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Short (finance)

Schematic representation of short selling in two steps. The short

sellerborrows sharesand immediately sellsthem. The short seller

then expects the price to decrease, when the seller can profit by

purchasing the shares to return to the lender.

In finance,short selling(also known asshortingor go-

ing short) is the practice of selling securitiesor other

financial instrumentsthat are not currently owned, and

subsequently repurchasing them (covering). In the

event of an interim price decline, the short seller willprofit, since the cost of (re)purchase will be less than the

proceeds which were received upon the initial (short) sale.

Conversely, the short position will be closed out at a loss

in the event that the price of a shorted instrument should

rise prior to repurchase. The potential loss on a short sale

is theoretically unlimited in the event of an unlimited rise

in the price of the instrument, however, in practice, the

short seller will be required to post margin or collateral

to cover losses, and any inability to do so on a timely ba-

sis would cause its broker orcounterpartyto liquidate the

position. In the securities markets, the seller generally

must borrow the securities in order to effect delivery inthe short sale. In some cases, the short seller must pay a

fee to borrow the securities and must additionally reim-

burse the lender for cash returns the lender would have

received had the securities not been loaned out.

Short selling is most commonly done with instruments

traded inpublic securities, futures or currency markets,

due to the liquidity and real-time price dissemination

characteristic of such markets and because the instru-

ments defined within each class arefungible.

In practical terms, going short can be considered the

opposite of the conventional practice of "going long",

whereby an investor profits from an increase in the priceof the asset. Mathematically, the return from a short po-

sition is equivalent to that of owning (being long) a neg-

ative amount of the instrument. A short sale may be mo-

tivated by a variety of objectives. Speculatorsmay sell

short in the hope of realizing a profit on an instrument

which appears to be overvalued, just as long investors

or speculators hope to profit from a rise in the price of

an instrument which appears undervalued. Traders or

fund managers mayhedgea long position or a portfolio

through one or more short positions.

1 Concept

The following example describes the short sale of a secu-

rity. In order to profit from a decrease in the price of a se-

curity, a short seller can borrow the security and sell it ex-

pecting that it will be cheaper to repurchase in the future.

When the seller decides that the time is right (or when the

lender recalls the securities), the seller buys equivalent se-

curities and returns them to the lender. The process relies

on the fact that the securities (or the other assets being

sold short) arefungible; the term borrowing is there-

fore used in the sense of borrowing cash, where differentbank notes or coins can be returned to the lender (as op-

posed to borrowing a car, where the same car must be

returned).

A short seller typically borrows through a broker, who

is usually holding the securities for anotherinvestorwho

owns the securities; the broker himself seldom purchases

the securities to lend to the short seller.[1] The lender does

not lose the right to sell the securities while they have been

lent, as the broker will usually hold a large pool of such

securities for a number of investors which, as such securi-

ties are fungible, can instead be transferred to any buyer.

In most market conditions there is a ready supply of se-curities to be borrowed, held by pension funds, mutual

funds and other investors.

The act of buying back the securities that were sold short

is called covering the short or covering the position.

A short position can be covered at any time before the

securities are due to be returned. Once the position is

covered, the short seller will not be affected by any sub-

sequent rises or falls in the price of the securities, as he

already holds the securities required to repay the lender.

Short selling refers broadly to any transaction used by

an investor to profit from the decline in price of a bor-

rowed asset or financial instrument. However some shortpositions, for example those undertaken by means of

derivatives contracts, are not technically short sales be-

1

https://en.wikipedia.org/wiki/Derivative_(finance)https://en.wikipedia.org/wiki/Investorhttps://en.wikipedia.org/wiki/Brokerage_firmhttps://en.wikipedia.org/wiki/Fungibilityhttps://en.wikipedia.org/wiki/Securities_lendinghttps://en.wikipedia.org/wiki/Hedge_(finance)https://en.wikipedia.org/wiki/Long_(finance)https://en.wikipedia.org/wiki/Speculationhttps://en.wikipedia.org/wiki/Long_(finance)https://en.wikipedia.org/wiki/Fungibilityhttps://en.wikipedia.org/wiki/Financial_markethttps://en.wikipedia.org/wiki/Counterpartyhttps://en.wikipedia.org/wiki/Financial_instrumenthttps://en.wikipedia.org/wiki/Security_(finance)https://en.wikipedia.org/wiki/Securities_lending

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2 2 HISTORY

cause no underlying asset is actually delivered upon the

initiation of the position. Derivatives contracts include

futures,options, andswaps.[2][3]

1.1 Worked examples

1.1.1 Profitable trade

Shares in ACME Inc. currently trade at $10 per share.

1. A short seller investor borrows from a lender 100

shares of ACME Inc. and immediately sells them

for a total of $1,000.

2. Subsequently, the price of the shares falls to $8 per

share.

3. Short seller now buys 100 shares of ACME Inc. for

$800.

4. Short seller returns the shares to the lender, who

must accept the return of the same number of shares

as was lent despite the fact that the market value of

the shares has decreased.

5. Short seller retains as profit the $200 difference (mi-

nus borrowing fees) between the price at which he

sold the shares he borrowed and the lower price at

which he was able to purchase the shares he re-

turned.

1.1.2 Profitable covered trade

Shares in ACME Inc. currently trade at $10 per share.

1. A short seller investor owns 100 shares of ACME

Inc. and sells them for a total of $1,000.

2. Subsequently, the price of the shares falls to $8 per

share.

3. Short seller now buys 100 shares of ACME Inc.

for $800, or alternatively, purchases 125 shares for

$1,000.

4. Short seller retains as profit the $200 difference be-

tween the price at which he sold the shares he owned

and the lower price at which he was able to repur-

chase the shares.

1.1.3 Loss-making trade

Shares in ACME Inc. currently trade at $10 per share.

1. A short seller borrows 100 shares of ACME Inc. and

immediately sells them for a total of $1,000.

2. Subsequently the price of the shares rises to $25.

3. Short seller is required to return the shares, and is

compelled to buy 100 shares of ACME Inc. for

$2,500.

4. Short seller returns the shares to the lender who ac-

cepts the return of the same number of shares as was

lent.

5. Short seller incurs as a loss the $1,500 difference

between the price at which he sold the shares he bor-

rowed and the higher price at which he had to pur-

chase the shares he returned (plus borrowing fees).

2 History

Some hold that the practice was invented in 1609 by

Dutch merchantIsaac Le Maire, a sizeable shareholder

of the Vereenigde Oostindische Compagnie (VOC).[4]Edward Stringham has written extensively on the de-

velopment of sophisticated contracts on theAmsterdam

Stock Exchange in the seventeenth century, including

short sale contracts.[5] Short selling can exert downward

pressure on the underlying stock, driving down the price

of shares of that security. This, combined with the seem-

ingly complex and hard-to-follow tactics of the practice,

has made short selling a historical target for criticism. [6]

At various times in history, governments have restricted

or banned short selling.

