Buy in is an order executed in the event of a customer or firm’s failure to deliver the securities they sold. The buyer repurchases the securities in the open market and charges the seller for any loss.
Applying "Buy In" to Securities Exams:
When a customer or firm sells securities the seller is required to make prompt delivery of those securities. If a customer who has securities in their possession fails to deliver the securities the broker who sold the securities for the customer will buy in the customer to complete the delivery of the securities to the buying broker. In the case where a selling broker dealer fails to deliver the securities the buying broker will buy in the securities to complete the delivery of securities to its customer or for its own account.