delivered, 10 basis point
fine on the total amount of the short sale
TD + 5 (SD +2): if trade has not settled by 4 p.m. local time, the
market automatically 'buys-you-in'
Buy-in rule on the Singapore equity market
The following apply to the Singapore
(SGX) mainboard and Sesdaq.
Trade Date (TD)
: Date the shares are sold.
Settlement Date (SD)
- Shares must be available at the end of TD (i.e. you have to
cover in the same day).
(aka Due date) : * Trade date
(TD) + 3
- Date the shares are debited from your account.
- If shares were not available on TD (see above), SGX will
automatically buy in for you.
- The initial price is set at 2 tick above SD (TD+3) close or
market price at TD+4, whichever is higher. The price will be
continually increased until a seller is found.
- The buy-in will be subjected to a brokerage commission of 0.75%
plus additional fees and taxes. From my experience, it works out to
around 0.93%. This excludes commission, fees and taxes earlier
incurred when selling.
Note : Any long position after TD will be a new contract. It cannot
be used to cover your short position.
Alternatives to short selling available on the SGX
- Borrow the share and proceed to sell a stock.
- Buy a put warrant
- Short a CFD.
- Sell a Single Stock Future (SSF) in the futures market.
Poker and gaming
"Buying in" regarding poker tournaments is the process of entering
tournament that requires an up-front
payment. The size of the payment, otherwise known as the "Buy In",
determines the total winning prize pool and also contains a fee,
otherwise known as the rake
, that is
paid to the house.
For example a 50 person capacity tournament could cost $55 to enter
per player. In poker terms this could equate to $50+5, meaning $50
goes to the prize pool to pay the eventual winners and $5 (10%)
goes to the house for hosting the tournament. In this example the
prize pool would contain $2500 and the house would take a total of
$250 (also 10%).
The process of lobbying for support for part of the influential
group before suggesting an idea, arguing a case or submitting a
In the sports world, buying in is a significant aspect of
players/participants accepting goals and direction from a coach,
leader or program. "Buying in" becomes synonymous with commitment
and dedication. In the Spring of 2007, two film makers, Tim
Breitbach(Dopamine) and Ralph Barhydt, started producing a film
entitled, "Buying In" that explores the social issues of buying in
based on the success of the boys' and girls' high school basketball
teams at The Branson School, in Ross, California, who each won the
State Championship in their division in 2007.