Identifier: C3T8L5 · Revision: 2026-10-26 · Classification: restricted

Decision and objectives

Verify general eligibility, temporary measures and actual financing separately. The decision record must connect the exposure, cash dates and implementable contract, rather than stop at a favorable price forecast.

By the end, you can verify general eligibility, temporary measures and actual financing separately; apply a supplied up-tick scenario without assuming current permission; defer a trade whose borrow or legal evidence is incomplete.

Prerequisite: C3T8L4; completed Classes 1 and 2 and the Stock Market School foundation or Forex School foundation. All cases below are hypothetical; their prices, costs, rates, dates, contractual assumptions and collateral amounts are teaching inputs, not current offers.

Mechanics

Three approvals are distinct: the product can generally be financed or sold short; current regulator and exchange measures permit the specific security; and the intermediary can supply credit or borrow on agreed terms. A fourth check is execution rules, including proper short-order marking and any price restrictions. A security that passes one check can fail the others.

The verified Borsa announcement on KAP dated 22 September 2026 applies an up-tick rule to eligible BIST 50 shares until further announcement and reiterates short marking for same-day uncovered sales. It is a dated source, not certification that a named security is eligible on 26 October. Check subsequent decisions and instrument measures before any implementation.

Price and return drivers

A regulatory restriction is not a cost to be offset by a larger expected profit. Where a supplied hypothetical up-tick rule permits a price above the last trade, an unchanged last price can qualify only under the stated rising-last-trade exception. Borrow quantity then constrains implementable size, even if the order price is valid.

Worked case

Hypothetical evidence packet: last two trades TRY 99 then TRY 100; supplied up-tick condition permits a short at 100 because the last trade rose. Proposed 1,000-share sale passes that price test, but confirmed term borrow is only 700 shares. Maximum covered size is 700; 300 shares lack borrow. At a supplied sale 100 and target purchase 95, 700 shares yield TRY 3,500 gross. Borrow TRY 600, trading TRY 200, distribution adjustment TRY 700 and funding TRY 150 leave TRY 1,850 before tax. This packet assumes legal eligibility solely to teach the sequence; it is not a live stock recommendation.

Adverse case

If the last trades are instead 101 then 100, a short at 100 fails the supplied rising-last exception and requires an allowed higher price. If a new instrument measure prohibits short sales, even a 101 order with confirmed borrow fails. If the broker only has a same-day indicative locate, it cannot be treated as a 30-day committed loan. Foregone expected profit is not a justification for bypassing a restriction.

Practical use

Preserve the latest SPK decision, Borsa general rules and temporary measure, current constituent/eligibility evidence, member authorization, marked order and borrow confirmation. Confirm dates and effective sessions; a notice ending yesterday does not prove no replacement was issued. Organized lending and custody records do not certify current stock inventory. Actual taxes require a separate dated check.

Reconcile the confirmation, position register and cash statement separately. Costs include the quoted bid/ask spread, brokerage and clearing charges, collateral or principal financing, currency conversion, custody where relevant, and exit or termination charges. A mark is not a fill. Any amount explicitly excluded below remains outside the reported result. Tax is excluded from these teaching cases: an actual comparison requires income year, investor residence and individual/corporate status, contract and acquisition dates, settlement form and effective law. The GIB guide, checked 2026-10-26, covers 2025 individual investment income, so its publication date alone does not settle a 2026 derivative liability.

Decision boundaries

Use the smaller 700-share implementation only if current legal, price and funding checks all pass and it fits the mandate. Otherwise defer. In a course exercise, uncertainty is a valid reason to reject implementation; no learner needs an account or a live stock locate.

Practice and references

Exercise: hypothetical intended 800 shares; confirmed borrow 500; sale 60, repurchase 57; all charges TRY 650. Solution: implementable borrowed quantity 500, uncovered intended remainder 300, gross TRY 1,500 and net TRY 850 before tax. If current eligibility evidence is missing, the correct implementation is zero until verified, regardless of this arithmetic.

Takeaway: Defer a trade whose borrow or legal evidence is incomplete using the actual cash schedule, with every excluded cost and remaining exposure stated.

Reference card: short-sale-and-borrow. Formula: Borrow-constrained implementation size. Glossary: Up-tick rule, Locate. Next lesson: C3T5L1. Topic test.

Sources and verification date (2026-10-26):

Shared reference guide | Class examination