Fail to Receive is an event where the broker on the buy side of the transaction fails to receive the security from the broker on the sell side.
Applying "Fail to Receive" to Securities Exams:
All securities transactions must be settled with the delivery of the physical securities if the securities are issued in physical form. When the selling broker dealer fails to deliver the securities to the buying broker dealer the buying broker dealer has an open fail to receive. If the issue is not resolved the buying broker dealer may buy in the securities to close the open fail to receive and charge the selling broker dealer (who failed to deliver the securities ) any difference.