Timeline for ETF asterisk clause meaning
Current License: CC BY-SA 4.0
6 events
| when toggle format | what | by | license | comment | |
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| Mar 15, 2019 at 17:10 | comment | added | mbrig | @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity. | |
| Mar 15, 2019 at 15:40 | comment | added | Bob Baerker | @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule? | |
| Mar 15, 2019 at 15:40 | comment | added | Bob Baerker | @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->) | |
| Mar 15, 2019 at 15:25 | comment | added | Sobrique | You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead. | |
| Mar 15, 2019 at 15:16 | comment | added | sscarduzio | Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔 | |
| Mar 15, 2019 at 13:01 | history | answered | Bob Baerker | CC BY-SA 4.0 |