The sale of security that is not owned by the seller. The seller borrows the security, sells it, and then buys it at a later date to return it to the lender. The purpose of a short sale is to attempt to profit from the fall in the price of a security. Short sales are considered trading activities. For banks, when the security that is sold is "borrowed" from the seller's investment portfolio, the transaction is not considered a short sale; it must be treated as an outright sale of the underlying security. American Banker Glossary
————
Selling a security that the seller does not own but is committed to repurchasing eventually. It is used to capitalize on an expected decline in the security's price. Bloomberg Financial Dictionary
————
The sale of a security or commodities futures not owned by the seller at the time of the trade. Short sales are usually made in anticipation of a decline in the price. Exchange Handbook Glossary
* * *
* * *
short sale UK US noun [C]
► STOCK MARKET an occasion when someone sells shares that they have borrowed hoping that their price will fall before they have to replace them so that they make a profit: »
The Fund may make short sales in an attempt to protect against market declines.
► PROPERTY an occasion when a house is sold for less than the value of its mortgage: »
A homeowner involved in a short sale will see an 80- to 100-point drop on his or her credit score.
Financial and business terms. 2012.