Short (finance) - Wikipedia

Short selling terms Short(finance) FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch Practiceofsellingsecuritiesorotherfinancialinstrumentsthatarenotcurrentlyowned Thisarticleneedsadditionalcitationsforverification.Pleasehelpimprovethisarticlebyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.Findsources: "Short" finance – news ·newspapers ·books ·scholar ·JSTOR(April2018)(Learnhowandwhentoremovethistemplatemessage) Schematicrepresentationofphysicalshortsellingintwosteps.Theshortsellerborrowssharesandimmediatelysellsthem.Theshortsellerthenexpectsthepricetodecrease,afterwhichthesellercanprofitbypurchasingthesharestoreturntothelender. Securities Securities Banknote Bond Debenture Derivative Stock Markets Stockmarket Commoditymarket Foreignexchangemarket Futuresexchange Over-the-countermarket(OTC) Spotmarket Bondsbycoupon Fixedratebond Floatingratenote Inflation-indexedbond Perpetualbond Zero-couponbond Commercialpaper Bondsbyissuer Corporatebond Governmentbond Municipalbond Pfandbrief Equities(stocks) Stock Share Initialpublicoffering(IPO) Shortselling Investmentfunds Mutualfund Closed-endfund Exchange-tradedfund(ETF) Hedgefund Indexfund Segregatedfund Structuredfinance Securitization Agencysecurity Asset-backedsecurity Mortgage-backedsecurity Commercialmortgage-backedsecurity Residentialmortgage-backedsecurity Tranche Collateralizeddebtobligation Collateralizedfundobligation Collateralizedmortgageobligation Credit-linkednote Unsecureddebt Derivatives Forward Futures Option Swap Warrant Creditderivative Hybridsecurity vte Infinance,beingshortinanassetmeansinvestinginsuchawaythattheinvestorwillprofitifthevalueoftheassetfalls.Thisistheoppositeofamoreconventional"long"position,wheretheinvestorwillprofitifthevalueoftheassetrises. Thereareanumberofwaysofachievingashortposition.Themostfundamentalmethodis"physical"sellingshortorshort-selling,whichinvolvesborrowingassets(oftensecuritiessuchassharesorbonds)andsellingthem.Theinvestorwilllaterpurchasethesamenumberofthesametypeofsecuritiesinordertoreturnthemtothelender.Ifthepricehasfalleninthemeantime,theinvestorwillhavemadeaprofitequaltothedifference.Conversely,ifthepricehasrisenthentheinvestorwillbearaloss.Theshortsellermustusuallypayafeetoborrowthesecurities(chargedataparticularrateovertime,similartoaninterestpayment),andreimbursethelenderforanycashreturnssuchasdividendsthatweredueduringtheperiodoflease. Shortpositionscanalsobeachievedthroughfutures,forwardsoroptions,wheretheinvestorcanassumeanobligationorarighttosellanassetatafuturedateatapricethatisfixedatthetimethecontractiscreated.Ifthepriceoftheassetfallsbelowtheagreedprice,thentheassetcanbeboughtatthelowerpricebeforeimmediatelybeingsoldatthehigherpricespecifiedintheforwardoroptioncontract.Ashortpositioncanalsobeachievedthroughcertaintypesofswap,suchascontractsfordifferences.Theseareagreementsbetweentwopartiestopayeachotherthedifferenceifthepriceofanassetrisesorfalls,underwhichthepartythatwillbenefitifthepricefallswillhaveashortposition. Becauseashortsellercanincuraliabilitytothelenderifthepricerises,andbecauseashortsaleisnormallydonethroughabroker,ashortselleristypicallyrequiredtopostmargintoitsbrokerascollateraltoensurethatanysuchliabilitiescanbemet,andtopostadditionalmarginiflossesbegintoaccrue.Foranalogousreasons,shortpositionsinderivativesalsousuallyinvolvethepostingofmarginwiththecounterparty.Anyfailuretopostmarginpromptlywouldpromptthebrokerorcounterpartytoclosetheposition. Shortsellingisanespeciallysystematicandcommonpracticeinpublicsecurities,futuresorcurrencymarketsthatarefungibleandreasonablyliquid. Ashortsalemayhaveavarietyofobjectives.Speculatorsmaysellshorthopingtorealizeaprofitonaninstrumentthatappearsovervalued,justaslonginvestorsorspeculatorshopetoprofitfromariseinthepriceofaninstrumentthatappearsundervalued.Alternatively,tradersorfundmanagersmayuseoffsettingshortpositionstohedgecertainrisksthatexistinalongpositionoraportfolio. Researchindicatesthatbanningshortsellingisineffectiveandhasnegativeeffectsonmarkets.[1][2][3][4][5]Nevertheless,shortsellingissubjecttocriticismandperiodicallyfaceshostilityfromsocietyandpolicymakers.[6] Contents 1Concept 1.1Physicalshortingwithborrowedsecurities 1.1.1Workedexampleofaprofitableshortsale 1.1.2Workedexampleofaloss-makingshortsale 1.2Syntheticshortingwithderivatives 2History 2.1Nakedshortsellingrestrictions 3Mechanism 3.1ShortingstockintheU.S. 3.2Securitieslending 3.3Sourcesofshortinterestdata 3.4Shortsellingterms 3.4.1Majorlenders 3.5Nakedshortselling 4Fees 5Dividendsandvotingrights 6Markets 6.1Futuresandoptionscontracts 6.2Currency 7Risks 8Strategies 8.1Hedging 8.2Arbitrage 8.3Againstthebox 9Regulations 9.1UnitedStates 9.2Europe,AustraliaandChina 10Viewsofshortselling 11Seealso 12Notes 13References 14Externallinks Concept PartofaseriesonFinance Markets Assets Bond Commodity Derivatives Foreignexchange Money Over-the-counter Privateequity Realestate Spot Stock Participants Investor institutional Retail Speculator Locations Financialcentres Offshorefinancialcentres ConduitandsinkOFCs Instruments Bond Cash Collateraliseddebtobligation Creditdefaultswap Timedeposit(certificateofdeposit) Creditline Deposit Derivative Futurescontract Indemnity Insurance Letterofcredit Loan Mortgage Option (callexoticput) Performancebonds Repurchaseagreement Stock Security Syndicatedloan SyntheticCDO Corporate General Accounting Audit Capitalbudgeting Creditratingagency Riskmanagement Financialstatements Transactions Leveragedbuyout Mergersandacquisitions Structuredfinance Venturecapital Taxation Baseerosionandprofitshifting(BEPS) Corporatetaxhaven Taxinversion Taxhaven Transferpricing Personal Credit /Debt Employmentcontract Financialplanning RetirementStudentloan Public Governmentspending Finalconsumptionexpenditure OperationsRedistribution Transferpayment Governmentrevenue TaxationDeficitspending Budget (balance)Debt Non-taxrevenue Warrantofpayment Banking Centralbank Depositaccount Fractional-reserve Full-reserve Loan Moneysupply Listsofbanks Bankregulation Bankinglicense BaselAccords BankforInternationalSettlements FinancialStabilityBoard Depositinsurance