this might be worth reading.

the "borrowing" most of the time, is done by your broker "behind the scenes", although some (very) sophisticated investors can arrange it off-exchange themselves, but doing so is beyond the means of most regular retail investors.

some securites are "hard to borrow"; dealers are supposed to have found enough to lend you *before* they finalize the transaction.

in the US, the SEC calls this the "locate" rule.

Canadian info here.

obligatory Wikipedia link here.