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With a contract to supply it at a future date, paid immediately.



So what would you do if the counterparty failed to deliver on that contract?


Castration? I don't know, whatever they do on "plain vanilla" exchanges/brokerages that allow shorting.

Although there were recent scandals about people shorting shares that didn't exist, and when they would have reaped a profit, they were told there was no record of the shares, "but we can reverse the transaction if you like".




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