They aren’t essential, but they are actually useful. There have been some experiments with banning shorts, but they lead to larger spreads on longs because mark

They aren’t essential, but they are actually useful. There have been some experiments with banning shorts, but they lead to larger spreads on longs because market participants have to hedge by going risk-off on longs instead of shorting affirmatively. Shorts can create moments of volatility, but they improve overall trading liquidity and reduce frictional cost of capital.