> a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borro

> a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares It's literally called the "madoff rule" and the "madoff exemption" because he's the one that pushed the SEC to allow it. https://www.sec.gov/investor/pubs/regsho.htm https://www.sec.gov/investor/pubs/regsho.htm