What Is Short Sale?
The sale of a security the seller does not own, typically borrowed and sold with the intent to repurchase it later at a lower price; profit results if the price declines.
Short Sale across 3 exams
Short Sale appears on the following exams. Each defines it in the context candidates are tested on:
- Series 57
- The sale of a security the seller does not own, typically borrowed and sold with the intent to repurchase it later at a lower price; profit results if the price declines.
- Series 99
- A transaction in which a customer sells securities they do not own, expecting to buy them back later at a lower price. Operations staff ensure borrowed securities are available before the sale and manage the locate and return process.
- Series 9/10
- The sale of a security a customer does not own, with the expectation that the price will decline so the customer can repurchase it at a lower price. Supervisors must ensure that short sales comply with exchange rules, including the uptick rule and proper locate confirmation before execution.