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Consider a scenario that a market maker placing orders through many brokers. Each broker allows short selling, but the exchange forbids it. How does the market maker ensure that the overall position is positive? Even though the position on some broker is negative.

More specifically: In China, Shanghai Stock Exchange does not allow short selling on stocks. As a result, the market maker must ensure that the quantity of sell order does not exceed the position he or she currently holds in the exchange. If the broker does not have such limit. It is the responsibility of market maker to maintain a positive position. How does he maintain the position across many brokers?

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  • $\begingroup$ Most exchanges I know allow short selling, subject to regulations which can vary from country to country (and from time to time). You might want to be more specific about the situation you describe "Each broker allows short selling, but the exchange forbids it". When/where does/did this occur? $\endgroup$ – Alex C Oct 1 '19 at 14:49
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    $\begingroup$ @AlexC In China, Shanghai Stock Exchange does not allow short selling on stocks. As a result, the market maker must ensure that the quantity of sell order does not exceed the position he or she currently holds in the exchange. If the broker does not have such limit. It is the responsibility of market maker to maintain a positive position. How does he maintain the position across many brokers? $\endgroup$ – 8.8.8.8 Oct 1 '19 at 15:02

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