Short Selling BitAssets

"In order to increase your exposure to BTS and offer liquidity to BitAssets, such as USD, EUR, GOLD, etc., you can go borrow this bitAsset from the network and sell it short. We will here briefly describe the procedure.
Borrowing

The BitShares network is capable of issuing any amount of any BitAsset and lend it out to participants given enough collateral.
settlement price: The price for 1 BTS as it is traded on external exchanges.
maintenance collateral ratio (MCR): A ratio defined by the witnesses as minimum required collateral ratio
maximum short squeeze ratio (MSQR): A ratio defined by the witnesses as to how far shorts are protected against short squeezes
short squeeze protection (SQP): Defines the most that a margin position will ever be forced to pay to cover
call price (CP): The price at which short/borrow positions are margin called
Margin Call

The BitShares network is capable of margin calling those positions that do not have enough collateral to back their borrowed bitAssets. A margin call will occur any time the highest bid is less than the call price and greater than SQP. The margin position will be forced to sell its collateral anytime the highest offer to buy the collateral is less than the call price (x/BTS).SQP = settlement price / MSQR call price = DEBT / COLLATERAL * MCR


The margin call will take the collateral, buy shares of borrowed bitAsset at market rates up to the SQP and close the position. The remaining BTS of the collateral are returned to the customer.
Settlement

Holders of any bitAsset can request a settlement at a fair price at any time. The settlement closes the borrow/short positions with lowest collateral ratio and sells the collateral for the settlement.
Selling

After borrowing bitAssets, they can be sold free at any of the corresponding markets at any price a buyer is willing to pay. With this step, the short-selling is now complete and you are short that particular bitAsset.
Updating Collateral Ratio

At any time, the holder of a borrow/short position can modify the collateral ratio in order to flexibly adjust to market behavior. If the collateral ratio is increase, an additional amount of BTS is locked as collateral, while reducing the collateral ratio will require an amount of the corresponding BitAsset to be payed back to the network.
Covering

To close a borrow/short position, one must hold the borrowed amount of that particular bitAsset to hand it over to the BitShares network. After that, the BitAssets are reduced from the corresponding supply and the collateral is released and given back to its owner."