The London banking house ofNeal, James, Fordyce and

Downcollapsed in June 1772, precipitating a major crisiswhich included the collapse of almost every private bank

in Scotland, and a liquidity crisis in the two major bank-

ing centres of the world, London and Amsterdam. The

bank had been speculating by shortingEast India Com-

panystock on a massive scale, and apparently using cus-

tomer deposits to cover losses. It was perceived as having

a magnifying effect in the violent downturn in theDutch

tulip market in the eighteenth century. In another well-

referenced example,George Sorosbecame notorious for

breaking theBank of England" onBlack Wednesdayof

1992, when he sold short more than $10 billion worth of

pounds sterling.The term short was in use from at least the mid-

nineteenth century. It is commonly understood that

short is used because the short-seller is in a deficit posi-

tion with hisbrokerage house.Jacob Littlewas known as

The Great Bear of Wall Street who began shorting stocks

in the United States in 1822.[7]

Short sellers were blamed for theWall Street Crash of

1929.[8] Regulationsgoverning short selling were imple-

mented in the United States in 1929 and in 1940. Po-

litical fallout from the 1929 crash led Congress to en-

act a law banning short sellers from selling shares dur-

ing a downtick; this was known as theuptick rule, andthis was in effect until 3 July 2007 when it was removed

by the Securities and Exchange Commission (SEC Re-

https://en.wikipedia.org/wiki/Uptick_rulehttps://en.wikipedia.org/wiki/Regulationhttps://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929https://en.wikipedia.org/wiki/Jacob_Littlehttps://en.wikipedia.org/wiki/Brokerage_firmhttps://en.wikipedia.org/wiki/Pounds_sterlinghttps://en.wikipedia.org/wiki/Black_Wednesdayhttps://en.wikipedia.org/wiki/Bank_of_Englandhttps://en.wikipedia.org/wiki/George_Soroshttps://en.wikipedia.org/wiki/Tulip_maniahttps://en.wikipedia.org/wiki/Tulip_maniahttps://en.wikipedia.org/wiki/East_India_Companyhttps://en.wikipedia.org/wiki/East_India_Companyhttps://en.wikipedia.org/wiki/Neal,_James,_Fordyce_and_Downhttps://en.wikipedia.org/wiki/Neal,_James,_Fordyce_and_Downhttps://en.wikipedia.org/wiki/Amsterdam_Stock_Exchangehttps://en.wikipedia.org/wiki/Amsterdam_Stock_Exchangehttps://en.wikipedia.org/wiki/Edward_Stringhamhttps://en.wikipedia.org/wiki/Vereenigde_Oostindische_Compagniehttps://en.wikipedia.org/wiki/Isaac_Le_Mairehttps://en.wikipedia.org/wiki/Share_(finance)https://en.wikipedia.org/wiki/Share_(finance)https://en.wikipedia.org/wiki/Swap_(finance)https://en.wikipedia.org/wiki/Option_(finance)https://en.wikipedia.org/wiki/Futures_contract

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3.1 Shorting stock in the U.S. 3

lease No. 34-55970).[9] PresidentHerbert Hoovercon-

demned short sellers and even J. Edgar Hooversaid he

would investigate short sellers for their role in prolong-

ing theDepression. A few years later, in 1949,Alfred

Winslow Jones founded a fund (that was unregulated)

that bought stocks while selling other stocks short, hence

hedging some of themarket risk, and thehedge fundwasborn.[10]

Negative news, such as litigation against a company, may

also entice professional traders to sell the stock short in

hope of the stock price going down.

During theDot-com bubble, shorting a start-up company

could backfire since it could be taken over at a price higher

than the price at which speculators shorted. Short-sellers

were forced to cover their positions at acquisition prices,

while in many cases the firm often overpaid for the start-

up.

2.1 Naked short selling restrictions

During the2008 financial crisis, critics argued that in-

vestors taking large short positions in struggling financial

firms like Lehman Brothers, HBOS and Morgan Stan-

leycreated instability in the stock market and placed ad-

ditional downward pressure on prices. In response, a

number of countries introduced restrictive regulations on

short-selling in 2008 and 2009. Naked short sellingis

the practice of short-selling a tradable asset without first

borrowing the security or ensuring that the security can

be borrowed it was this practice that was commonly

restricted.[11][12] Investors argued that it was the weak-

ness of financial institutions, not short-selling, that drove

stocks to fall.[13] In September 2008, the Securities Ex-

change Commission in the United States abruptly banned

short sales, primarily in financial stocks, to protect com-

panies under siege in the stock market. That ban expired

several weeks later as regulators determined the ban was

not stabilizing the price of stocks.[13][12]

Temporary short-selling bans were also introduced in the

United Kingdom, Germany, France, Italy and other Eu-

ropean countries in 2008 to minimal effect.[14] Australia

moved to ban naked short selling entirely in September

2008.[11] Germany placed a ban on naked short selling of

certain euro zone securities in 2010.[15] Spain and Italy in-

troduced short selling bans in 2011 and again in 2012.[16]

Worldwide, economic regulators seem inclined to restrict

short selling to decrease potential downward price cas-

cades. Investors continue to argue this only contributes

to market inefficiency.[11]

3 Mechanism

See also:Securities lending

Short selling stock consists of the following:

Thespeculatorinstructs the broker to sell the shares

and the proceeds are credited to his brokers account

at the firm upon which the firm can earn interest.

Generally, the short seller does not earn interest onthe short proceeds and cannot use or encumber the

proceeds for another transaction.[17]

Upon completion of the sale, the investor has 3 days

(in the US) to borrow the shares. If required by law,

the investor first ensures that cash or equity is on

deposit with his brokerage firm as collateral for the

initial short margin requirement. Some short sell-

ers, mainly firms and hedge funds, participate in the

practice of naked short selling, where the shorted

shares are not borrowed or delivered.

The speculator may close the position by buyingback the shares (called covering). If the price has

dropped, he makes a profit. If the stock advanced,

he takes a loss.

Finally, the speculator may return the shares to the

lender or stay short indefinitely.

At any time, the lender may call for the return of

his shares e.g. because he wants to sell them. The

borrower must buy shares on the market and return

them to the lender (or he must borrow the shares

from elsewhere). When the broker completes thistransaction automatically, it is called a 'buy-in'.

