Comments on: Hard-To-Borrow Fees

By: Preet

Preet — Thu, 28 Jan 2010 01:36:17 +0000

@JohnnyH – I called IB directly and they pointed to a page on their site which lists the current rates. With some searching you should be able to find it (rates change constantly – probably related to implied volatility)

By: JohnnyH

JohnnyH — Wed, 27 Jan 2010 04:16:34 +0000

Hilarious! Where did you find this fee at Preet? I use IB as well. Do they keep a table somewhere?

I would have expected a little better from IB…

By: Holly

Holly — Wed, 07 Oct 2009 11:57:04 +0000

Thanks Preet for this subject. Recertly I had nightmare with Zecco who claim free trading but with huge hidden charges. They charged me this hard to borrow fee $5/day almost EVERYDAY even after I covered!!! And very insane is that I was shorting the same stock NTAP from Scottrade at the same time, yet Scottrade didn’t charge me once with this so called HTB fee. So I don’t understand why NTAP is HTB for Zecco and why got charged everyday? isn’t this something wrong?

By: Canadian Personal Finance Blog » Blog Archive » Random Thoughts: $50 Billion is a lot of money

Fri, 29 May 2009 11:02:50 +0000

[...] Preet at Where Does All My Money Go, points out there are hidden fees everywhere in Hard to Borrow Fees. [...]

By: Preet

Preet — Wed, 27 May 2009 17:37:32 +0000

@Michael James – I agree, the hurdle becomes that much higher for break even. The short proceeds could be put into a GIC to reduce the height of that hurdle, but it will still exist. There will never be a situation (for long anyways) where the interest charged to a retail investor would be lower than what they can earn.

Hmmm… want to start up a securities lending shop with me?

By: Michael James

Michael James — Wed, 27 May 2009 17:21:52 +0000

Thanks for the explanation. The “FR” did precede a date.

If charging this “interest” for short positions is typical, then it makes no sense for retail investors to ever short anything where the expected returns are over a period of months or more.

By: Preet

Preet — Wed, 27 May 2009 15:17:35 +0000

@Michael James: FR usually means “from” followed by the date you shorted, and then ends with THRU meaning “through”, followed by the date you closed your short. THRU may not appear if you have not covered your position, but sometimes it will still appear to be the end of the reporting period. Any chance you remember if there was a date on that line of your statement? That might confirm it…

Questrade has no hard-to-borrow fees, just interest on debit positions which is prime + 1.5%, or 3.75% right now. The spread is still a big money maker, no matter what.

By: Michael James

Michael James — Wed, 27 May 2009 13:33:03 +0000

I’d be interested in learning more about the fees involved in shorting. The one time I was short stock, I was charged “INT FR” at 9.75% at a time when positive cash balances were paid 5% interest. In trying to parse “INT FR”, I’m guessing that “INT” is interest, but I have no guess for “FR”.

By: Ink-Stained Gorilla

Ink-Stained Gorilla — Tue, 26 May 2009 14:14:09 +0000

Preet,

I think the lender did the math on the shorting scheme. To me this seems to validate your thoughts about shorting in a volatile market.

Sadly this all seems reminiscent of the types of practices you see with a sports betting operation….