Separationofinvestmentandretailbanking Regulation ·Financiallaw InternationalFinancialReportingStandards ISO31000 Professionalcertification Fundgovernance Economichistory Privateequityandventurecapital Recession Stockmarketbubble Stockmarketcrash Accountingscandals  BusinessandEconomicsportal  Moneyportalvte Physicalshortingwithborrowedsecurities Toprofitfromadecreaseinthepriceofasecurity,ashortsellercanborrowthesecurityandsellit,expectingthatitwillbecheapertorepurchaseinthefuture.Whenthesellerdecidesthatthetimeisright(orwhenthelenderrecallsthesecurities),thesellerbuysthesamenumberofequivalentsecuritiesandreturnsthemtothelender.Theactofbuyingbackthesecuritiesthatweresoldshortiscalledcoveringtheshort,coveringthepositionorsimplycovering.Ashortpositioncanbecoveredatanytimebeforethesecuritiesareduetobereturned.Oncethepositioniscovered,theshortsellerisnotaffectedbysubsequentrisesorfallsinthepriceofthesecurities,foritalreadyholdsthesecuritiesthatitwillreturntothelender. Theprocessreliesonthefactthatthesecurities(ortheotherassetsbeingsoldshort)arefungible.Aninvestortherefore"borrows"securitiesinthesamesenseasoneborrowscash,wheretheborrowedcashcanbefreelydisposedofanddifferentbanknotesorcoinscanbereturnedtothelender.Thiscanbecontrastedwiththesenseinwhichoneborrowsabicycle,wherethesamebicyclemustbereturned,notmerelyonethatisthesamemodel. Becausethepriceofashareistheoreticallyunlimited,thepotentiallossesofashort-sellerarealsotheoreticallyunlimited. Workedexampleofaprofitableshortsale SharesinACMEInc.currentlytradeat$10pershare. Ashortsellerborrowsfromalender100sharesofACMEInc.,andimmediatelysellsthemforatotalof$1,000. Subsequently,thepriceofthesharesfallsto$8pershare. Shortsellernowbuys100sharesofACMEInc.for$800. Shortsellerreturnsthesharestothelender,whomustacceptthereturnofthesamenumberofsharesaswaslentdespitethefactthatthemarketvalueoftheshareshasdecreased. Shortsellerkeepsasitsprofitthe$200differencebetweenthepriceatwhichtheshortsellersoldtheborrowedsharesandthelowerpriceatwhichtheshortsellerpurchasedtheequivalentshares(minusborrowingfeespaidtothelender). Workedexampleofaloss-makingshortsale SharesinACMEInc.currentlytradeat$10pershare. Ashortsellerborrows100sharesofACMEInc.,andsellsthemforatotalof$1,000. Subsequently,thepriceofthesharesrisesto$25pershare. Shortsellerisrequiredtoreturntheshares,andiscompelledtobuy100sharesofACMEInc.for$2,500. Shortsellerreturnsthesharestothelender,whoacceptsthereturnofthesamenumberofsharesaswaslent. Shortsellerincursasalossthe$1,500differencebetweenthepriceatwhichhesoldtheborrowedsharesandthehigherpriceatwhichtheshortsellerhadtopurchasetheequivalentshares(plusanyborrowingfees). Syntheticshortingwithderivatives "Shorting"or"goingshort"(andsometimesalso"shortselling")alsorefermorebroadlytoanytransactionusedbyaninvestortoprofitfromthedeclineinpriceofaborrowedassetorfinancialinstrument.Derivativescontractsthatcanbeusedinthiswayincludefutures,options,andswaps.[7][8]Thesecontractsaretypicallycash-settled,meaningthatnobuyingorsellingoftheassetinquestionisactuallyinvolvedinthecontract,althoughtypicallyonesideofthecontractwillbeabrokerthatwilleffectaback-to-backsaleoftheassetinquestioninordertohedgetheirposition. History ReplicaofanEastIndiamanoftheDutchEastIndiaCompany/UnitedEastIndiaCompany,or(VOC). CourtyardoftheAmsterdamStockExchange(BeursvanHendrickdeKeyserinDutch) Thepracticeofshortsellingwaslikelyinventedin1609byDutchbusinessmanIsaacLeMaire,asizeableshareholderoftheDutchEastIndiaCompany(VereenigdeOostindischeCompagnieorVOCinDutch).[9]EdwardStringhamhaswrittenextensivelyonthedevelopmentofsophisticatedcontractsontheAmsterdamStockExchangeintheseventeenthcentury,includingshortsalecontracts.[10]Shortsellingcanexertdownwardpressureontheunderlyingstock,drivingdownthepriceofsharesofthatsecurity.This,combinedwiththeseeminglycomplexandhard-to-followtacticsofthepractice,hasmadeshortsellingahistoricaltargetforcriticism.[11]Atvarioustimesinhistory,governmentshaverestrictedorbannedshortselling. TheLondonbankinghouseofNeal,James,FordyceandDowncollapsedinJune1772,precipitatingamajorcrisisthatincludedthecollapseofalmosteveryprivatebankinScotland,andaliquiditycrisisinthetwomajorbankingcentresoftheworld,LondonandAmsterdam.ThebankhadbeenspeculatingbyshortingEastIndiaCompanystockonamassivescale,andapparentlyusingcustomerdepositstocoverlosses.Itwasperceived[citationneeded]ashavingamagnifyingeffectintheviolentdownturnintheDutchtulipmarketintheeighteenthcentury.Inanotherwell-referencedexample,GeorgeSorosbecamenotoriousfor"breakingtheBankofEngland"onBlackWednesdayof1992,whenhesoldshortmorethan$10 billionworthofpoundssterling. Thetermshortwasinusefromatleastthemid-nineteenthcentury.Itiscommonlyunderstoodthattheword"short"(i.e.'lacking')isusedbecausetheshortsellerisinadeficitpositionwithhisbrokeragehouse.JacobLittle,knownasTheGreatBearofWallStreet,beganshortingstocksintheUnitedStatesin1822.[12] ShortsellerswereblamedfortheWallStreetCrashof1929.[13]RegulationsgoverningshortsellingwereimplementedintheUnitedStatesin1929andin1940.[citationneeded]Politicalfalloutfromthe1929crashledCongresstoenactalawbanningshortsellersfromsellingsharesduringadowntick;thiswasknownastheuptickruleandwasineffectuntil3July2007,whenitwasremovedbytheSecuritiesandExchangeCommission(SECReleaseNo.34-55970).[14]PresidentHerbertHoovercondemnedshortsellersandevenJ.EdgarHooversaidhewouldinvestigateshortsellersfortheirroleinprolongingtheDepression.[citationneeded]Afewyearslater,in1949,AlfredWinslowJonesfoundedafund(thatwasunregulated)thatboughtstockswhilesellingotherstocksshort,hencehedgingsomeofthemarketrisk,andthehedgefundwasborn.[15] Negativenews,suchaslitigationagainstacompany,mayalsoenticeprofessionaltraderstosellthestockshortinhopeofthestockpricegoingdown. Duringthedot-combubble,shortingastart-upcompanycouldbackfiresinceitcouldbetakenoveratapricehigherthanthepriceatwhichspeculatorsshorted.[citationneeded]Short-sellerswereforcedtocovertheirpositionsatacquisitionprices,whileinmanycasesthefirmoftenoverpaidforthestart-up.