Share your insights or perspective on the financial matter presented in the input.

Why does short selling require borrowing?
Concerning the general problem of short selling and the need to borrow shares to complete the transaction : Selling short is a cash transaction.  Unlike a futures contract, where a short seller is entering into a legal agreement to sell something in the future, in the case of short selling a share the buyer of the share is taking immediate delivery and is therefore entitled to all of the benefits and rights that come with share ownership.  In particular, the buyer of the shares is entitled to any dividends payable and, where applicable, to vote on motions at AGMs.  If the short seller has not borrowed the shares to sell, then buyer of non-existent shares will have none of the rights associated with ownership. The cash market is based on the idea of matching buyers and sellers.  It does not accommodate people making promises. Consider that to allow short sellers to sell shares they have not borrowed opens up the possibility of the aggregate market selling more shares than actually exist.  This would lead to all sorts of problematic consequences such as heavily distorting the price of the underlying share.  If everyone is selling shares they have not borrowed willy-nilly, then it will drive the price of the share down, much to the disadvantage of existing share holders. In this case, short sellers who have sold shares they have not already borrowed would be paying out more in dividends to the buyers than the total dividends being paid out by the underlying company. There are instruments that allow for short selling of unowned shares on a futures basis.  One example is a CFD = Contract for Difference.  In the case of CFDs, sellers are obliged to pay dividends to buyers as well as other  costs related to financing. EDIT Regarding your comment, note that borrowing shares is not a market transaction.  Your account does not show you buying a share and then selling it.  It simply shows you selling a share short.  The borrowing is the result of an agreement between yourself and the lender and this agreement is off market.  You do not actually pay the lender for the shares, but you do pay financing costs for the borrowing so long as you maintain your short position. EDIT I realise that I have not actually read your question correctly.  You are not actually talking about "naked" short selling.  You are talking about selling shares you already own in a hope of maintaining both a long and short position (gross).  The problem with this approach is that you must deliver the shares to the buyer.  Otherwise, ask yourself what shares is the buyer actually buying if you want the bought shares to remain in your account. If you are not going to deliver your long position shares, then you will need to borrow the shares you are selling short for the reasons I have outlined above.