To all, I've read all the posts this afternoon re: shorting stocks. Let me see if I can shed some light on this area...
A. Only stocks that are marginable can be shorted.
B. When you "short" your broker has to borrow the shares from somebody and make delivery on settlement date to complete the transaction.
C. As Radim stated most stocks (those listed on an exchange and selected issues traded NASDAQ approved by the Fed) can be shorted, as long as your broker can borrow the shares.
D. If you own shares in any security cited in C. above and they repose in your margin account at the broker, they can be "hypothecated" i.e. borrowed by the broker to deliver against another client's short sale.
E. However, if those shares are in your cash account, by definition they are fully paid for, then they must be segregated, they cannot be borrowed. Whether or not you signed a margin agreement.
F. BBs are not marginable. They do not meet the criteria set forth in A., B., C. or D. above, but they do fulfill the criteria in E.
Therefore there is no need to request physical delivery of your certificates. It is costly, cumbersome (you have to provide for their safety) and it is time consuming (stock powers, certified mail etc) and you have to get them to your broker by settlement date (3 days) in order to get your money, if you need it quick.
As to Canadian clients being able to short at will...I do not know the answer tonight, but I have contacted the Compliance and the Credit departments at a large and well known Canadian brokerage this afternoon and I expect a citing of the rules and regs to be at my office tomorrow.
If anyone has any questions I will try to answer them.
Best, |
