Posted On: 08/24/2016 9:24:00 AM
Post# of 22940
Great explanation of shorting.
The only thing I would add is Naked shorting is when a entity "MM" usually outside of the us. Will sell lets say 20 million shares of a stock they do not own without a source of borrowing the stock from. So they are selling the stock short and dont have a potential seller to replace the borrowed stock. That usually ends up missing the 3 day requirement to replenish the stock and falls in a FTD "Failed To Deliver" status on OTC. In some cases overseas MM's will sell NSS stock with no intent of ever replacing the borrowed shares. Thats when it really becomes an issue because the company stock then becomes diluted with stock that does not exist.
The only thing I would add is Naked shorting is when a entity "MM" usually outside of the us. Will sell lets say 20 million shares of a stock they do not own without a source of borrowing the stock from. So they are selling the stock short and dont have a potential seller to replace the borrowed stock. That usually ends up missing the 3 day requirement to replenish the stock and falls in a FTD "Failed To Deliver" status on OTC. In some cases overseas MM's will sell NSS stock with no intent of ever replacing the borrowed shares. Thats when it really becomes an issue because the company stock then becomes diluted with stock that does not exist.
(3)
(1)
