Usually this handled via a stock loan or triparty agreement. A stock loan is an OTC (over the counter agreement, e.g. not on an exchange) when firm A "borrows"

Usually this handled via a stock loan or triparty agreement. A stock loan is an OTC (over the counter agreement, e.g. not on an exchange) when firm A "borrows" the shares from firm B and then after a term, either need to return the shares, or possibly offer cash compensation. This helps to cover the short. Versus a naked short, where you don't actual have possession of the shares you're selling. In my experience, naked shorts are rare, but I dont know how my experience plays out to the industry et large. A triparty agreement is somewhat similar, but well, involves 3 parties instead of 2. Who gets what isn't always immediately clear to a casual observer. These can get quite nuanced and difficult to understand.