3.1 Shorting stock in the U.S.

In the U.S., in order to sell stocks short, the seller must ar-

range for a broker-dealer to confirm that it is able to make

delivery of the shorted securities. This is referred to as a

locate. Brokers have a variety of means to borrow stocks

in order to facilitate locates and make good delivery of

the shorted security.

The vast majority of stocks borrowed by U.S. brokerscome from loans made by the leading custody banks and

fund management companies (see list below). Institu-

tions often lend out their shares in order to earn a little ex-

tra money on their investments. These institutional loans

are usually arranged by the custodian who holds the secu-

rities for the institution. In an institutional stock loan, the

borrower puts up cash collateral, typically 102% of the

value of the stock. The cash collateral is then invested by

the lender, who often rebates part of the interest to the

borrower. The interest that is kept by the lender is the

compensation to the lender for the stock loan.

Brokerage firms can also borrow stocks from the accountsof their own customers. Typical margin account agree-

ments give brokerage firms the right to borrow customer

https://en.wikipedia.org/wiki/Locate_(finance)https://en.wikipedia.org/wiki/Naked_short_sellinghttps://en.wikipedia.org/wiki/Margin_(finance)https://en.wikipedia.org/wiki/Speculationhttps://en.wikipedia.org/wiki/Securities_lendinghttps://en.wikipedia.org/wiki/Naked_short_sellinghttps://en.wikipedia.org/wiki/Morgan_Stanleyhttps://en.wikipedia.org/wiki/Morgan_Stanleyhttps://en.wikipedia.org/wiki/HBOShttps://en.wikipedia.org/wiki/Lehman_Brothershttps://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308https://en.wikipedia.org/wiki/Dot-com_bubblehttps://en.wikipedia.org/wiki/Hedge_fundhttps://en.wikipedia.org/wiki/Market_riskhttps://en.wikipedia.org/wiki/Alfred_Winslow_Joneshttps://en.wikipedia.org/wiki/Alfred_Winslow_Joneshttps://en.wikipedia.org/wiki/Great_Depressionhttps://en.wikipedia.org/wiki/J._Edgar_Hooverhttps://en.wikipedia.org/wiki/Herbert_Hoover

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4 3 MECHANISM

shares without notifying the customer. In general, bro-

kerage accounts are only allowed to lend shares from ac-

counts for which customers have debit balances, mean-

ing they have borrowed from the account. SEC Rule

15c3-3 imposes such severe restrictions on the lending of

shares from cash accounts or excess margin (fully paid

for) shares from margin accounts that most brokeragefirms do not bother except in rare circumstances. (These

restrictions include that the broker must have the express

permission of the customer and provide collateral or a

letter of credit.)

Most brokers will allow retail customers to borrow shares

to short a stock only if one of their own customers has

purchased the stock onmargin. Brokers will go through

the locate process outside their own firm to obtain bor-

rowed shares from other brokers only for their large insti-

tutional customers.

Stock exchanges such as theNYSEor theNASDAQtyp-ically report the short interest of a stock, which gives

the number of shares that have been legally sold short

as a percent of the total float. Alternatively, these can

also be expressed as theshort interest ratio, which is the

number of shares legally sold short as a multiple of the

average daily volume. These can be useful tools to spot

trends in stock price movements but in order to be reli-

able, investors must also ascertain the number of shares

brought into existence by naked shorters. Speculators are

cautioned to remember that for every share that has been

shorted (owned by a new owner), a 'shadow owner' exists

(i.e. the original owner) who also is part of the universe

of owners of that stock, i.e. Despite not having any vot-ing rights, he has not relinquished his interest and some

rights in that stock.

3.2 Securities lending

Main article:Securities lending

When a security is sold, the seller is contractually obliged

to deliver it to the buyer. If a seller sells a security short

without owning it first, the seller needs to borrow the se-

curity from a third party to fulfill its obligation. Other-

wise, the seller will fail to deliver, the transaction will

notsettle, and the seller may be subject to a claim from

itscounterparty. Certain large holders of securities, such

as a custodian or investment management firm, often lend

out these securities to gain extra income, a process known

assecurities lending. The lender receives a fee for this

service. Similarly, retail investors can sometimes make

an extra fee when their broker wants to borrow their se-

curities. This is only possible when the investor has fulltitleof the security, so it cannot be used as collateral for

margin buying.

3.3 Sources of short interest data

Time delayed short interest data (for legally shorted

shares) is available in a number of countries, including

the US, the UK, Hong Kong, and Spain. The number of

stocks being shorted on a global basis has increased in re-

cent years for various structural reasons (e.g. the growthof 130/30 type strategies, shortor bear ETFs). The data is

typically delayed; for example, the NASDAQ requires its

broker-dealermember firms to report data on the 15th of

each month, and then publishes a compilation eight days

later.[18]

Some market data providers (like Data Explorers and

SunGard Financial Systems[19]) believe that stock lend-

ing data provides a good proxy for short interest levels

(excluding any naked short interest). SunGard provides

daily data on short interest by tracking the proxy variables

based on borrowing and lending data which it collects.[20]

3.4 Short selling terms

Days to Cover (DTC)is a numerical term that describes

the relationship between the number of shares in a given

equity that has beenlegallyshort-sold and the number of

days of typical trading that it would require to 'cover' all

legal short positions outstanding. For example, if there

are ten million shares of XYZ Inc. that are currently

legally short-sold and the average daily volume of XYZ

shares traded each day is one million, it would require ten

days of trading for all legal short positions to be covered(10 million / 1 million).

Short Interestis a numerical term that relates the num-

ber of shares in a given equity that have been legally

shorted divided by the total shares outstanding for the

company, usually expressed as a percent. For example, if

there are ten million shares of XYZ Inc. that are currently

legally short sold, and the total number of shares issued by

the company is one hundred million, the Short Interest is

10% (10 million / 100 million). If however, shares are be-

ing created through naked short selling, fails data must

be accessed to assess accurately the true level of short in-

terest.

