Define: Shorting

UK Accounting Glossary

Definition: Shorting



What is the dictionary definition of Shorting?

Dictionary Definition


  1. transitive To cause a short circuit in (something).
  2. intransitive Of an electrical circuit, to short circuit.
  3. transitive To shortchange.

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Full Definition of Shorting


Shorting a stock or other asset is the selling of something not yet owned. Whereas buying, or going long an asset is an attempt to profit from a rise in price, shorting is a bet that price will decrease. In the United States, shorting is heavily regulated. Shorting requires the trader’s broker to “borrow” the stock from someone who is long the shares. Unless this can be arranged, shorting is not permitted. This restricts the number of shares available for shorting. In much of the world, so-called naked shorting, where no “borrow” is required, is completely legal.

Shorting is the subject of much speculation and numerous conspiracy theories. Companies involved in stock fraud will sometimes blame so-called illegal naked shorting for their low share price. In an attempt to provide more transparency, Nasdaq initiated the SHO list; stocks on the SHO list are not available for shorting until the exchange receives more detailed information on recent trading patterns.


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Page URL
https://payrollheaven.com/define/shorting/
Modern Language Association (MLA):
Shorting. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. March 30, 2020 https://payrollheaven.com/define/shorting/.
Chicago Manual of Style (CMS):
Shorting. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/shorting/ (accessed: March 30, 2020).
American Psychological Association (APA):
Shorting. PayrollHeaven.com. Retrieved March 30, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/shorting/

Definition Sources


Definitions for Shorting are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th February 2020.