Naked short selling , or naked shorting , is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed. When the seller does not obtain the asset and deliver it to the buyer within the required time frame, the result is known as a " failure to deliver " FTD. The transaction generally remains open until the asset is acquired and delivered by the seller, or the seller's broker settles the trade on their behalf. Short selling is used to take advantage of perceived arbitrage opportunities or to anticipate a price fall, but exposes the seller to the risk of a price rise.
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