Borrow costis the fee paid to a securities lender for bor-

rowing the stock or other security. The cost of borrowing

the stock is usually negligible compared to fees paid and

interest accrued on the margin account - in 2002, 91% of

stocks could be shorted for less than a 1% fee per annum,

generally lower than interest rates earned on the margin

account. However, certain stocks become hard to bor-

row as stockholders willing to lend their stock become

more difficult to locate. The cost of borrowing these

stocks can become significant - in February 2001, the cost

to borrow (short)Krispy Kremestock reached an annual-

ized 55%, indicating that a short seller would need to paythe lender more than half the price of the stock over the

course of the year, essentially as interest for borrowing

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5

a stock in limited supply.[21] This has important implica-

tions for derivatives pricing and strategy, as the borrow

cost itself can become a significantconvenience yieldfor

holding the stock (similar to additionaldividend) - for in-

stance, put-call parity relationships are broken and the

early exercisefeature of American call options on non-

dividend paying stocks can become rational to exerciseearly, which otherwise would not be economical.[22]

3.4.1 Major lenders

State Street Corporation(Boston, United States)

Merrill Lynch(New Jersey, United States)

JP Morgan Chase(New York, United States)

Northern Trust(Chicago, United States)

Fortis(Amsterdam, Netherlands, now defunct)

ABN AMRO(Amsterdam, Netherlands, formerly

Fortis)

Citibank(New York, United States)

Bank of New York Mellon Corporation(New York,

United States)

UBS AG(Zurich, Switzerland)

Barclays(London, United Kingdom)

3.5 Naked short selling

Main article:Naked short selling

A naked short sale occurs when a security is sold short

without borrowing the security within a set time (for ex-

ample, three days in the US.) This means that the buyer of

such a short is buying the short-sellers promise to deliver

a share, rather than buying the share itself. The short-

sellers promise is known as a hypothecated share.

When the holder of the underlying stock receives a divi-dend, the holder of the hypothecated share would receive

an equaldividendfrom the short seller.

Naked shorting has been made illegal except where al-

lowed under limited circumstances bymarket makers. It

is detected by theDepository Trust & Clearing Corpora-

tion(in the US) as a failure to deliver or simply fail.

While many fails are settled in a short time, some have

been allowed to linger in the system.

In the US, arranging to borrow a security before a short

sale is called a locate. In 2005, to prevent widespread

failure to deliver securities, theU.S. Securities and Ex-

change Commission(SEC) put in placeRegulation SHO,intended to prevent speculators from selling some stocks

short before doing a locate. Requirements that are more

stringent were put in place in September 2008, ostensi-

bly to prevent the practice from exacerbating market de-

clines. The rules were made permanent in 2009.

4 Fees

When a broker facilitates the delivery of a clients short

sale, the client is charged a fee for this service, usually a

standard commission similar to that of purchasing a sim-

ilar security.

If the short position begins to move against the holder of

the short position (i.e., the price of the security begins to

rise), money will be removed from the holders cash bal-

ance and moved to his or her margin balance. If short

shares continue to rise in price, and the holder does not

have sufficient funds in the cash account to cover the po-

sition, the holder will begin to borrow on margin for thispurpose, thereby accruing margin interest charges. These

are computed and charged just as for any other margin

debit. Therefore, only margin accounts can be used to

open a short position.

When a securitysex-dividend datepasses, the dividend

is deducted from the shortholders account and paid to the

person from whom the stock is borrowed.

For some brokers, the short seller may not earn interest on

the proceeds of the short sale or use it to reduce outstand-

ing margin debt. These brokers may not pass this benefit

on to the retail client unless the client is very large. The

interest is often split with the lender of the security.

5 Dividends and voting rights

Where shares have been shorted and the company which

issues the shares distributes a dividend, the question arises

as to who receives the dividend. The new buyer of the

shares, who is the holder of record and holds the shares

outright, will receive the dividend from the company.

However, the lender, who may hold its shares in amargin

accountwith aprime brokerand is unlikely to be aware

that these particular shares are being lent out for short-ing, also expects to receive a dividend. The short seller

will therefore pay to the lender an amount equal to the

dividend in order to compensate, though as this payment

does not come from the company it is not technically a

dividend as such. The short seller is therefore said to be

short the dividend.

A similar issue comes up with the voting rights attached to

the shorted shares. Unlike a dividend, voting rights can-

not legally be synthesized and so the buyer of the shorted

share, as the holder of record, controls the voting rights.

The owner of a margin account from which the shares

were lent will have agreed in advance to relinquish vot-ing rights to shares during the period of any short sale.[23]

As noted earlier, victims of Naked Shorting sometimes

https://en.wikipedia.org/wiki/Prime_brokeragehttps://en.wikipedia.org/wiki/Margin_accounthttps://en.wikipedia.org/wiki/Margin_accounthttps://en.wikipedia.org/wiki/Ex-dividend_datehttps://en.wikipedia.org/wiki/Margin_balancehttps://en.wikipedia.org/wiki/Regulation_SHOhttps://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commissionhttps://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commissionhttps://en.wikipedia.org/wiki/Depository_Trust_&_Clearing_Corporationhttps://en.wikipedia.org/wiki/Depository_Trust_&_Clearing_Corporationhttps://en.wikipedia.org/wiki/Market_makerhttps://en.wikipedia.org/wiki/Dividendhttps://en.wikipedia.org/wiki/Naked_short_sellinghttps://en.wikipedia.org/wiki/Barclayshttps://en.wikipedia.org/wiki/UBS_AGhttps://en.wikipedia.org/wiki/Bank_of_New_York_Mellonhttps://en.wikipedia.org/wiki/Citibankhttps://en.wikipedia.org/wiki/ABN_AMROhttps://en.wikipedia.org/wiki/Fortis_(finance)https://en.wikipedia.org/wiki/Northern_Trusthttps://en.wikipedia.org/wiki/JP_Morgan_Chasehttps://en.wikipedia.org/wiki/Merrill_Lynchhttps://en.wikipedia.org/wiki/State_Street_Corporationhttps://en.wikipedia.org/wiki/Exercise_(options)#Exercise_Considerationshttps://en.wikipedia.org/wiki/Exercise_(options)#Exercise_Considerationshttps://en.wikipedia.org/wiki/Exercise_(options)https://en.wikipedia.org/wiki/Put-call_parityhttps://en.wikipedia.org/wiki/Dividendhttps://en.wikipedia.org/wiki/Convenience_yield

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6 7 RISKS

report that the number of votes cast is greater than the

number of shares issued by the company.[24]

6 Markets

6.1 Futures and options contracts

When tradingfutures contracts, being 'short' means hav-

ing the legal obligation to deliver something at the ex-

piration of the contract, although the holder of the short

position may alternately buy back the contract prior to ex-

piration instead of making delivery. Short futures trans-

actions are often used by producers of a commodity to

fix the future price of goods they have not yet produced.

Shorting a futures contract is sometimes also used by

those holding the underlying asset (i.e. those with a long

position) as a temporary hedge against price declines.

Shorting futures may also be used for speculative trades,

in which case the investor is looking to profit from any

decline in the price of the futures contract prior to expi-

ration.

An investor can also purchase a put option, giving that

investor the right (but not the obligation) to sell the un-

derlying asset (such as shares of stock) at a fixed price. In

the event of a market decline, the option holder may ex-

ercise these put options, obliging the counterparty to buy

the underlying asset at the agreed upon (or strike) price,

which would then be higher than the current quoted spot

price of the asset.

