The only "loophole" for "naked shorting" is for the market makers, and they cover the 2nd leg of the transaction almost instantly. Once again, from FINRA and OTC Markets describing what the market makers do: https://www.finra.org/rules-guidance/notices/information-notice-051019 https://blog.otcmarkets.com/2018/11/13/understanding-short-sale-activity/