Short selling

Short selling and securities lending and borrowing

Short selling is an investment strategy involving the sale of securities not held by the seller. Transactions are executed in order to profit off falling security prices. While anticipating the fall of a security’s price, the investor sells the given security and then buys it back at a lower price. The investor's profit is the difference between the amount received from the sale of the security (at a higher price) and the amount received from the purchase of the security. The investor risks booking a loss if the price of the security rises.

Read the short selling regulations.

  Read the new GPW short selling rules under EU regulations

Please be aware, regulations require investors to report significant net short positions in equities to the Polish Financial Supervision Authority (KNF). For details, visit the KNF website.

In a short sale transaction, you sell securities which you do not hold; however, you are still required to deliver the securities to the buyer at settlement. For GPW listed securities, the settlement date is T + 2. This means you have two trading days to deliver the securities. The most common way to ensure delivery is to borrow the securities, for example from your broker. For this reason, securities lending and borrowing plays a crucial role in the development of short sale transactions.

Securities Lending Agreement

Global Master Securities Lending Agreement under standards of the International Securities Lending Association www.isla.co.uk

  Global Master Securities Lending Agreement

  Polish translation of the Global Master Securities Lending Agreement

 

Taxes on securities lending

The Warsaw Stock Exchange publishes a study on securities lending taxation prepared by the firm Andrzej Paczuski, Andrzej Taudul, Piotr Korszla, Maciej Grochulski Doradcy Podatkowi Spółka Partnerska. The purpose of the study is to describe the main principles of securities lending taxation for lenders and borrowers including income tax, tax on goods and services (VAT) and the tax on civil law transactions.

  Study on securities lending taxation