Re:GameStop Is Rage Against the Financial Machine
by dcolkitt on Thursday January 28, 2021 @01:03AM
(#25938773)
This is true. But shares are fungible. So, even if Alice sells, the broker will just locate 100 different shares on the loan market and invisibly swap them out for Bob. Very likely whoever Alice sells her shares to, will also put them up for lending.
That is not quite true. If after Bob has borrowed and sold 100 shares to Chuck, and then David comes along and makes an offer to Alice to buy 100 shares, Alice can only sell her shares once they are recalled. Which means Bob now has to scramble to return those shares, specially if Chuck does not want to sell (or if Chuck has lent out those shares and they need to be recalled in turn).