Naked short selling is allowed by market neutral market makers, but it does not function as convention short seller. Under current regulation, a naked short sel

Naked short selling is allowed by market neutral market makers, but it does not function as convention short seller. Under current regulation, a naked short seller is not looking to make a profit from a future decrease in price, but instead ensuring market availability of the stock. E.g., if there is a sudden increase in buyers market makers continue to make good on their obligation to always be willing to buy and sell a certain stock. Market makers are required to buy a share back from the market sometime in the future to replace the phantom share that they sold.