Zeev's Turnips Patch-No Politics (ZEEV)

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Yes, "cluster F" was the phrase that went through my head when I thought through the ramifications. My initial response was "WTF" when my broker notified me one day last fall that some ETF's that I shorted two days before may not have the shares. I was like, WTF, I'd sue them for fraud if they had never borrowed the shares when they executed the order for me. Then it was explained to me, the shares were borrowed for me to facilitate the execution, but borrowed back out (as I have a margin account) for someone else' short order!

That's when I realized that there are two borrowings involved, for execution and for settlement! two entirely different events. That also means, regulatory measures taken against naked shorting will shaft the small traders because at time of settlment, the shares available for borrowing will be assigned to the big boys, leaving the small traders naked! Until that day, I was very much against naked shorting, thinking like you do that once you short, you keep the borrowed shares until settlement or closing of position. Apparently the game is far more rigged.