Short Selling

A client uses this service when they anticipate a decline in the market value of a security. Stocks that an investor expects to decline are borrowed from a creditor, in this case Fio banka, which is then sold on the market.

If this expectation becomes reality and the price of the stock really drops, the investor purchases the same quantity of the stock at a lower price that it was first sold thereby stopping speculation on the drop (the stocks are returned).

The difference between the buy and sell price is the resulting profit or loss.

The client's funds are used as collateral for the borrowed securities (cash, securities or a combination of the two). From the creditor's point of view this is a loan provided in the amount of the current market value of the sold stock.