[citationneeded] Nakedshortsellingrestrictions Duringthe2008financialcrisis,criticsarguedthatinvestorstakinglargeshortpositionsinstrugglingfinancialfirmslikeLehmanBrothers,HBOSandMorganStanleycreatedinstabilityinthestockmarketandplacedadditionaldownwardpressureonprices.Inresponse,anumberofcountriesintroducedrestrictiveregulationsonshort-sellingin2008and2009.Nakedshortsellingisthepracticeofshort-sellingatradableassetwithoutfirstborrowingthesecurityorensuringthatthesecuritycanbeborrowed–itwasthispracticethatwascommonlyrestricted.[16][17]Investorsarguedthatitwastheweaknessoffinancialinstitutions,notshort-selling,thatdrovestockstofall.[18]InSeptember2008,theSecuritiesExchangeCommissionintheUnitedStatesabruptlybannedshortsales,primarilyinfinancialstocks,toprotectcompaniesundersiegeinthestockmarket.Thatbanexpiredseveralweekslaterasregulatorsdeterminedthebanwasnotstabilizingthepriceofstocks.[17][18] Temporaryshort-sellingbanswerealsointroducedintheUnitedKingdom,Germany,France,ItalyandotherEuropeancountriesin2008tominimaleffect.[19]AustraliamovedtobannakedshortsellingentirelyinSeptember2008.[16]Germanyplacedabanonnakedshortsellingofcertaineurozonesecuritiesin2010.[20]Spain,PortugalandItalyintroducedshortsellingbansin2011andagainin2012.[21] DuringtheCOVID-19pandemic,shortingwasseverelyrestrictedortemporarilybanned,withEuropeanmarketwatchdogstighteningtherulesonshortselling"inanefforttostemthehistoriclossesarisingfromthecoronaviruspandemic".[22][23] Worldwide,economicregulatorsseeminclinedtorestrictshortsellingtodecreasepotentialdownwardpricecascades.Investorscontinuetoarguethisonlycontributestomarketinefficiency.[16] Mechanism Thissectionneedsadditionalcitationsforverification.Pleasehelpimprovethisarticlebyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.(January2019)(Learnhowandwhentoremovethistemplatemessage) Seealso:Securitieslending Ashortsellertypicallyborrowsthroughabroker,whoisusuallyholdingthesecuritiesforanotherinvestorwhoownsthesecurities;thebrokerhimselfseldompurchasesthesecuritiestolendtotheshortseller.[24]Thelenderdoesnotlosetherighttosellthesecuritieswhiletheyhavebeenlent,asthebrokerusuallyholdsalargepoolofsuchsecuritiesforanumberofinvestorswhich,assuchsecuritiesarefungible,caninsteadbetransferredtoanybuyer.Inmostmarketconditionsthereisareadysupplyofsecuritiestobeborrowed,heldbypensionfunds,mutualfundsandotherinvestors. ShortingstockintheU.S. TosellstocksshortintheU.S.,thesellermustarrangeforabroker-dealertoconfirmthatitcandelivertheshortedsecurities.Thisisreferredtoasalocate.Brokershaveavarietyofmeanstoborrowstockstofacilitatelocatesandmakegoodondeliveryoftheshortedsecurity. ThevastmajorityofstocksborrowedbyU.S.brokerscomefromloansmadebytheleadingcustodybanksandfundmanagementcompanies(seelistbelow).Institutionsoftenlendouttheirsharestoearnextramoneyontheirinvestments.Theseinstitutionalloansareusuallyarrangedbythecustodianwhoholdsthesecuritiesfortheinstitution.Inaninstitutionalstockloan,theborrowerputsupcashcollateral,typically102%ofthevalueofthestock.Thecashcollateralistheninvestedbythelender,whooftenrebatespartoftheinteresttotheborrower.Theinterestthatiskeptbythelenderisthecompensationtothelenderforthestockloan. Brokeragefirmscanalsoborrowstocksfromtheaccountsoftheirowncustomers.Typicalmarginaccountagreementsgivebrokeragefirmstherighttoborrowcustomershareswithoutnotifyingthecustomer.Ingeneral,brokerageaccountsareonlyallowedtolendsharesfromaccountsforwhichcustomershavedebitbalances,meaningtheyhaveborrowedfromtheaccount.SECRule15c3-3imposessuchsevererestrictionsonthelendingofsharesfromcashaccountsorexcessmargin(fullypaidfor)sharesfrommarginaccountsthatmostbrokeragefirmsdonotbotherexceptinrarecircumstances.(Theserestrictionsincludethatthebrokermusthavetheexpresspermissionofthecustomerandprovidecollateraloraletterofcredit.) Mostbrokersallowretailcustomerstoborrowsharestoshortastockonlyifoneoftheirowncustomershaspurchasedthestockonmargin.Brokersgothroughthe"locate"processoutsidetheirownfirmtoobtainborrowedsharesfromotherbrokersonlyfortheirlargeinstitutionalcustomers. StockexchangessuchastheNYSEortheNASDAQtypicallyreportthe"shortinterest"ofastock,whichgivesthenumberofsharesthathavebeenlegallysoldshortasapercentofthetotalfloat.Alternatively,thesecanalsobeexpressedastheshortinterestratio,whichisthenumberofshareslegallysoldshortasamultipleoftheaveragedailyvolume.Thesecanbeusefultoolstospottrendsinstockpricemovementsbutforthemtobereliable,investorsmustalsoascertainthenumberofsharesbroughtintoexistencebynakedshorters.Speculatorsarecautionedtorememberthatforeverysharethathasbeenshorted(ownedbyanewowner),a'shadowowner'exists(i.e.,theoriginalowner)whoalsoispartoftheuniverseofownersofthatstock,i.e.,despitehavingnovotingrights,hehasnotrelinquishedhisinterestandsomerightsinthatstock. Securitieslending Mainarticle:Securitieslending Whenasecurityissold,theselleriscontractuallyobligedtodeliverittothebuyer.Ifasellersellsasecurityshortwithoutowningitfirst,thesellermustborrowthesecurityfromathirdpartytofulfillitsobligation.Otherwise,thesellerfailstodeliver,thetransactiondoesnotsettle,andthesellermaybesubjecttoaclaimfromitscounterparty.Certainlargeholdersofsecurities,suchasacustodianorinvestmentmanagementfirm,oftenlendoutthesesecuritiestogainextraincome,aprocessknownassecuritieslending.Thelenderreceivesafeeforthisservice.Similarly,retailinvestorscansometimesmakeanextrafeewhentheirbrokerwantstoborrowtheirsecurities.Thisisonlypossiblewhentheinvestorhasfulltitleofthesecurity,soitcannotbeusedascollateralformarginbuying. Sourcesofshortinterestdata Timedelayedshortinterestdata(forlegallyshortedshares)isavailableinanumberofcountries,includingtheUS,theUK,HongKong,andSpain.Thenumberofstocksbeingshortedonaglobalbasishasincreasedinrecentyearsforvariousstructuralreasons(e.g.,thegrowthof130/30typestrategies,shortorbearETFs).Thedataistypicallydelayed;forexample,theNASDAQrequiresitsbroker-dealermemberfirmstoreportdataonthe15thofeachmonth,andthenpublishesacompilationeightdayslater.[25] Somemarketdataproviders(likeDataExplorersandSunGardFinancialSystems[26])believethatstocklendingdataprovidesagoodproxyforshortinterestlevels(excludinganynakedshortinterest).SunGardprovidesdailydataonshortinterestbytrackingtheproxyvariablesbasedonborrowingandlendingdataitcollects.