July 25, 2008
If anyone can sell anything without delivery,
then he/she can naked short any stock without delivery.
He can GM nakes short 1000 shr of GM at $10 without delver.
He will be more happy to naked short 1000 shr of GM at $20.
Then the whole financial structure will collapse.
Financial Institutes, Brokerage and Banks are based on trust.
If the naked short is allowed, there is soon no maket for financial instruments.