This video can be viewed at the below link.[1]

What is short selling, and what does it have to do with the meme stock trading frenzy of last year?

Let’s say you think that a stock price is going to go down, and you want to profit on that. How could you do it? If you thought the stock price was going to rise, of course you might buy it. If you thought the stock price was going to fall, and you already owned it, you might sell it.

But what if you thought the prices was going to fall, and you didn’t already own any of the stocks?

Here’s what you might do.

You could borrow the stock and then sell it.  And then if the price fell, you could buy another share, return it to the borrower, and pocket the difference.

This is called selling something short. It’s existed for hundreds of years. And like other parts of financial markets, it’s important to be sure we protect against manipulation and ensure for sufficient transparency in these markets.

You might recall from the meme stock frenzy there was something called a significant short interest.

That meant that lots of investors and institutions had borrowed stock and sold it because they thought the price was going to go down. Of course, other investors had a different view.

Back to protecting investors: I think short selling would benefit from greater visibility and oversight.

So, in February, the Securities and Exchange Commission proposed some rule changes to bring greater transparency shining a light on short selling —both for the regulators and for you as investors.

Right now, both the public and regulators get more information about stock that’s owned than stock that’s sold short.

The proposed rule would use authority from Congress to bring more transparency to this market. It would make data about large short positions and short sale activity available to the public.

In addition, the SEC would collect more detailed data from large short-sellers.

So going forward, I think it would be good for the SEC and investors alike to know more about the short selling market, especially in times of stress or volatility.

And that’s the long and the short of short selling.