[27] Shortsellingterms DaystoCover(DTC)istherelationshipbetweenthenumberofsharesinagivenequitythathasbeenlegallyshort-soldandthenumberofdaysoftypicaltradingthatitwouldrequireto'cover'alllegalshortpositionsoutstanding.Forexample,iftherearetenmillionsharesofXYZInc.thatarecurrentlylegallyshort-soldandtheaveragedailyvolumeofXYZsharestradedeachdayisonemillion,itwouldrequiretendaysofaveragetradingforalllegalshortpositionstobecovered(10 million/1million). ShortInterestrelatesthenumberofsharesinagivenequitythathavebeenlegallyshorteddividedbythetotalsharesoutstandingforthecompany,usuallyexpressedasapercent.Forexample,iftherearetenmillionsharesofXYZInc.thatarecurrentlylegallyshort-sold,andthetotalnumberofsharesissuedbythecompanyisonehundredmillion,theShortInterestis10%(10 million/100 million).If,however,sharesarebeingcreatedthroughnakedshortselling,"fails"datamustbeaccessedtoassessaccuratelythetruelevelofshortinterest. Borrowcostisthefeepaidtoasecuritieslenderforborrowingthestockorothersecurity.Thecostofborrowingthestockisusuallynegligiblecomparedtofeespaidandinterestaccruedonthemarginaccount–in2002,91%ofstockscouldbeshortedforlessthana1%feeperannum,generallylowerthaninterestratesearnedonthemarginaccount.However,certainstocksbecome"hardtoborrow"asstockholderswillingtolendtheirstockbecomemoredifficulttolocate.Thecostofborrowingthesestockscanbecomesignificant–inFebruary2001,thecosttoborrow(short)KrispyKremestockreachedanannualized55%,indicatingthatashortsellerwouldneedtopaythelendermorethanhalfthepriceofthestockoverthecourseoftheyear,essentiallyasinterestforborrowingastockinlimitedsupply.[28]Thishasimportantimplicationsforderivativespricingandstrategy,fortheborrowcostitselfcanbecomeasignificantconvenienceyieldforholdingthestock(similartoadditionaldividend)–forinstance,put–callparityrelationshipsarebrokenandtheearlyexercisefeatureofAmericancalloptionsonnon-dividendpayingstockscanbecomerationaltoexerciseearly,whichotherwisewouldnotbeeconomical.[29] Majorlenders StateStreetCorporation(Boston,UnitedStates) MerrillLynch(NewJersey,UnitedStates) JPMorganChase(NewYork,UnitedStates) NorthernTrust(Chicago,UnitedStates) Fortis(Amsterdam,Netherlands,nowdefunct) ABNAMRO(Amsterdam,Netherlands,formerlyFortis) Citibank(NewYork,UnitedStates) BankofNewYorkMellonCorporation(NewYork,UnitedStates) UBSAG(Zurich,Switzerland) Barclays(London,UnitedKingdom) Nakedshortselling Mainarticle:Nakedshortselling Anakedshortsaleoccurswhenasecurityissoldshortwithoutborrowingthesecuritywithinasettime(forexample,threedaysintheUS.)Thismeansthatthebuyerofsuchashortisbuyingtheshort-seller'spromisetodeliverashare,ratherthanbuyingtheshareitself.Theshort-seller'spromiseisknownasahypothecatedshare. Whentheholderoftheunderlyingstockreceivesadividend,theholderofthehypothecatedsharewouldreceiveanequaldividendfromtheshortseller. Nakedshortinghasbeenmadeillegalexceptwhereallowedunderlimitedcircumstancesbymarketmakers.ItisdetectedbytheDepositoryTrust&ClearingCorporation(intheUS)asa"failuretodeliver"orsimply"fail."Whilemanyfailsaresettledinashorttime,somehavebeenallowedtolingerinthesystem. IntheUS,arrangingtoborrowasecuritybeforeashortsaleiscalledalocate.In2005,topreventwidespreadfailuretodeliversecurities,theU.S.SecuritiesandExchangeCommission(SEC)putinplaceRegulationSHO,intendedtopreventspeculatorsfromsellingsomestocksshortbeforedoingalocate.MorestringentruleswereputinplaceinSeptember2008,ostensiblytopreventthepracticefromexacerbatingmarketdeclines.Theserulesweremadepermanentin2009. Fees Thissectiondoesnotciteanysources.Pleasehelpimprovethissectionbyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.(April2018)(Learnhowandwhentoremovethistemplatemessage) Whenabrokerfacilitatesthedeliveryofaclient'sshortsale,theclientischargedafeeforthisservice,usuallyastandardcommissionsimilartothatofpurchasingasimilarsecurity. Iftheshortpositionbeginstomoveagainsttheholderoftheshortposition(i.e.,thepriceofthesecuritybeginstorise),moneyisremovedfromtheholder'scashbalanceandmovedtotheirmarginbalance.Ifshortsharescontinuetoriseinprice,andtheholderdoesnothavesufficientfundsinthecashaccounttocovertheposition,theholderbeginstoborrowonmarginforthispurpose,therebyaccruingmargininterestcharges.Thesearecomputedandchargedjustasforanyothermargindebit.Therefore,onlymarginaccountscanbeusedtoopenashortposition. Whenasecurity'sex-dividenddatepasses,thedividendisdeductedfromtheshortholder'saccountandpaidtothepersonfromwhomthestockisborrowed. Forsomebrokers,theshortsellermaynotearninterestontheproceedsoftheshortsaleoruseittoreduceoutstandingmargindebt.Thesebrokersmaynotpassthisbenefitontotheretailclientunlesstheclientisverylarge.Theinterestisoftensplitwiththelenderofthesecurity. Dividendsandvotingrights Whereshareshavebeenshortedandthecompanythatissuesthesharesdistributesadividend,thequestionarisesastowhoreceivesthedividend.Thenewbuyeroftheshares,whoistheholderofrecordandholdsthesharesoutright,receivesthedividendfromthecompany.However,thelender,whomayholditssharesinamarginaccountwithaprimebrokerandisunlikelytobeawarethattheseparticularsharesarebeinglentoutforshorting,alsoexpectstoreceiveadividend.Theshortsellerthereforepaysthelenderanamountequaltothedividendtocompensate—thoughtechnically,asthispaymentdoesnotcomefromthecompany,itisnotadividend.Theshortselleristhereforesaidtobeshortthedividend. Asimilarissuecomesupwiththevotingrightsattachedtotheshortedshares.Unlikeadividend,votingrightscannotlegallybesynthesizedandsothebuyeroftheshortedshare,astheholderofrecord,controlsthevotingrights.Theownerofamarginaccountfromwhichtheshareswerelentagreedinadvancetorelinquishvotingrightstosharesduringtheperiodofanyshortsale.[citationneeded] Asnotedearlier,victimsofnakedshortingsometimesreportthatthenumberofvotescastisgreaterthanthenumberofsharesissuedbythecompany.[30] Markets Thissectiondoesnotciteanysources.Pleasehelpimprovethissectionbyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.