In short selling is the share borrowed?

When a person do short selling for intraday, is the share borrowed from somewhere and given to short seller for short selling ? I read like that in wikipedia and in some countries they charge interest for the borrowed shares. But in india is there any borrowing taking place ? is yes, from whom ?


When you short shares for intraday, you have to deliver the shares to the person who has bought it from you only by latest T+2 morning (i.e if you sell shares on Monday, your broker will have to give the shares that you have sold latest by Wed morning to the exchange). So if you sell the shares in the morning and buy it back before close of day you will have no shares to deliver, in this case you don't really have to borrow any shares. 

But there is a SLB (Stock lending and borrowing) mechanism in India, check this post. 

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Yeah, that explains it very well.

In intraday, when you short, you are not really owning any shares (you are not borrowing also, borrowing and selling is separate mechanism, which comes as delivery trade called SLB). But instead you are entering into an agreement that you will be delivering the shares to the person who have bought the shares from you. (ideally T+2 days settlement), But since before evening you are buying the shares from someone else and squaring off your position, you can assume that your name will be erased from the agreement and the person whom from you bought the shares, his name will be replaced instead. This is like a rolling mechanism. This is taken care by the stock exchange.

So at the end of day closing T+0 day, All intraday buy and sells will be matched, and all delivery buys and sells will be matched. If someone is defaulting and not delivering the short sold shares, he will enter into auction market.