Introduction
Short selling, a trading strategy often perceived as controversial, has been subject to increased scrutiny and regulatory changes in recent years. This practice, which involves borrowing and selling an asset with the expectation of repurchasing it at a lower price, has been credited with enhancing market efficiency by identifying overvalued assets and facilitating price discovery. However, it has also been blamed for exacerbating market downturns and unfairly targeting companies.
This delicate balance between the benefits and risks of short selling has led regulators to implement a complex web of rules and restrictions aimed at mitigating systemic risks while preserving the strategy's potential benefits. This blog post delves into the evolving regulatory landscape surrounding short selling, examining the rationale behind recent changes and their implications for investors and the market as a whole.