(April2018)(Learnhowandwhentoremovethistemplatemessage) Futuresandoptionscontracts Whentradingfuturescontracts,being'short'meanshavingthelegalobligationtodeliversomethingattheexpirationofthecontract,althoughtheholderoftheshortpositionmayalternatelybuybackthecontractpriortoexpirationinsteadofmakingdelivery.Shortfuturestransactionsareoftenusedbyproducersofacommoditytofixthefuturepriceofgoodstheyhavenotyetproduced.Shortingafuturescontractissometimesalsousedbythoseholdingtheunderlyingasset(i.e.thosewithalongposition)asatemporaryhedgeagainstpricedeclines.Shortingfuturesmayalsobeusedforspeculativetrades,inwhichcasetheinvestorislookingtoprofitfromanydeclineinthepriceofthefuturescontractpriortoexpiration. Aninvestorcanalsopurchaseaputoption,givingthatinvestortheright(butnottheobligation)toselltheunderlyingasset(suchassharesofstock)atafixedprice.Intheeventofamarketdecline,theoptionholdermayexercisetheseputoptions,obligingthecounterpartytobuytheunderlyingassetattheagreedupon(or"strike")price,whichwouldthenbehigherthanthecurrentquotedspotpriceoftheasset. Currency Sellingshortonthecurrencymarketsisdifferentfromsellingshortonthestockmarkets.Currenciesaretradedinpairs,eachcurrencybeingpricedintermsofanother.Inthisway,sellingshortonthecurrencymarketsisidenticaltogoinglongonstocks. Novicetradersorstocktraderscanbeconfusedbythefailuretorecognizeandunderstandthispoint:acontractisalwayslongintermsofonemediumandshortanother. Whentheexchangeratehaschanged,thetraderbuysthefirstcurrencyagain;thistimehegetsmoreofit,andpaysbacktheloan.Sincehegotmoremoneythanhehadborrowedinitially,hemakesmoney.Ofcourse,thereversecanalsooccur. Anexampleofthisisasfollows:LetussayatraderwantstotradewiththeUSdollarandtheIndianrupeecurrencies.AssumethatthecurrentmarketrateisUS$1toRs.50andthetraderborrowsRs.100.Withthis,hebuysUS$2.Ifthenextday,theconversionratebecomesUS$1toRs.51,thenthetradersellshisUS$2andgetsRs.102.HereturnsRs.100andkeepstheRs.2profit(minusfees). Onemayalsotakeashortpositioninacurrencyusingfuturesoroptions;theprecedingmethodisusedtobetonthespotprice,whichismoredirectlyanalogoustosellingastockshort. Risks Thisarticleneedsadditionalcitationsforverification.Pleasehelpimprovethisarticlebyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.Findsources: "Short" finance – news ·newspapers ·books ·scholar ·JSTOR(April2009)(Learnhowandwhentoremovethistemplatemessage) Note:thissectiondoesnotapplytocurrencymarkets. Shortsellingissometimesreferredtoasa"negativeincomeinvestmentstrategy"becausethereisnopotentialfordividendincomeorinterestincome.Stockisheldonlylongenoughtobesoldpursuanttothecontract,andone'sreturnisthereforelimitedtoshorttermcapitalgains,whicharetaxedasordinaryincome.Forthisreason,buyingshares(called"goinglong")hasaverydifferentriskprofilefromsellingshort.Furthermore,a"long's"lossesarelimitedbecausethepricecanonlygodowntozero,butgainsarenot,asthereisnolimit,intheory,onhowhighthepricecango.Ontheotherhand,theshortseller'spossiblegainsarelimitedtotheoriginalpriceofthestock,whichcanonlygodowntozero,whereasthelosspotential,againintheory,hasnolimit.Forthisreason,shortsellingprobablyismostoftenusedasahedgestrategytomanagetherisksoflonginvestments. Manyshortsellersplaceastoporderwiththeirstockbrokeraftersellingastockshort—anordertothebrokeragetocoverthepositionifthepriceofthestockshouldrisetoacertainlevel.Thisistolimitthelossandavoidtheproblemofunlimitedliabilitydescribedabove.Insomecases,ifthestock'spriceskyrockets,thestockbrokermaydecidetocovertheshortseller'spositionimmediatelyandwithouthisconsenttoguaranteethattheshortsellercanmakegoodonhisdebtofshares. Shortsellersmustbeawareofthepotentialforashortsqueeze.Whenthepriceofastockrisessignificantly,somepeoplewhoareshortingthestockcovertheirpositionstolimittheirlosses(thismayoccurinanautomatedwayiftheshortsellershadstop-lossordersinplacewiththeirbrokers);othersmaybeforcedtoclosetheirpositiontomeetamargincall;othersmaybeforcedtocover,subjecttothetermsunderwhichtheyborrowedthestock,ifthepersonwholentthestockwishestosellandtakeaprofit.Sincecoveringtheirpositionsinvolvesbuyingshares,theshortsqueezecausesaneverfurtherriseinthestock'sprice,whichinturnmaytriggeradditionalcovering.Becauseofthis,mostshortsellersrestricttheiractivitiestoheavilytradedstocks,andtheykeepaneyeonthe"shortinterest"levelsoftheirshortinvestments.Shortinterestisdefinedasthetotalnumberofsharesthathavebeenlegallysoldshort,butnotcovered.Ashortsqueezecanbedeliberatelyinduced.Thiscanhappenwhenlargeinvestors(suchascompaniesorwealthyindividuals)noticesignificantshortpositions,andbuymanyshares,withtheintentofsellingthepositionataprofittotheshortsellers,whomaybepanickedbytheinitialuptickorwhoareforcedtocovertheirshortpositionstoavoidmargincalls. Anotherriskisthatagivenstockmaybecome"hardtoborrow".AsdefinedbytheSECandbasedonlackofavailability,abrokermaychargeahardtoborrowfeedaily,withoutnotice,foranydaythattheSECdeclaresashareishardtoborrow.Additionally,abrokermayberequiredtocoverashortseller'spositionatanytime("buyin").Theshortsellerreceivesawarningfromthebrokerthatheis"failingtodeliver"stock,whichleadstothebuy-in.[31] Becauseshortsellersmusteventuallydelivertheshortedsecuritiestotheirbroker,andneedmoneytobuythem,thereisacreditriskforthebroker.ThepenaltiesforfailuretodeliveronashortsellingcontractinspiredfinancierDanielDrewtowarn:"Hewhosellswhatisn'this'n,Mustbuyitbackorgotopris'n."Tomanageitsownrisk,thebrokerrequirestheshortsellertokeepamarginaccount,andchargesinterestofbetween2%and8%dependingontheamountsinvolved.[32] In2011,theeruptionofthemassiveChinastockfraudsonNorthAmericanequitymarketsbroughtarelatedrisktolightfortheshortseller.Theeffortsofresearch-orientedshortsellerstoexposethesefraudseventuallypromptedNASDAQ,NYSEandotherexchangestoimposesudden,lengthytradinghaltsthatfrozethevaluesofshortedstocksatartificiallyhighvalues.Reportedlyinsomeinstances,brokerschargedshortsellersexcessivelylargeamountsofinterestbasedonthesehighvaluesastheshortswereforcedtocontinuetheirborrowingsatleastuntilthehaltswerelifted.[33] Shortsellerstendtotemperovervaluationbysellingintoexuberance.Likewise,shortsellersaresaidtoprovidepricesupportbybuyingwhennegativesentimentisexacerbatedafterasignificantpricedecline.Shortsellingcanhavenegativeimplicationsifitcausesaprematureorunjustifiedsharepricecollapsewhenthefearofcancellationduetobankruptcybecomescontagious.