Under what circumstances will short-selling stocks be forced to close their positions? What are the closing rules?

Your short position may be forced to close when the following occurs:

1. Account risk control level risk

When your account is in a "Margin Call" status for a long time and does not take the initiative to deposit or close the position, it will eventually be forced to close the position until the account returns to the "safe" state. Futu will liquidate derivatives and stocks (including long positions and short positions) in turn in accordance with risk control criteria. 

2. There is an insufficient number of securities available for lending by the securities lender.

When the number of securities available to the securities lender is insufficient, the system will send you an early warning message. You can take the initiative to close your position as soon as possible, but you also face the risk of being forced to close your position in a short period of time. Due to the different time point of closing the position, the actual price at which the customer is liquidated may be different.

3. The Exchange forbids the sale of securities.

The exchange will publish a list of designated shortable securities from time to time on its official website.

Only the securities on the list can be short selling. When the Exchange updates the list and the short stock you hold is no longer designated security that can be shorted, you will receive the same system message as mentioned in point 2. You can take the initiative to close your position as soon as possible, but you also face the risk of being forced to close your position in a short period of time.

If the position is forced to be closed, the actual price at which the customer is liquidated may be different due to the different time point of closing the position.

4. Corporate action takes place

For the distribution of equity/subscription rights, acquisitions, delisting, voting, and other corporate actions (except dividends, special dividends, stock selection, split/partnership, transcoding).

When the listed company to which you hold the short stock issues an announcement, resulting in one of the above company actions, the system will send you a message notification because the relevant interests are not easy/cannot be bought from the market. You can choose to take the initiative to close the short position before the specified date in the message. If you do not close your position before the specified date, the system will force you to close your position at the market price on the mandatory closing date specified in the message.

If the position is forced to be closed, the actual price at which the customer is liquidated may be different due to the different time point of closing the position.