Shares for short transactions

Question

Quizplus · Accepted Answer

Short selling involves borrowing shares from a broker and then selling them in the market with the expectation that the price will fall. The shares used for short transactions are typically held by the short seller's broker in street name. This allows the broker to lend out the shares to short sellers. Short sellers pay a fee to borrow the shares, and they must eventually return the shares to the broker. Commercial banks may also lend shares, but this is less common.

Shares for Short Transactions