[34] Strategies Hedging Thissectiondoesnotciteanysources.Pleasehelpimprovethissectionbyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.(April2018)(Learnhowandwhentoremovethistemplatemessage) Furtherinformation:Hedge(finance) Hedgingoftenrepresentsameansofminimizingtheriskfromamorecomplexsetoftransactions. Examplesofthisare: Afarmerwhohasjustplantedtheirwheatwantstolockinthepriceatwhichtheycansellaftertheharvest.Thefarmerwouldtakeashortpositioninwheatfutures. Amarketmakerincorporatebondsisconstantlytradingbondswhenclientswanttobuyorsell.Thiscancreatesubstantialbondpositions.Thelargestriskisthatinterestratesoverallmove.Thetradercanhedgethisriskbysellinggovernmentbondsshortagainsthislongpositionsincorporatebonds.Inthisway,theriskthatremainsiscreditriskofthecorporatebonds. Anoptionstradermayshortsharestoremaindeltaneutralsothattheyarenotexposedtoriskfrompricemovementsinthestocksthatunderlietheiroptions Arbitrage Furtherinformation:Arbitrage Ashortsellermaybetryingtobenefitfrommarketinefficienciesarisingfromthemispricingofcertainproducts.Examplesofthisare AnarbitrageurwhobuyslongfuturescontractsonaUSTreasurysecurity,andsellsshorttheunderlyingUSTreasurysecurity. Againstthebox Onevariantofsellingshortinvolvesalongposition."Sellingshortagainstthebox"consistsofholdingalongpositiononwhichtheshareshavealreadyrisen,whereupononethenentersashortsellorderforanequalnumberofshares.Thetermboxalludestothedayswhenasafedepositboxwasusedtostore(long)shares.Thepurposeofthistechniqueistolockinpaperprofitsonthelongpositionwithouthavingtosellthatposition(andpossiblyincurtaxesifsaidpositionhasappreciated).Oncetheshortpositionhasbeenentered,itservestobalancethelongpositiontakenearlier.Thus,fromthatpointintime,theprofitislockedin(lessbrokeragefeesandshortfinancingcosts),regardlessoffurtherfluctuationsintheunderlyingshareprice.Forexample,onecanensureaprofitinthisway,whiledelayingsaleuntilthesubsequenttaxyear. U.S.investorsconsideringenteringintoa"shortagainstthebox"transactionshouldbeawareofthetaxconsequencesofthistransaction.Unlesscertainconditionsaremet,theIRSdeemsa"shortagainstthebox"positiontobea"constructivesale"ofthelongposition,whichisataxableevent.Theseconditionsincludearequirementthattheshortpositionbeclosedoutwithin30daysoftheendoftheyearandthattheinvestormustholdtheirlongposition,withoutenteringintoanyhedgingstrategies,foraminimumof60daysaftertheshortpositionhasbeenclosed.[35] Regulations UnitedStates TheSecuritiesExchangeActof1934gavetheSecuritiesandExchangeCommissionthepowertoregulateshortsales.[36]Thefirstofficialrestrictiononshortsellingcamein1938,whentheSECadoptedarule(knownastheuptickrule)thatashortsalecouldonlybemadewhenthepriceofaparticularstockwashigherthantheprevioustradeprice.Theuptickruleaimedtopreventshortsalesfromcausingorexacerbatingmarketpricedeclines.[37]InJanuary2005,TheSecuritiesandExchangeCommissionenactedRegulationSHOtotargetabusivenakedshortselling.RegulationSHOwastheSEC'sfirstupdatetoshortsellingrestrictionssincetheuptickrulein1938.[38][39] Theregulationcontainstwokeycomponents:the"locate"andthe"close-out".Thelocatecomponentattemptstoreducefailuretodeliversecuritiesbyrequiringabrokerpossessorhavearrangedtopossessborrowedshares.Thecloseoutcomponentrequiresthatabrokerbeabletodeliverthesharesthataretobeshorted.[37][40]IntheUS,initialpublicoffers(IPOs)cannotbesoldshortforamonthaftertheystarttrading.Thismechanismisinplacetoensureadegreeofpricestabilityduringacompany'sinitialtradingperiod.However,somebrokeragefirmsthatspecializeinpennystocks(referredtocolloquiallyasbucketshops)haveusedthelackofshortsellingduringthismonthtopumpanddumpthinlytradedIPOs.CanadaandothercountriesdoallowsellingIPOs(includingU.S.IPOs)short.[41] TheSecuritiesandExchangeCommissioninitiatedatemporarybanonshortsellingof799financialstocksfrom19September2008until2October2008.Greaterpenaltiesfornakedshorting,bymandatingdeliveryofstocksatclearingtime,werealsointroduced.Somestategovernorshavebeenurgingstatepensionbodiestorefrainfromlendingstockforshortingpurposes.[42]Anassessmentoftheeffectofthetemporarybanonshort-sellingintheUnitedStatesandothercountriesinthewakeofthefinancialcrisisshowedthatithadonly"littleimpact"onthemovementsofstocks,withstockpricesmovinginthesamewayastheywouldhavemovedanyhow,butthebanreducedvolumeandliquidity.[19] Europe,AustraliaandChina IntheUK,theFinancialServicesAuthorityhadamoratoriumonshortsellingof29leadingfinancialstocks,effectivefrom2300GMTon19September2008until16January2009.[43]Afterthebanwaslifted,JohnMcFall,chairmanoftheTreasurySelectCommittee,HouseofCommons,madeclearinpublicstatementsandalettertotheFSAthathebelieveditoughttobeextended.Between19and21September2008,Australiatemporarilybannedshortselling,[44]andlaterplacedanindefinitebanonnakedshortselling.[45]Australia'sbanonshortsellingwasfurtherextendedforanother28dayson21October2008.[46]AlsoduringSeptember2008,Germany,Ireland,SwitzerlandandCanadabannedshortsellingofleadingfinancialstocks,[47]andFrance,theNetherlandsandBelgiumbannednakedshortsellingofleadingfinancialstocks.[48]Bycontrastwiththeapproachtakenbyothercountries,Chineseregulatorsrespondedbyallowingshortselling,alongwithapackageofothermarketreforms.[49]Shortsellingwascompletelyallowedon31March2010,limitedto"forlargebluechipstockswithgoodearningsperformanceandlittlepricevolatility."[50]However,in2015,shortsellingwaseffectivelybannedduetolegislativerestrictionsonborrowingstocksfollowingthestockmarketcrashthesameyear.[51] Viewsofshortselling Advocatesofshortsellingarguethatthepracticeisanessentialpartofthepricediscoverymechanism.[52]FinancialresearchersatDukeUniversitysaidinastudythatshortinterestisanindicatorofpoorfuturestockperformance(theself-fulfillingaspect)andthatshortsellersexploitmarketmistakesaboutfirms'fundamentals.[53] SuchnotedinvestorsasSethKlarmanandWarrenBuffetthavesaidthatshortsellershelpthemarket.KlarmanarguedthatshortsellersareausefulcounterweighttothewidespreadbullishnessonWallStreet,[54]whileBuffettbelievesthatshortsellersareusefulinuncoveringfraudulentaccountingandotherproblemsatcompanies.[55] ShortsellerJamesChanosreceivedwidespreadpublicitywhenhewasanearlycriticoftheaccountingpracticesofEnron.