Naked short: Difference between revisions
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{{image|Stock lending|jpg|Some covered shorts, yesterday.}} | |||
}}Adapted from an enlightening [http://blogs.reuters.com/financial-regulatory-forum/2012/12/04/europes-naked-short-selling-ban-leaves-investors-with-skin-in-the-game/ Reuters blog]: | }}Adapted from an enlightening [http://blogs.reuters.com/financial-regulatory-forum/2012/12/04/europes-naked-short-selling-ban-leaves-investors-with-skin-in-the-game/ Reuters blog]: | ||
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X hopes that the value of A’s shares fall in the interim period so that X can purchase A shares at less than $50 before delivering them to the buyer whilst pocketing the difference. | X hopes that the value of A’s shares fall in the interim period so that X can purchase A shares at less than $50 before delivering them to the buyer whilst pocketing the difference. | ||
Naked short selling can lead to “failed to deliver” notices whereby the short seller is unable to obtain the securities and therefore fails to deliver them to the buyer. Such | Naked short selling can lead to “failed to deliver” notices whereby the short seller is unable to obtain the securities and therefore fails to deliver them to the buyer. Such failures to deliver were suspected of having created market volatility and sharp decreases in share values. | ||
===[[Short Selling Regulations]]=== | ===[[Short Selling Regulations]]=== | ||