free shorting at prop company possible?

[tonyzhou]

I just have a question about prop company that since prop company need to close trade daily, can I short any stocks for those hard borrowed shares?

Personally, I am not interested in leverage, but just need to short those hard borrowed stocks. Hate to see no shares at Interactive Brokers. Thanks

 

[rmorse]

Not all Prop firms require flat at end of day. It's hard to find the rule on the SEC/Finra website. To my knowledge, if a securities is NOT on the easy to borrow list, you can't enter an order to short the securities without first requesting and receiving a locate from your Prime Broker. When you buy it back does not give you an exemption. Broker Dealers with or without a JBO relationship are not, as far as I know, exempt from locates.

The only exemption I'm aware of is an options market making selling short in order to hedge an options trade, is not required to get a locate. That's the last advantage left for Market Makers.