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Short selling and securities lending

Short selling is an investment strategy involving the sale of securities not owned by the seller. This transaction is concluded in order to earn on declines of security proces. The investor anticipates that the price of a security will fall sells it, then buys it back at a lower price. The investor's profit is the difference between the amount received from the sale of securities (at a higher price) and the amount he received from the purchase of security. The investor loses if the price of securities rise.

Check the laws and regulations governing the rules for short selling

New rules of short selling on GPW in the light of European Union regulations


WSE points out the obligations to report to the Polish Financial Supervision Authority (KNF) significant net short positions in equities. Details are available on the KNF’s web page.

Because in a short sale transaction we sell securities that are not our ownership, we are committed to deliver them within a period in which the transaction is settled. In the case of equities listed on the Warsaw Stock Exchange maturity is T + 2, which means that we have 2 trading days to ensure the delivery of the securities concerned.

The most common way to ensure the delivery is borrowing of securities for example from your broker. For this reason, securities borrowing and lending plays an important role in the development of short sale transactions.

See also
Model Securities Lending Agreement Drafted
Taxation on Securities Lending

Contact

shortselling@wse.com.pl
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