[56]Chanosrespondstocriticsofshort-sellingbypointingtothecriticalroletheyplayedinidentifyingproblemsatEnron,BostonMarketandother"financialdisasters"overtheyears.[57]In2011,researchorientedshortsellerswerewidelyacknowledgedforexposingtheChinastockfrauds.[58] CommentatorJimCramerhasexpressedconcernaboutshortsellingandstartedapetitioncallingforthereintroductionoftheuptickrule.[59]BookslikeDon'tBlametheShortsbyRobertSloanandFubarnomicsbyRobertE.WrightsuggestCramerexaggeratedthecostsofshortsellingandunderestimatedthebenefits,whichmayincludetheexanteidentificationofassetbubbles. Individualshortsellershavebeensubjecttocriticismandevenlitigation.ManuelP.Asensio,forexample,engagedinalengthylegalbattlewiththepharmaceuticalmanufacturerHemispherxBiopharma.[60] Severalstudiesoftheeffectivenessofshortsellingbansindicatethatshortsellingbansdonotcontributetomoremoderatemarketdynamics.[61][62][63][64] Seealso AnthonyElgindy TheBigShort Inverseexchange-tradedfund JamesChanos JosephParnes MagnetarCapital ManuelP.Asensio Margin Repurchaseagreement Shariaandsecuritiestrading Shortsqueeze Sociallyresponsibleinvesting Straddle Notes ^https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr518.pdf[bareURLPDF] ^http://people.stern.nyu.edu/mbrenner/research/short_selling.pdf[bareURLPDF] ^http://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1704&context=njilb[bareURLPDF] ^"Archivedcopy"(PDF).Archivedfromtheoriginal(PDF)on22July2012.Retrieved5July2016.{{citeweb}}:CS1maint:archivedcopyastitle(link) ^https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci18-5.pdf[bareURLPDF] ^Lamont,Owen(1March2005)."ShortSaleConstraintsandOverpricing".NBER.Retrieved28January2021. ^LarryHarris(2002).TradingandExchange:MarketMicrostructureforPractitioners.OxfordUniversityPress.p. 41.ISBN 978-0195144703. ^DonM.ChanceandRobertBrooks(11August2009).AnIntroductiontoDerivativesandRiskManagement.South-WesternCollege.p. 6.ISBN 978-0324601206.{{citebook}}:CS1maint:usesauthorsparameter(link) ^"'Naaktshortgaan',eenoud-Hollandskunstje".NRCHandelsblad. ^Stringham,Edward(2003)."TheExtralegalDevelopmentofSecuritiesTradinginSeventeenthCenturyAmsterdam".QuarterlyReviewofEconomicsandFinance.43(2):321.doi:10.1016/S1062-9769(02)00153-9.S2CID 153987773.SSRN 1676251. ^Stanley,ChristopherA.(2009)."ThePanicEffect:PossibleUnintendedConsequencesoftheTemporaryBansonShortSellingEnactedDuringthe2008FinancialCrisis".EntrepreneurialBusinessLawJournal.4(1).hdl:1811/78357. ^"Scripophily–PSTA–ProfessionalScripophilyTradeAssociation".Encyberpedia.com.Retrieved24May2012. ^"Shortsellershavebeenthevillainfor400years".Reuters.26September2008.Retrieved28September2008. ^"SECReleaseNo.34-55970"(PDF).Retrieved24May2012. ^Lindgren,Hugo(9April2007)."NewYorkMagazine–TheCreationoftheHedgeFund".NewYork.Retrieved24May2012. ^abcLavinio,Stefano(1999).TheHedgeFundHandbook:ADefinitiveGuideforAnalyzingandEvaluatingAlternativeInvestments.McGraw-Hill.pp. 442–443.ISBN 978-0071350303. ^abMadura,Jeff(2009).FinancialMarketsandInstitutions.South-WesternCollegePublishing.p. 308.ISBN 978-1439038840. ^abHarris,Larry(7October2008)."ADebateasaBanonShort-SellingEnds:DidItMakeAnyDifference?".TheNewYorkTimes.Retrieved12September2012. ^abOakley,David(18December2008)."Short-sellingbanhasminimaleffect".FinancialTimes.Retrieved12September2012. ^Crawford,Alan(18May2010)."GermanytoTemporarilyBanNakedShortSelling,SomeSwapsofEuroBonds".Bloomberg.Retrieved13September2012. ^TracyRucinskiandStephenJewkes(23July2012)."Spain,PortugalandItalyreinstateshort-sellingban".Reuters.Retrieved12September2012.{{citeweb}}:CS1maint:usesauthorsparameter(link) ^"TheAMFannouncesashortsellingbanforonemonth".AMF.Retrieved30March2020. ^Smith,Elliot(17March2020)."Short-sellingbanssweepEuropeinthehopeofstemmingstockmarketbleeding".CNBC.Retrieved30March2020. ^"UnderstandingShortSelling–APrimer".Langasset.com.Archivedfromtheoriginalon19August2011.Retrieved24May2012. ^NASDAQ.AbouttheShortInterestPage. ^SunGard'sShortSide.comdiscussestheproduct. ^SunGard.SunGardLaunchesBorrowIndices;FirstProxyforMeasuringShortInterestonaDailyBasis.BusinessWire. ^"Themarketforborrowingstock"(PDF).Retrieved25December2012. ^"Lecture13:HardtoBorrowSecurities"(PDF).Retrieved25December2012. ^GregLand(15May2009)."Over-votingatTaserin2005".Law.com.Retrieved10May2018. ^Arnold,Roger(14January2000)."KnowingtheRulesoftheShortingGame".TheStreet.Retrieved24May2012. ^"marginaccountratesschedule".ScotTrade.18June2011. ^"EvenShort-SellersBurnedbyChineseShares".Barrons.18June2011. ^Fabozzi,FrankJ.(17November2004).TheTheoryandPracticeofShortSelling,Chapter9,ConclusionsandImplicationsforInvestorsbyFrankJ.Fabozzi,editor.ISBN 9780471704331.Retrieved24May2012. ^"UnitedStatesIRSPublication550InvestmentIncomeandExpenses".Irs.gov.Retrieved24May2012. ^"SecuritiesExchangeActof1934"(PDF).SecuritiesandExchangeCommission.1934. ^abLavinio,Stefano(1999).TheHedgeFundHandbook:ADefinitiveGuideforAnalyzingandEvaluatingAlternativeInvestments.McGraw-Hill.pp. 85–95.ISBN 978-0071350303. ^S.K.Singh(2009).BankRegulations.DiscoveryPublishingHouse.pp. 122–123.ISBN 978-8183564472. ^U.S.SEC(11April2005)."DivisionofMarketRegulation:KeyPointsaboutRegulationSHO". ^Young,MatthewG.(2010).TheCompleteGuidetoSellingStocksShort:EverythingYouNeedtoKnowExplainedSimply.AtlanticPublishingGroupInc.pp. 178–179.ISBN 978-1601383266. ^MahipalSingh(2011).SecurityAnalysiswithInvestmentandPortfolioManagement.GyanBooks.p. 233.ISBN 978-8182055193. ^Tsang,Michael(19September2008)."ShortSellersunderFireinU.S.,U.K.AfterAIGFall".BloombergL.P. ^"FSAclampsdownonshort-selling".BBCNews.18September2008.Retrieved4January2010. ^"TheAustralian".2October2008. ^"ASXbanonshortsellingisindefinite".TheSydneyMorningHerald.3October2008.Archivedfromtheoriginalon5October2008. ^"AustralianSecuritiesandInvestmentsCommission–08-210ASICextendsbanoncoveredshortselling".Asic.gov.au.Archivedfromtheoriginalon20March2012.Retrieved24May2012. ^McDonald,Sarah(22September2008)."Australianshortsellingbangoesfurtherthanotherbourses".NationalBusinessReview.Archivedfromtheoriginalon27September2011.Retrieved9November2011. ^Ram,Vidya(22September2008)."EuropeSpookedByRevengeoftheCommodities".Forbes.Archivedfromtheoriginalon22September2008. ^Shen,Samuel(5October2008)."UPDATE2-Chinatolaunchstocksmargintrade,shortsales".Reuters. ^Li,Rui;Li,Nan;Li,Jiahui;Wu,Chongfeng(2018)."Shortselling,marginbuyingandstockreturninChinamarket".Accounting&Finance.58(2):477–501.doi:10.1111/acfi.12229.ISSN 1467-629X.S2CID 157725706. ^Chatterjee,NathanielTaplin,Saikat(4August2015)."Chinastockexchangesstepupcrackdownonshort-selling".Reuters.Retrieved26February2021. ^Jones,CharlesM.;Lamont,OwenA.