Naked short selling
At the time of the sale of a security, the seller has not yet bought the security or ensured the security can be borrowed.
Naked short selling poses the risk of delayed delivery. If delivery is delayed, the usual rules of securities transactions, which depend on the respective market, apply to short sales too. In Germany, exchange transactions must be settled within two days. In case of default a compulsory settlement can be carried out after a further one to two business days.
Since July 2, 2010, naked short selling is largely prohibited by law.