Can a big firm short stocks, & futures

Discussion in 'Trading' started by doug456, Mar 11, 2004.

  1. doug456


    Can a big firm short stocks, futures or options? I don't think it's a law, but since a short sale is borrowing a security and selling, then buying it back? IF so who does the big firm borrow the security from? I mean big firms like Merill, JP Morgan, and so on.
  2. Yes.
  3. doug456


    Who do they get the stocks or what ever from? They can't borrower something they don't have.
  4. By definition you borrow what you don't have :)

    They borrow theorically to all the owners (you and others of course) ... in france it was normally obliged that they notify the owners except that in practice they didn't do it since they had to pay interest upon it once upon a time some people learning that the bankers own them interest on shorting their shares but never paid them that due interest got angry and go on trial against them ... what did they do: they changed the law so that the people can't complain any more :D. For US I don't know exactly but it should be more or less the same kind of things.

  5. dgmodel

    dgmodel Guest

    yes and no... they cannot short their own stocks that they brought public...
  6. doug456


    What I want to know is we do the stocks, futures, options, anything else come from if they want to short something?
  7. No but suffice to have a "foreign" entity to do so... like the supposed chinese wall between analysts and corporate sellers the frontier can be so thin :D