6.2 Currency

Selling short on the currency markets is different from

selling short on the stock markets. Currencies are traded

in pairs, each currency being priced in terms of another.

In this way, selling short on the currency markets is iden-

tical to going long on stocks.

Novice traders or stock traders can be confused by the

failure to recognize and understand this point: a contract

is always long in terms of one medium and short another.

When the exchange rate has changed, the trader buys the

first currency again; this time he gets more of it, and pays

back the loan. Since he got more money than he had bor-

rowed initially, he makes money. Of course, the reverse

can also occur.

An example of this is as follows: Let us say a trader wants

to trade with theUS dollarand theIndian rupeecurren-

cies. Assume that the current market rate is USD 1 to

Rs.50 and the trader borrows Rs.100. With this, he buys

USD 2. If the next day, the conversion rate becomes

USD 1 to Rs.51, then the trader sells his USD 2 and gets

Rs.102. He returns Rs.100 and keeps the Rs.2 profit (mi-nus fees).

One may also take a short position in a currency using

futures or options; the preceding method is used to bet on

the spot price, which is more directly analogous to selling

a stock short.

7 Risks

Note: this section does not apply to currency markets.

Short selling is sometimes referred to as a negative in-

come investment strategy because there is no potential

for dividend income or interest income. Stock is held

only long enough to be sold pursuant to the contract,

and ones return is therefore limited to short termcapital

gains, which are taxed as ordinary income. For this rea-

son, buying shares (called going long) has a very differ-

ent risk profile from selling short. Furthermore, a longs

losses are limited because the price can only go down to

zero, butgainsare not, as there is no limit, in theory, on

how high the price can go. On the other hand, the short

sellers possible gains are limited to the original price of

the stock, which can only go down to zero, whereas the

loss potential, again in theory, has no limit. For this rea-

son, short selling probably is most often used as a hedge

strategy to manage the risks of long investments.

Many short sellers place a "stop order" with their stock-

broker after selling a stock short. This is an order to the

brokerage to cover the position if the price of the stock

should rise to a certain level, in order to limit the loss and

avoid the problem of unlimited liability described above.

In some cases, if the stocks price skyrockets, the stock-

broker may decide to cover the short sellers position im-

mediately and without his consent, in order to guarantee

that the short seller will be able to make good on his debt

of shares.

Short sellers must be aware of the potential for a short

squeeze. When the price of a stock rises significantly,

some people who are shorting the stock will cover their

positions to limit their losses (this may occur in an auto-

mated way if the short sellers had stop-loss orders in place

with their brokers); others may be forced to close their

position to meet a margin call; others may be forced to

cover, subject to the terms under which they borrowed the

stock, if the person who lent the stock wishes to sell and

take a profit. Since covering their positions involves buy-

ing shares, the short squeeze causes an ever further rise

in the stocks price, which in turn may trigger additional

covering. Because of this, most short sellers restrict their

activities to heavily traded stocks, and they keep an eye

on the short interest levels of their short investments.

Short interest is defined as the total number of shares that

have been legally sold short, but not covered. A short

squeeze can be deliberately induced. This can happen

when large investors (such as companies or wealthy indi-

viduals) notice significant short positions, and buy manyshares, with the intent of selling the position at a profit to

the short sellers who will be panicked by the initial uptick

https://en.wikipedia.org/wiki/Margin_callhttps://en.wikipedia.org/wiki/Short_squeezehttps://en.wikipedia.org/wiki/Short_squeezehttps://en.wikipedia.org/wiki/Stop_orderhttps://en.wikipedia.org/wiki/Hedge_(finance)https://en.wikipedia.org/wiki/Gain_(accounting)https://en.wikipedia.org/wiki/Riskhttps://en.wikipedia.org/wiki/Capital_gainhttps://en.wikipedia.org/wiki/Capital_gainhttps://en.wikipedia.org/wiki/Indian_rupeehttps://en.wikipedia.org/wiki/US_dollarhttps://en.wikipedia.org/wiki/Contracthttps://en.wikipedia.org/wiki/Futures_contract

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8.2 Arbitrage 7

or who are forced to cover their short positions in order

to avoid margin calls.

Another risk is that a given stock may become hard to

borrow. As defined by the SEC and based on lack of

availability, a broker may charge a hard to borrow fee

daily, without notice, for any day that the SEC declaresa share is hard to borrow. Additionally, a broker may be

required to cover a short sellers position at any time (buy

in). The short seller receives a warning from the broker

that he is failing to deliver stock, which will lead to the

buy-in.[25]

Because short sellers must deliver the shorted securities

to their broker eventually, and will need money to buy

them, there is a credit risk for the broker. The penalties

for failure to deliver on a short selling contract inspired

financierDaniel Drewto warn: He who sells what isn't

hisn, Must buy it back or go to prisn. To manage its

own risk, the broker requires the short seller to keep amarginaccount, and charges interest of between 2% and

8% depending on the amounts involved.[26]

In 2011, the eruption of the massive China stock frauds

on North American equity markets brought a related risk

to light for the short seller. The efforts of research-

oriented short sellers to expose these frauds eventually

prompted NASDAQ, NYSE and other exchanges to im-

pose sudden, lengthytrading halts that froze the values

of shorted stocks at artificially high values. Reportedly in

some instances, brokers charged short sellers excessively

large amounts of interest based on these high values as the

shorts were forced to continue their borrowings at least

until the halts were lifted.[27]

Short sellers tend to temper overvaluation by selling into

exuberance. Likewise, short sellers are said to provide

price support by buying when negative sentiment is ex-

acerbated after a significant price decline. Short selling

can have negative implications if it causes a premature or

unjustified share price collapse when the fear of cancel-

lation due to bankruptcy becomes contagious.[28]

8 Strategies

8.1 Hedging

Further information:Hedge (finance)

Hedging often represents a means of minimizing the risk

from a more complex set of transactions. Examples of

this are:

A farmer who has just planted his wheat wants to

lock in the price at which he can sell after the har-

vest. He would take a shortposition in wheat futures.

A market maker in corporate bonds is constantly

trading bonds when clients want to buy or sell. This

can create substantial bond positions. The largest

risk is that interest rates overall move. The trader

can hedge this risk by selling government bonds

short against his long positions in corporate bonds.

In this way, the risk that remains iscredit riskof the

corporate bonds.

An options trader may short shares in order to re-

maindelta neutralso that he is not exposed to risk

from price movements in the stocks that underlie his

options

8.2 Arbitrage

Further information:Arbitrage

A short seller may be trying to benefit from market inef-ficiencies arising from the mispricing of certain products.

