SHORT-SELLING OF EQUITIES. ADVANTAGES, DISADVANTAGES AND USING OF THIS INVESTMENT TECHNIQUE ON THE WARSAW STOCK EXCHANGE (Krótka sprzedaz akcji. Wady i zalety oraz wykorzystanie tej techniki na Gieldzie Papierów Wartosciowych w Warszawie)
The main aim of this article is to present short-selling as an investment technique, that enables investors to make profits on drops of prices of securities. Two types of short-selling were characterized: covered short-selling and naked short-selling. The article presents advantages of this investment technique, not only for investors, but also for functioning of the equity and derivatives markets. Disadvantages of short-selling were also presented including, among other things, market abuse and short squeeze. It was noted that the negative impact of short-selling may be partially limited by applying proper regulations (like the up-tick rule). Problems concerning concluding short-selling transactions on the Warsaw Stock Exchange were also analysed, emphasizing the role of legal factors in development of this market.
Financed by the National Centre for Research and Development under grant No. SP/I/1/77065/10 by the strategic scientific research and experimental development program:
SYNAT - “Interdisciplinary System for Interactive Scientific and Scientific-Technical Information”.