In the financial market there is a term; A buy-in, in which an investor is forced to repurchase shares of security. That happen because the seller of the original shares did not deliver the securities in a timely fashion or did not deliver them at all. So, let’s get to know buy-in
A buy-in can also be a reference to a person or entity buying shares. In psychological terms, it is the process of someone getting on board with an idea or concept that is not their own but nonetheless appeals to them.
Understanding Buy-In
Those who fail to deliver the securities as promised are generally notified with a buy-in notice. A buyer will send notice to exchange officials. As a result, officials will usually notify the seller of their delivery failure. The stock exchange (e.g., NASDAQ or NYSE) supports the investor in buying the stocks a second time from another seller. Typically, the original seller must make up any price difference between the original price of the stock and the second purchase price of the stock by the buyer.
To know the failure to answer the buy-in notice results in a broker buying the securities and delivering them on the client’s behalf. The client is then need to pay back the broker at a pre-determined price.
The Difference Between a Buy-In and a Forced Buy-In
The difference between a traditional and forced buy-in is that in a forced buy-in, shares are repurchased to cover an open short position. A forced buy-in occurs in a short seller’s account when the original lender of the shares recalls them. This can also occur when the broker is no longer able to borrow shares for the shorted position. In some cases, an account holder might not be notified before a forced buy-in. A forced buy-in is the opposite of forced selling or forced liquidation.
source: investopedia