It's begun- Shorters beginning to close their PNV positions, page-33

I'm trying to find which countries you are talking about. There have been restrictions to ban naked shorting, that is selling before you have confirmed the ability to deliver, but it's hard to find banning of the practice altogether in developed markets. ASIC found spreads were wider and liquidity decreased during the period of the shorting ban in Australia post GFC and other countries have had similar experiences.

Also, it isn't clear what is meant by having separate futures/CFD markets. Are you saying somehow that participants shouldn't be able to arbitrage the differential between derivatives and the underlying securities???

As an aside, US companies can raise money by something called an "At the money offering". This is the exact opposite of an on-market buyback in ASX-speak. If there's strong demand for a stock, the company can step in and supply that demand by issuing stock. Stock loan and shorters are doing the same thing, identifying demand and creating supply to fill it. Its all rather temporary by comparison, and the company doesnt get the money. Then again, the shorter has to do an "on market buyback" at some later time, which the company doesn't have to do.

Anyway, it's common to see these complaints in heavily shorted stocks. I remember all the gnashing of teeth in the lithium slump of 2018/9. Some of the companies went bust because they didn't have sufficient funding to survive the downturn, but look at them now. If the company is good and not overpriced, the shorters will leave it alone.