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 concluded gain on falling security prices. The investor anticipates that the price of a security will fall. The investor sells the 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 is in the red if the price of the security rises.

Read the regulations governing short selling.

  Read the new rules of short selling on GPW under EU regulations

GGPW points out the obligation 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 and you are required to deliver them at the settlement of the trade. In the case of equities listed on GPW, the settlement date is T + 2, which means that you have 2 trading days to ensure the delivery of the securities. The most common way to ensure the delivery is borrowing the securities, for example from your broker. This is securities lending and borrowing plays an important role in the development of short sale transactions.

Securities Lending Agreement

Global Master Securities Lending Agreement under the standards of the International Securities Lending Association

  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 taxation of securities lending 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 taxation of securities lending for lenders and borrowers including the income tax, the tax on goods and services (VAT) and the tax on civil law transactions.

  Study on taxation on securities lending