Examples of this are

An arbitrageur who buys long futures contracts on a

US Treasury security, and sells short the underlying

US Treasury security.

8.3 Against the box

One variant of selling short involves a long position.

Selling short against the box consists of holding a long

position on which the shares have already risen, where-

upon onethen enters a shortsell order for an equal amount

of shares. The termboxalludes to the days when a safe

deposit boxwas used to store (long) shares. The purpose

of this technique is to lock in paper profits on the long

position without having to sell that position (and possi-

bly incur taxes if said position has appreciated). Once

the short position has been entered, it serves to balance

the long position taken earlier. Thus, from that point in

time, the profit is locked in (less brokerage fees and short

financing costs), regardless of further fluctuations in theunderlying share price. For example, one can ensure a

profit in this way, while delaying sale until the subsequent

tax year.

U.S. investors considering entering into a short against

the box transaction should be aware of the tax conse-

quences of this transaction. Unless certain conditions are

met, the IRS deems a short against the box position to

be a constructive sale of the long position, which is a

taxable event. These conditions include a requirement

that the short position be closed out within 30 days of the

end of the year and that the investor must hold their long

position, without entering into any hedging strategies, fora minimum of 60 days after the short position has been

closed.[29]

https://en.wikipedia.org/wiki/Safe_deposit_boxhttps://en.wikipedia.org/wiki/Safe_deposit_boxhttps://en.wikipedia.org/wiki/Treasury_securityhttps://en.wikipedia.org/wiki/Treasury_securityhttps://en.wikipedia.org/wiki/Arbitragehttps://en.wikipedia.org/wiki/Delta_neutralhttps://en.wikipedia.org/wiki/Credit_riskhttps://en.wikipedia.org/wiki/Corporate_bondhttps://en.wikipedia.org/wiki/Market_makerhttps://en.wikipedia.org/wiki/Hedge_(finance)https://en.wikipedia.org/wiki/Trading_halthttps://en.wikipedia.org/wiki/Securities_fraudhttps://en.wikipedia.org/wiki/Margin_(finance)https://en.wikipedia.org/wiki/Daniel_Drew

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8 11 SEE ALSO

9 Regulations

9.1 United States

The Securities and Exchange Act of 1934 gave the

Securities and Exchange Commissionthe power to reg-ulate short sales.[30] The first official restriction on short

selling came in 1938, when the SEC adopted a rule known

as theuptick rulethat dictated that a short sale could only

be made when the price of a particular stock was higher

than the previous trade price. The uptick rule aimed to

prevent short sales from causing or exacerbating market

price declines.[31] In January 2005, The Securities and

Exchange Commission enactedRegulation SHOto tar-

get abusive naked short selling. Regulation SHO was the

SECs first update to short selling restrictions since the

uptick rule in 1938.[32][33]

The regulation contains two key components: the lo-cate and the close-out. The locate component attempts

to reducefailure to deliversecurities by requiring a bro-

ker possess or have arranged to possess borrowed shares.

The close out component requires that a broker be able

to deliver the shares that are to be shorted. [31][34] In the

US, initial public offers(IPOs) cannot be sold short for

a month after they start trading. This mechanism is in

place to ensure a degree of price stability during a com-

panys initial trading period. However, somebrokerage

firmsthat specialize in penny stocks(referred to collo-

quially asbucket shops) have used the lack of short sell-

ing during this month topump and dump thinly traded

IPOs. Canadaand other countries do allow selling IPOs(including U.S. IPOs) short.[35]

The Securities and Exchange Commission initiated a

temporary ban on short selling on 799 financial stocks

from 19 September 2008 until 2 October 2008. Greater

penalties for naked shorting, by mandating delivery of

stocks at clearing time, were also introduced. Some state

governors have been urging state pension bodies to refrain

from lending stock for shorting purposes.[36] An assess-

ment of the effect of the temporary ban on short-selling

in the United States and other countries in the wake of

the financial crisis showed that it had only little impact

on the movements of stocks, with stock prices moving inthe same way as they would have moved anyhow, but the

ban reduced volume and liquidity.[14]

9.2 Europe, Australia and China

In the UK, theFinancial Services Authorityhad a mora-

torium on short selling 29 leading financial stocks, ef-

fective from 2300 GMT, 19 September 2008 until 16

January 2009.[37] After the ban was lifted,John McFall,

chairman of the Treasury Select Committee, House of

Commons, made clear in public statements and a letterto the FSA that he believed it ought to be extended. Be-

tween 19 and 21 September 2008,Australiatemporarily

banned short selling,[38] and later placed an indefinite ban

on naked short selling.[39] Australias ban on short sell-

ing was further extended for another 28 days on 21 Oc-

tober 2008.[40] Also during September 2008, Germany,

Ireland, Switzerland and Canada banned short selling

leading financial stocks,[41] andFrance, theNetherlands

andBelgiumbanned naked short selling leading financialstocks.[42] By contrast with the approach taken by other

countries, Chinese regulators responded by allowing short

selling, along with a package of other market reforms. [43]

10 Views of short selling

Advocates of short selling argue that the practice is an es-

sential part of theprice discoverymechanism.[44] Finan-

cial researchers at Duke University said in a study that

short interest is an indicator of poor future stock perfor-

mance (the self-fulfilling aspect) and that short sellers ex-

ploit market mistakes about firms fundamentals.[45]

Such noted investors asSeth Klarmanand Warren Buf-

fetthave said that short sellers help the market. Klarman

argued that short sellers are a useful counterweight to the

widespread bullishness on Wall Street,[46] while Buffett

believes that short sellers are useful in uncovering fraud-

ulent accounting and other problems at companies.[47]

Shortseller James Chanosreceived widespread publicity

when he was an early critic of the accounting practices

ofEnron.[48] Chanos responds to critics of short-selling

by pointing to the critical role they played in identifyingproblems at Enron, Boston Market and other financial

disasters over the years.[49] In 2011, research oriented

short sellers were widely acknowledged for exposing the

China stock frauds.[50]

Commentator Jim Cramerhas expressed concern about

short selling and started a petition calling for the rein-

troduction of theuptick rule.[51] Books likeDon't Blame

the ShortsbyRobert Sloanand Fubarnomicsby Robert

E. Wrightsuggest Cramer exaggerated the costs of short

selling and underestimated the benefits, which may in-

clude theex anteidentification ofasset bubbles.

