Short selling in Singapore is a trading strategy where an investor borrows shares from a broker and sells them in the open market, hoping to buy them back later at a lower price to profit from the price decline. Short selling on the Singapore Exchange (SGX) is regulated by MAS and SGX Rules. This page is for general information only and does not constitute financial advice.
How Short Selling Works on SGX
The process: (1) Borrow shares from a broker’s securities lending programme; (2) Sell the borrowed shares at the current market price; (3) Wait for the price to fall; (4) Buy back the shares at the lower price; (5) Return the shares to the lender; (6) Profit = selling price − buyback price − borrowing fees.
If the price rises instead, your losses are theoretically unlimited — the stock can keep rising, forcing you to buy back at ever-higher prices.
Regulated vs Naked Short Selling
In Singapore, regulated short selling (where shares are borrowed before selling) is permitted under SGX rules with disclosure requirements. Naked short selling — selling shares you have not yet borrowed — is illegal in Singapore. SGX requires disclosure when a short position exceeds 0.05% of issued share capital or S$1 million in value.
Short Selling via Securities Borrowing and Lending (SBL)
Most retail investors access short selling through the Securities Borrowing and Lending (SBL) programme offered by brokers. Borrowing costs vary from 0.5%–8% p.a. depending on the stock’s availability and demand. Highly shorted stocks command higher borrowing fees. For more on SBL mechanics, see the Securities Borrowing Singapore glossary entry.
Risks of Short Selling in Singapore
- Unlimited loss potential: Unlike buying stocks (loss capped at 100%), short losses have no ceiling
- Short squeeze: If many short sellers rush to cover simultaneously, prices spike — amplifying losses
- Borrow recall: The lender can recall your borrowed shares at any time, forcing you to cover at inopportune prices
- Dividend liability: If the stock pays dividends while you are short, you must pay the equivalent to the share lender
Short Selling and S-REIT Investors
For Singapore dividend investors, short selling is rarely part of a core strategy. However, understanding short interest data on S-REITs can be useful — high short interest may signal market scepticism about a REIT’s fundamentals, valuation, or distribution sustainability. SGX publishes short-sell data weekly at sgx.com. Check the Best S-REITs 2026 article for fundamental analysis.