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Old 26-06-2012, 09:40 PM   #823
Join Date: Dec 2009
Posts: 139
You will need to borrow share if shorting because if you short sell share at T day and then buy back at T+1, you will not be able to deliver the share that you sold on T+3 as the share you bought will only be delivered to you on T+4.

Thus, you need to borrow share so that you can deliver on the T+3 day. Furthermore, it is very risky to short any share overnight without confirming that you can borrow the share, as the share you shorted may not be available in the lending pool. Thus, the usual pratice is to borrow the share before shorting which will incur at least 3 days of borrowing charge. This means that short-sellers using contra will still be charged the borrowing cost.
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