Another obstacle to shorting stocks is that the downside is limitless. Rolling Stone. But, he warns, they are not without risk. This is especially true for market makers in thinly traded, illiquid stocks as there may be few shares available to purchase or borrow at a given time. Delivery on sales should be made by the settlement date.
I. Short Sales
Due to continued concerns about failures to deliver, and to promote market stability and preserve investor confidence, the Commission has amended Regulation SHO several times since to eliminate certain exceptions, strengthen certain requirements and reintroduce the price test restriction. But, rather than short the stock physically, as professional investors do in the likes of Domino's, for individual investors there are cheaper, more convenient strategies. The value of a stock is determined by the basic relationship between supply and demand. The actual process is more complex and arcane than this, but the end result is accurately depicted.