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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: LLCF who wrote (60472)7/22/2008 2:08:01 PM
From: tyc:>  Read Replies (2) of 78437
 
Well my version of what actually happens is this:

1..A client (you or I) wishes to short a stock so using direct access he enters an order to short it.

2. Seeing that there is sufficient margin in the account to cover it, the computer makes the sale.

3. IF the broker were asked at this stage his answer would be, "go ahead if you have sufficient margin, but understand that with any short you may be called in.

4 Later the broker has to settle the sale. He settles it simply by taking shares from his available inventory, which is how he settles all his sales.

5. Whoops ! we have no inventory left; "I, the broker, am unable to settle".

6. My point is at no stage does anyone say my trade a naked short sale, nor have shares specifically been loaned to me. It is the broker's responsibility to settle all sales. He cannot do so because he has no stock with which to settle. He must call in A short.
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