Hi elementwise....

I posted on this earlier, but I really don't understand that line of thougt.

The short seller is not simply forced to buy stock - thats misleading. The shorter is forced to buy back what they previously sold in the first place. The shorter also don't own the stock, they borrow the shares they are speculating with.

Why Short?
It is a way to make money on a stock when its falling.
The company loaning the shares also makes money loaning the shares to the shorter. The shorter is speculating that the share price will be LOWER by the time they will need to buy the stock back.

EG: Borrow and Sell at $2/sh
Forced Buy back later at $1/sh (Stock is lower = win)
Forced Buy back later at $3/sh (Stock is higher = loose)

While normally the shorter is not causing major problems, during extremely turbulent times - I understand the ban (though others may still disagree).

A good link:
http://www.independent.co.uk/news/bu...