I am not an expert on this.. but here is a theory. Broker's are incentivized to have the short squeeze stop.
Someone please correct me if I am (or how I am) wrong with the following:
Bob is a broker.
Jack comes along buys 100 shares of X.
Bob lends those 100 shares of X to Amy to sell short.
Amy sells it short. Price shoots up.. Amy says “oh crap.. Sorry bill. Simply cannot buy back those shares. I am bankrupt. I physically do not have the money to do so.
Jack will still expect Bob the broker to make sure his 100 shares of X are there one way or the other.
Bob the broker has to buy back those shares it lent out to Amy so that Jack the account holder is still able to sell/trade their shares.
Someone please correct me if I am (or how I am) wrong with the following:
Bob is a broker.
Jack comes along buys 100 shares of X.
Bob lends those 100 shares of X to Amy to sell short.
Amy sells it short. Price shoots up.. Amy says “oh crap.. Sorry bill. Simply cannot buy back those shares. I am bankrupt. I physically do not have the money to do so.
Jack will still expect Bob the broker to make sure his 100 shares of X are there one way or the other.
Bob the broker has to buy back those shares it lent out to Amy so that Jack the account holder is still able to sell/trade their shares.