NEW YORK, Aug 26 (Reuters) - Short interest on the

Nasdaq rose 2.02% in mid-August, the exchange said on Tuesday.

As of August 15, short interest rose to about 16.93 billion

shares from 16.59 billion shares as of July 31.

Investors who sell securities "short" borrow shares and then

sell them, expecting the stock to fall so they can buy the

shares back at the lower price, return them to the lender and

pocket the difference.

Shorting can also be part of a hedging strategy.