Replies to post #598216 on Fannie Mae-No Politics (FNMA)

[HappyAlways]

Naked short selling is illegal.
Why would any long investor willingly lend his shares for short selling?

Are you sure that applies to stocks in OTC ? I was wondering who were selling in the past few days. Stock price simply jumped down. Will one lend his stocks for someone to do that to his holding to this extent ? Can we block this loophole in future ? Thanks.

[Donotunderstand]

naked short selling breaks rules - not sure if SEC or NYSE or brokers -
but it should not exist (at its extreme naked short sellers can be betting with 3X or 5X the number of existing shares and then trying to manipulate)


regular short selling is buying and selling - just in reverse (borrow - sell - buy back lower)

I do not have an opinion on its legitimacy - value - need - horror - etc.

I will say that short selling - per the books - is done only after borrowing shares. This is done at the brokerage. It is the job of the Brokerage (Fidelity - Morgan Stanley - etc.) to have (in a legit place) the requisite number of shares . On occasion - at COB on a given day they borrow from other brokerages )

Where do shares come from ?

They must be in one of two places. The house might own some. And, margin agreement bound accounts. Everyone who has such an account has signed a margin agreement that includes the right of the brokerage to borrow shares as the brokerage wants. (The shares are NOT moved out of your account but are "noted on the books" as borrowed)

It is that simple when done the right way

The requirement that you borrow first is to try and insure that the short sellers can make good on what they "have sold to others" is so required (they can be broke but they can deliver the borrowed shares )