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Strategies & Market Trends : Shorting stocks: Mechanical aspects
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To: Iceberg who wrote (13)6/4/1997 11:38:00 AM
From: Q.   of 172
 
Iceberg, re. how your broker decides which shares to call in: I don't really know what rules they follow exactly.

When you shorted 800 shares, they probably borrowed shares from at least two different unknowing shareholders, not being able to borrow all 800 from a single customer. When one of them decided to sell, and the broker couldn't find enough to borrow elsewhere, he called in what he couldn't borrow. Why they chose you instead of another short customer with the same firm, I don't know. There are rules that must be followed by brokers when short options are called in to make sure that everyone is treated fairly, but I don't know whether there are similar rules for short equity. I would suggest phoning the margin dept. of your broker and ask them to explain their procedures.

Or maybe somebody else on this thread knows more.
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