Individual short sellers have been subject to criticism andeven litigation.Manuel P. Asensio, for example, engaged

in a lengthy legal battle with the pharmaceutical manufac-

turer Hemispherx Biopharma.[52]

Several studies of the effectiveness of short selling bans

indicate that short selling bans do not contribute to more

moderate market dynamics.[53][54][55][56]

11 See also

Inverse exchange-traded fund

Magnetar Capital

https://en.wikipedia.org/wiki/Magnetar_Capitalhttps://en.wikipedia.org/wiki/Inverse_exchange-traded_fundhttps://en.wikipedia.org/wiki/Manuel_P._Asensiohttps://en.wikipedia.org/wiki/Stock_market_bubblehttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Ex_antehttps://en.wikipedia.org/wiki/Robert_E._Wrighthttps://en.wikipedia.org/wiki/Robert_E._Wrighthttps://en.wikipedia.org/wiki/Robert_Sloanhttps://en.wikipedia.org/wiki/Uptick_rulehttps://en.wikipedia.org/wiki/Jim_Cramerhttps://en.wikipedia.org/wiki/Enronhttps://en.wikipedia.org/wiki/James_Chanoshttps://en.wikipedia.org/wiki/Warren_Buffetthttps://en.wikipedia.org/wiki/Warren_Buffetthttps://en.wikipedia.org/wiki/Seth_Klarmanhttps://en.wikipedia.org/wiki/Price_discoveryhttps://en.wikipedia.org/wiki/Belgiumhttps://en.wikipedia.org/wiki/Netherlandshttps://en.wikipedia.org/wiki/Francehttps://en.wikipedia.org/wiki/Canadahttps://en.wikipedia.org/wiki/Switzerlandhttps://en.wikipedia.org/wiki/Irelandhttps://en.wikipedia.org/wiki/Germanyhttps://en.wikipedia.org/wiki/Australiahttps://en.wikipedia.org/wiki/House_of_Commons_of_the_United_Kingdomhttps://en.wikipedia.org/wiki/House_of_Commons_of_the_United_Kingdomhttps://en.wikipedia.org/wiki/John_McFall,_Baron_McFall_of_Alcluithhttps://en.wikipedia.org/wiki/GMThttps://en.wikipedia.org/wiki/Financial_Services_Authorityhttps://en.wikipedia.org/wiki/Canadahttps://en.wikipedia.org/wiki/Initial_Public_Offeringhttps://en.wikipedia.org/wiki/Pump_and_dumphttps://en.wikipedia.org/wiki/Bucket_shop_(stock_market)https://en.wikipedia.org/wiki/Penny_stockhttps://en.wikipedia.org/wiki/Brokerage_firmhttps://en.wikipedia.org/wiki/Brokerage_firmhttps://en.wikipedia.org/wiki/Initial_public_offeringhttps://en.wikipedia.org/wiki/Failure_to_deliverhttps://en.wikipedia.org/wiki/Regulation_SHOhttps://en.wikipedia.org/wiki/Uptick_rulehttps://en.wikipedia.org/wiki/Securities_and_Exchange_Commissionhttps://en.wikipedia.org/wiki/Securities_and_Exchange_Act_of_1934

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9

Repurchase agreement

Socially responsible investing

Straddle

Manuel P. Asensio

James Chanos

Anthony Elgindy

Joseph Parnes

Margin

12 Notes

[1] Understanding Short Selling - A Primer. Langas-

set.com. Retrieved 24 May 2012.

[2] Larry Harris(2002).Trading and Exchange: Market Mi-

crostructure for Practitioners. Oxford University Press.

p. 41.ISBN 0195144708.

[3] Don M. Chance and Robert Brooks.An Introduction to

Derivatives and Risk Management. South-Western Col-

lege. p. 6. ISBN 0324601204.

[4] NRC Handelsblad - Naked short selling is an old-Dutch

trick (in Dutch only) Archived 31 May 2013 at the

Wayback Machine

[5] Stringham, Edward (2003). The Extralegal Develop-ment of Securities Trading in Seventeenth Century Ams-

terdam. Quarterly Review of Economics and Finance 43

(2): 321. Retrieved 12 January 2015.

[6] Moritz College of Law(PDF).osu.edu.

[7] Scripophily - PSTA - Professional Scripophily Trade As-

sociation. Encyberpedia.com. Retrieved 24 May 2012.

[8] Short sellers have beenthe villain for 400 years. Reuters.

26 September 2008. Retrieved 28 September 2008.

[9] SEC Release No. 34-55970(PDF). Retrieved 24 May

2012.

[10] Lindgren, Hugo (9 April 2007). New York Magazine

- The Creation of the Hedge Fund. Nymag.com. Re-

trieved 24 May 2012.

[11] Lavinio, Stefano (1999). The Hedge Fund Handbook:

A Definitive Guide for Analyzing and Evaluating Alter-

native Investments. McGraw-Hill. pp. 442443. ISBN

0071350306.

[12] Madura, Jeff (2009). Financial Markets and Institu-

tions. South-Western College Publishing. p. 308. ISBN

1439038848.

[13] Harris, Larry (7 October 2008).A Debate as a Ban onShort-Selling Ends: Did It Make Any Difference?". The

New York Times. Retrieved 12 September 2012.

[14] Oakley, David (18 December 2008). Short-selling ban

has minimal effect. Financial Times. Retrieved 12

September 2012.

[15] Crawford, Alan (18 May 2010).Germany to Temporar-

ily BanNaked Short Selling, Some Swapsof Euro Bonds.

Bloomberg. Retrieved 13 September 2012.

[16] Tracy Rucinski and Stephen Jewkes (23 July 2012).

Spain, Italy reinstate short-selling ban. Reuters. Re-

trieved 12 September 2012.

[17] Federal Reserve Board.Regulation T 220.12

[18] NASDAQ.About the Short Interest Page.

[19] SunGardsShortSide.comdiscusses the product.

[20] SunGard.SunGard Launches Borrow Indices; First Proxy

for Measuring Short Interest on a Daily Basis. Business

Wire.

[21] The market for borrowing stock(PDF). Retrieved 25

December 2012.

[22] Lecture 13: Hard to Borrow Securities (PDF). Re-

trieved 25 December 2012.

[23] What happens to the voting rights on shares when the

shares are used in a short sale transaction?". Investopedia.

Retrieved 4 December 2008.

[24] Greg LandContactAll Articles (15 May 2009). Over-

voting at Taser in 2005. Law.com. Retrieved 24 May

2012.

[25] Arnold, Roger (14 January 2000).Knowing the Rules of

the Shorting Game. TheStreet. Retrieved 24 May 2012.

[26] margin account rates schedule. ScotTrade. 18 June

2011.

[27] Even Short-Sellers Burned by Chinese Shares. Barrons.

