if my broker is td ameritrade and I want 1 million shares, but td ameritrade only has 100k shares available to their name, but I still want a million, i place the order for a million and td withdraws the $ from my account and buys the 900k shares from another broker plus the 100k they own and put them all in my name.
Then if my account is a margin account, they have the right to lend my shares out for interest.
yes, td ameritrade may have been short 900k shares, but they were not lending me those shares, they were selling me those shares. I was long those shares not short those shares.
Instead, If i wanted to borrow those shares from TD ameritrade and immediately dump/sell them to the market, i would immediately pocket the cash for those borrowed shares, but i would have to pay the 130% interest to borrow them, and I would have to cover or return those shares in a month or two weeks, whatever the contract was for, by buying back those shares at whatever price they were at, even if the price was higher than what I borrowed them at. This would be shorting the stock.
At the end of the contract, say 2 weeks after i borrowed the shares, if I pay the 130% interest, the brokerage may give me the option of re-shorting, or re-borrowing the same shares, if I again agree to pay the 130% interest rate for the next 2 weeks and again allow me to borrow the same number of shares, this time from the new starting price which may be higher than or less than the original borrow price so I wouldn't need to cover or buy back the shares. this would allow me to hold onto the original cash which i originally borrowed the shares at, only being forced to pay the new interest rate to maintain my bet that i will eventually be able to cover at a price which is less than my original borrow rate plus all the interest paid.