A question about various aspects of shorting.
* are insto's allowed to short any stock they can borrow (i.e. do they have to be on an asx shorting list or could they literally short anything that they can negotiate a borrow on).
* what are the settlement mechanics of borrowing in order to short - is the end purchaser of the borrowed/shorted stock buying unencumbered stock (I'm assuming so it would be bizzarre if not) and if so, how is the borrowed stock secured - is it against other stock in the insto's portfolio, cash, cash deposit, is the cash from the short sale lodged in escrow with the stock lender etc.?
* when insto's borrow to short do they usually borrow from their own portfolios or from other institutions/brokers? If from other funds/ brokers how is this process negotiated. Is the borrowed stock ever borrowed from private clients without their knowing about it?
* can/do wealthy individuals have access to the same borrowing/shorting situations as insto's
* who's left holding the baby if a borrower of stock can't return it? I'm assuming the lender is and will go after whatever security is supplied as part of the borrow. Is the purchaser of the borrowed/shorted stock ever at risk in this scenario?
thanks to anyone that can answer these questions.