Series 7: 15.3.3.2.2. Rule 203—Locate And Delivery Requirements For Short Sales

15.3.3.2.2. Rule 203—Locate and Delivery Requirements for Short Sales

Rule 203 states that before a broker-dealer can execute a short sale, it must locate the securities that will be borrowed to cover the short sale. In this context, “locate” means one of the following:

• The securities have already been borrowed or there is a bona fide agreement to borrow the securities.

• The broker-dealer has “reasonable grounds” to believe that the security can