How do short sells work on POEMs?

Hey,

firstly you have to understand that there are stocks that are traded in the general market i.e those through your broker, to SGX, to your CDP account.

If you sell a stock you don't own through the above channel, it is called a "Naked Short".

In the above scenario, you will have to cover your position and buy it back within the same day. Otherwise, there will be a penalty of $1,000.

Secondly, there are stocks that are regarded as contracts between you and the broker which allows you to short. The term is "Contract-for-Difference, CFD".

The stocks that are traded using a CFD account is only between you and the broker i.e your order, to your broker.

It just stops there.

Assuming you shorted 1000 units of a stock at $1 using a CFD account(with the intention of taking profits at $0.80), in the event the stock becomes $0.80, you close out the position and the broker will pay you the $200 you earned.

Using CFD allows you to short stocks and hold it for days. However, you will have to pay finance charges as CFD are usually leveraged.

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Speak to your broker. If you do not cover your short, you will be fined. It is illegal to sell stocks you do not own. A broker will usually suggest trading contra versus going short.