18 June 2011.

[28] The Theory and Practice of Short Selling, Chapter 9,

Conclusions and Implications for Investors by Frank J.

Fabozzi, Editor. Books.google.com. Retrieved 24 May

2012.

[29] United States IRS Publication 550 Investment Income

and Expenses. Irs.gov. Retrieved 24 May 2012.

[30] Securities Exchange Act of 1934(PDF). Securities and

Exchange Commission. 1934.

[31] Lavinio, Stefano (1999). The Hedge Fund Handbook:

A Definitive Guide for Analyzing and Evaluating Alter-

native Investments. McGraw-Hill. pp. 8595. ISBN

0071350306.

[32] S.K. Singh (2009).Bank Regulations. Discovery Pub-

lishing House. pp. 122123. ISBN 818356447X.

[33] U.S. SEC (11 April 2005).Division of Market Regula-

tion: Key Points about Regulation SHO.

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[34] Young, Matthew G. (2010). The Complete Guide to

Selling Stocks Short: Everything You Need to Know Ex-

plained Simply. Atlantic Publishing Group Inc. pp.

178179.ISBN 1601383266.

[35] Mahipal Singh (2011). Security Analysis with Invest-

ment and Portfolio Management. Gyan Books. p. 233.

ISBN 8182055199.

[36] Tsang, Michael (19 September 2008).Short Sellers un-

der Fire in U.S., U.K. After AIG Fall. bloomberg.com.

[37] BBC(18 September 2008). FSA clamps down on short-

selling. BBC News. Retrieved 4 January 2010.

[38] The Australian. 2 October 2008.

[39] ASX ban on short selling is indefinite. The Sydney

Morning Herald. 3 October 2008.

[40] Australian Securities and Investments Commission -

08-210 ASIC extends ban on covered short selling.

Asic.gov.au. Retrieved 24 May 2012.

[41] McDonald, Sarah (22 September 2008).Australian short

selling ban goes further than other bourses. National

Business Review. Retrieved 9 November 2011.

[42] Ram, Vidya (22 September 2008). Europe Spooked By

Revenge Of The Commodities. Forbes.

[43] Shen, Samuel (5 October 2008). UPDATE 2-China to

launch stocks margin trade, short sales. Reuters.

[44] Short Sale Constraints And Stock Returns by C.M Jones

and O.A. Lamont. Papers.ssrn.com. 20 September

2001.doi:10.2139/ssrn.281514. Retrieved 24 May 2012.

[45] Do Short Sellers Convey Information About Changes in

Fundamentals or Risk?"(PDF). Retrieved 24 May 2012.

[46] Margin of safety (1991), by Seth Klarman. ISBN 0-

88730-510-5

[47] Casterline, Rick (1 June 2006). 2006 Berkshire

Hathaway Annual Meeting Q&A with Warren Buffett.

Fool.com. Retrieved 24 May 2012.

[48] Peterson, Jim (6 July 2002). Balance Sheet : The silly

season isn't over yet. The New York Times. Archived

fromthe originalon 31 May 2013. Retrieved 9 August

2009.

[49] Contrarian Investor Sees Economic Crash in China

[50] Alpert, Bill (18 June 2011).B. Alpert Even Short Sell-

ers Burned by Chinese Shares (Barrons20110618)". On-

line.barrons.com. Retrieved 24 May 2012.

[51] TheStreet. TheStreet. Retrieved 24 May 2012.

[52] Nelson, Brett (26 November 2001). Short Story.

Forbes. Retrieved 9 August 2009.

[53] Marsh I and Niemer N (2008) The impact of short

sales restrictions. Technical report, commissioned and

funded by the International Securities Lending Associa-

tion (ISLA) the Alternative Investment Management As-sociation (AIMA) and London Investment Banking Asso-

ciation (LIBA).

[54] Lobanova O, Hamid S. S. and Prakash A. J. (2010) The

impact of short-sale restrictions on volatility, liquidity, and

market efficiency: the evidence from the short-sale ban in

the u.s. Technical report, Florida International University

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[55] Beber A. and Pagano M. (2009) Short-selling bans

around the world: Evidence from the 2007-09 crisis.

CSEF Working Papers 241, Centre for Studies in Eco-

nomics and Finance (CSEF), University of Naples, Italy.

[56] Kerbl S (2010) Regulatory Medicine Against Finan-

cial Market Instability: What Helps And What Hurts?"

arXiv.org.

13 References

Sloan, Robert. Don't Blame the Shorts: Why

Short Sellers Are Always Blamed for Market Crashesand Why History Is Repeating Itself, (New York:

McGraw-Hill Professional, 2009).ISBN 978-0-07-

163686-5

Wright, Robert E. Fubarnomics: A Lighthearted,

Serious Look at Americas Economic Ills, (Buffalo,

N.Y.: Prometheus, 2010).ISBN 978-1-61614-191-

2

Fleckner, Andreas M. 'Regulating Trading Prac-

tices' in The Oxford Handbook of Financial Regula-

tion (Oxford: Oxford UniversityPress, 2015).ISBN

978-0-19-968720-6

14 External links

Porsche VW Shortselling Scandal

Short-Selling Bans Dampen 130/30 Strategies

Worldwide, Global Investment Technology, Sept.

29, 2008

Short Selling Introduction

Short Interest: What it tells us

SEC Discussion of Naked Short Selling

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15 Text and image sources, contributors, and licenses

15.1 Text

Short (finance) Source: https://en.wikipedia.org/wiki/Short_(finance)?oldid=699107205 Contributors: Damian Yerrick, Mav, MauryMarkowitz, B4hand, Stevertigo, Frecklefoot, Edward, Willsmith, Lousyd, Tregoweth, Jpatokal, Tristanb, Mydogategodshat, Dcoetzee,Jukeboksi, Sertrel, Furrykef, Hyacinth, Tempshill, Raul654, Pakaran, AnthonyQBachler, Jni, Nurg, Naddy, Gandalf61, Gidonb, Moink,

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15.2 Images

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Created from scratch in Adobe Illustrator. Based onImage:Question book.pngcreated byUser:EquazcionOriginal artist:

Tkgd2007

File:Short_(finance).pngSource: https://upload.wikimedia.org/wikipedia/commons/6/67/Short_%28finance%29.pngLicense:CC BY-SA 3.0Contributors:Own workOriginal artist:Grochim

File:Vereinigte_Ostindische_Compagnie_bond.jpg Source: https://upload.wikimedia.org/wikipedia/commons/5/5c/Vereinigte_Ostindische_Compagnie_bond.jpgLicense:Public domainContributors:? Original artist:?

15.3 Content license

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