From Idle Stocks To Fund Flows

Stock lending will do much more to the markets than just bring in liquidity. A look at how the concept can work for investors.

Globally, investors follow a simple strategy: buy low, sell high. But as the speculator in him matures, he soon prefers his old gameplan back-to-front: sell high, buy low. In financial parlance, this act of selling first (without physically possessing the shares) is called short selling.

The obvious advantage of short sales is that investors can make money on scrips whose prices are expected to fall. But there is a catch here. Short sellers have to cover their sale by buying an equal number of shares of the same scrip within the same settlement period. If they can