Short selling


Also found in: Dictionary, Thesaurus, Legal, Wikipedia.
Related to Short selling: hedging

Short selling

Establishing a market position by selling a security one does not own in anticipation of the price of that security falling.

Short Sale

The sale of borrowed securities. In a short sale, one borrows securities, usually from a brokerage, and sells them. One then buys the same securities in order to repay the brokerage. Selling short is practiced if one believes that the price of a security will soon fall. That is, one expects to sell the borrowed securities at a higher price than the price at which one will buy in order to return the securities. Selling short is one of the most common practices of hedge funds. This is also called establishing a bear position. See also: Margin account.
References in periodicals archive ?
The Abu Dhabi Securities Exchange (ADX) has also held training sessions for brokerage firms, market makers, and local funds to supply the technical short selling service to their customers, understand its positive returns on consumers and market liquidity, as well as its contribution to enhance long term investment savings.
However, short-sellers have taken advantage of the long-standing system of the Hong Kong market in recent years by publishing short selling reports to 'complement' its short selling activities to make a profit.
Best ratings announcements between January 1,2005 and December 31, 2006, we test whether short selling is unusually high in the period directly prior to IFS rating announcements.
Amelia Cottrell, associate director of the SEC's New York Regional Office, added in the statement that the trading conducted by Lynn and Worldwide Capital "disregarded the markets' independent pricing mechanisms" and that "their use of multiple accounts in obtaining offering shares and short selling did not satisfy the separate accounts exception to Rule 105."
In their working paper "Naked Short Selling: Is it Information-Based Trading?" authors Harrison Liu, Sean T.
In addition, if the price of a financial instrument falls by a significant amount in a day, national regulators will have the power to restrict short selling in that instrument until the end of the next trading day.
Further, we find no support for the hypothesis that bearish investors substituted put options for short selling on a wholesale basis following the introduction of put options as required by the Chen and Singal hypothesis.
Included in the proposals is the creation of a new agency that would oversee European financial markets and have powers to suspend short selling.
This is called covered short selling and ensures the trader fulfills his obligation by imposing adequate margins.
Summary: Despite reducing risk in short selling and offering benefits to all participants, the Securities Lending and Borrowing Scheme has failed to take off.
Market supervisors in the European Union could be given powers to temporarily ban naked short selling of credit default swaps and shares in times of extreme volatility, the bloc's executive body said on Monday.