shorting, page-3

insto's will short stocks much in the same way a banks bond trading desk will short govies and such.

Open a short position then arrange to borrow from another insto holder on settlement. The lender lends the stock to the shorter against cash they hold at a crap interest rate and the shorter hope the stocks price drop covers their interest costs. When they close it out they return the stock back to the insto they borrowed it from and the stock lender sends back the cash plus crappy interest.