2 ms·

Is that number actually correct? I don’t know the details on how margin lending of us stocks is reported. However I know from European markets that that number

• voisin 6y ago
  Yes it is correct. There’s no loophole. I borrow a share and sell it to someone. Someone else borrows that share and sells it to someone. Same share, borrowed twice and sold twice. As long as each short seller maintains the equity requirement, there’s no issue. What I am unclear on is who takes the counter party risk in the event the short seller cannot make margin calls and goes bust. The exchange I assume? Who insures the exchange if something like this happens where $10 billion is created overnight at the expense of short sellers?
  • throwaway4good 6y ago
    In Europe there is a settlement window of 3 days (and longer as failing to deliver only draws a fee) which makes it possible to sell stocks without holding them.