Naked and short selling - definitions?

[mattryanshares]

I notice when i go to sell shares through comsec i get this warning.

Naked short selling is prohibited. Covered short selling is
available only through CommSec's Term Short Selling
facility. Therefore, in placing this order you are confirming
that you own the stock you are selling and that the order is
a regular "long sale" (not a short sale).

Im guessing naked selling is selling a stock you havent purchased? Short selling i dont understand? Is that when you have purchased and paid for the stock but selling it prior to the 3 days settlement date?

Cheers matt

 

[ROE]

Re: Naked and short selling, definitions?

I notice when i go to sell shares through comsec i get this warning.

Naked short selling is prohibited. Covered short selling is
available only through CommSec's Term Short Selling
facility. Therefore, in placing this order you are confirming
that you own the stock you are selling and that the order is
a regular "long sale" (not a short sale).

Im guessing naked selling is selling a stock you havent purchased? Short selling i dont understand? Is that when you have purchased and paid for the stock but selling it prior to the 3 days settlement date?

Cheers matt

Naked shorts are selling stock you do not have or have right on it
But you can buy and resell before the settlement day
When you buy you have the right to that stock the other side is obligate to deliver in 3 days time