(20September2001)."ShortSaleConstraintsAndStockReturnsbyC.MJonesandO.A.Lamont"(PDF).doi:10.2139/ssrn.281514.SSRN 281514.{{citejournal}}:Citejournalrequires|journal=(help) ^"DoShortSellersConveyInformationAboutChangesinFundamentalsorRisk?"(PDF).Retrieved24May2012. ^Marginofsafety(1991),bySethKlarman.ISBN 0-88730-510-5 ^Casterline,Rick(1June2006)."2006BerkshireHathawayAnnualMeetingQ&AwithWarrenBuffett".Fool.com.Archivedfromtheoriginalon13June2006.Retrieved24May2012. ^Peterson,Jim(6July2002)."BalanceSheet :Thesillyseasonisn'toveryet".TheNewYorkTimes.Archivedfromtheoriginalon31May2013.Retrieved9August2009. ^"ContrarianInvestorSeesEconomicCrashinChina".Archivedfromtheoriginalon12January2010.Retrieved28January2021. ^Alpert,Bill(18June2011)."B.Alpert"EvenShortSellersBurnedbyChineseShares"(Barrons20110618)".Online.barrons.com.Retrieved24May2012. ^"TheStreet".TheStreet.Archivedfromtheoriginalon15March2012.Retrieved24May2012. ^Nelson,Brett(26November2001)."ShortStory".Forbes.Archivedfromtheoriginalon10August2009.Retrieved9August2009. ^MarshIandNiemerN(2008)"Theimpactofshortsalesrestrictions".Technicalreport,commissionedandfundedbytheInternationalSecuritiesLendingAssociation(ISLA)theAlternativeInvestmentManagementAssociation(AIMA)andLondonInvestmentBankingAssociation(LIBA). ^LobanovaO,HamidS.S.andPrakashA.J.(2010)"Theimpactofshort-salerestrictionsonvolatility,liquidity,andmarketefficiency:theevidencefromtheshort-salebanintheu.s."Technicalreport,FloridaInternationalUniversity–DepartmentofFinance. ^BeberA.andPaganoM.(2009)"Short-sellingbansaroundtheworld:Evidencefromthe2007–09crisis".CSEFWorkingPapers241,CentreforStudiesinEconomicsandFinance(CSEF),UniversityofNaples,Italy. ^KerblS(2010)"RegulatoryMedicineAgainstFinancialMarketInstability:WhatHelpsAndWhatHurts?"arXiv.org. References Sloan,Robert.Don'tBlametheShorts:WhyShortSellersAreAlwaysBlamedforMarketCrashesandWhyHistoryIsRepeatingItself,(NewYork:McGraw-HillProfessional,2009).ISBN 978-0-07-163686-5 Wright,RobertE.Fubarnomics:ALighthearted,SeriousLookatAmerica'sEconomicIlls,(Buffalo,N.Y.:Prometheus,2010).ISBN 978-1-61614-191-2 Fleckner,AndreasM.'RegulatingTradingPractices'inTheOxfordHandbookofFinancialRegulation(Oxford:OxfordUniversityPress,2015).ISBN 978-0-19-968720-6 Externallinks PorscheVWShortsellingScandal "Short-SellingBansDampen130/30StrategiesWorldwide,"GlobalInvestmentTechnology,Sept.29,2008 SECDiscussionofNakedShortSelling vteFinancialmarketsTypesofmarkets Primarymarket Secondarymarket Thirdmarket Fourthmarket Typesofstocks Commonstock Goldenshare Preferredstock Restrictedstock Trackingstock Sharecapital Authorisedcapital Issuedshares Sharesoutstanding Treasurystock Participants Broker-dealer Daytrader Floorbroker Floortrader Investor Marketmaker Proprietarytrader Quantitativeanalyst Financiallaw Regulator Stocktrader Exchanges Electroniccommunicationnetwork Listofstockexchanges Tradinghours Multilateraltradingfacility Over-the-counter Darkpool(privateexchange) Stockvaluation Alpha Arbitragepricingtheory Beta Bid–askspread Bookvalue Capitalassetpricingmodel Capitalmarketline Dividenddiscountmodel Dividendyield Earningspershare Earningsyield Fedmodel Netassetvalue Securitycharacteristicline Securitymarketline T-model Tradingtheoriesandstrategies Algorithmictrading Buyandhold Contrarianinvesting Daytrading Dollarcostaveraging Efficient-markethypothesis Fundamentalanalysis Growthstock Markettiming Modernportfoliotheory Momentuminvesting Mosaictheory Pairstrade Post-modernportfoliotheory Randomwalkhypothesis Sectorrotation Styleinvesting Swingtrading Technicalanalysis Trendfollowing Valueaveraging Valueinvesting Relatedterms Blocktrade Crosslisting Dividend Dual-listedcompany DuPontanalysis Efficientfrontier Flight-to-quality Governmentbond Greenspanput Haircut Initialpublicoffering Long Margin Marketanomaly Marketcapitalization Marketdepth Marketmanipulation Markettrend Meanreversion Momentum Openoutcry Position Publicfloat Publicoffering Rally Returns-basedstyleanalysis Reversestocksplit Sharerepurchase Shortselling Slippage Speculation Stockdilution Stockexchange Stockmarketindex Stocksplit Trade Uptickrule Volatility Votinginterest Yield vteHedgefundsInvestmentstrategyArbitrage/relativevalue Capitalstructurearbitrage Convertiblearbitrage Equitymarketneutral Fixedincomearbitrage/fixed-incomerelative-valueinvesting Statisticalarbitrage Volatilityarbitrage Event-driven Activistshareholder Distressedsecurities Riskarbitrage Specialsituation Directional Convergencetrade Commoditytradingadvisors/managedfuturesaccount Dedicatedshort Globalmacro Long/shortequity Trendfollowing Other Fundofhedgefunds/Multi-manager Trading Algorithmictrading Daytrading High-frequencytrading Primebrokerage Programtrading Proprietarytrading RelatedtermsMarkets Commodities Derivatives Equity Fixedincome Foreignexchange Moneymarkets Structuredsecurities Misc Absolutereturn Arbitragepricingtheory Assetsundermanagement Black–Scholesmodel(Greeks:deltaneutral) Capitalassetpricingmodel(alpha/beta/securitycharacteristicline) Fundamentalanalysis Hedge Securitization Short Taxationofprivateequityandhedgefunds Technicalanalysis Investors Vulturefunds Familyoffices Financialendowments Fundofhedgefunds High-net-worthindividual Institutionalinvestors Insurancecompanies Investmentbanks Merchantbanks Pensionfunds Sovereignwealthfunds Regulatory Fundgovernance HedgeFundStandardsBoard Alternativeinvestmentmanagementcompanies Hedgefunds Hedgefundmanagers Listofhedgefunds Authoritycontrol:Nationallibraries France(data) Germany Israel UnitedStates Retrievedfrom"https://en.wikipedia.org/w/index.php?title=Short_(finance)&oldid=1083121402" 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