Ann: Becoming a substantial holder from MUFG, page-33

Seems to be some confusion on basics?. MS are shorting GXY stock. They become a substantial holder when they open the short position and borrow the GXY shares from Mitsubishi. Mitsubishi conversely cease to be a substantial holder as they have lent out their shares to MS. MS sell the GXY shares they have borrowed on the market expecting share price to fall in future. MS ceases to be substantial holder as they have sold GXY shares they have borrowed from Mitsubishi. Price falls and MS buy back the same number of GXY shares for a lower price than they sold them for and return them to Mitsubishi who become a substantial holder again getting their shares back plus the borrowing fee they received from MS. MS pockets the difference in dollars they sold Mitsubishi’s shares for and the cost of buying them back to return them minus the cost of borrowing fee.

Both get something out of it -MS get shorting profits and and Mitsubishi who have a strategic holding and not looking at trading the shares receive a borrowing fee they wouldn’t otherwise have got just by holding them.