- 28 Jan 2021 20:19
#15153455
When shorting you're borrowing the shares from your broker. E.g. here:
https://www.investopedia.com/articles/i ... rt-selling
noemon wrote:If my exchange allowed me to short Gamestop today I would have made 3.25 million with 10k within the hour.
Obviously more people had the same idea and the brokers blocked people from shorting Gamestop which defeats the purpose of trading in the first place.
When shorting you're borrowing the shares from your broker. E.g. here:
Here is how the short sale process works:
You place the short sale order through your online brokerage account or financial advisor. Note that you have to declare the short sale as such, since an undeclared short sale amounts to a violation of securities laws.
Your broker will attempt to borrow the shares from a number of sources, including the brokerage's inventory, from the margin accounts of one of its clients or from another broker-dealer. Regulation SHO from the Securities and Exchange Commission (SEC) requires a broker-dealer to have reasonable grounds to believe that the security can be borrowed (so that it can be delivered to the buyer on the date that delivery is due) before effecting a short sale in any security; this is known as the “locate” requirement.
Once the shares have been borrowed or “located” by the broker-dealer, they will be sold in the market and the proceeds deposited in your margin account.
https://www.investopedia.com/articles/i ... rt-selling