How's IB on shorts?

C

catmango

I'm a novice swing trader using Scottrade, but I'm looking to switch to IB primarily for execution speed (I typically do all my trades as close to end of day as possible) and low commission rates.

One of my biggest problems with Scottrade is that I short frequently, and Scottrade is usually hit or miss on whether or not they have sufficient shares in inventory. Most times I actually need to call them to have the short order entered by one of there brokers (very annoying). I went through IB's website to check their short inventory on stocks that I've historically shorted and found a handful of stocks that they don't carry at all (e.g., RINO, AHS), which would have resulted in a costly missed opportunity. Also, the IB website gives no indication of the number of shares available to short for a given stock.

Are there any IB users out there who short frequently and can tell me their experience using IB? If you use TWS and the short order is rejected, can you call IB directly to see if they can borrow the shares, or are you just SOL?

Thanks for all of your help!!!
 
Shorting is getting very tough these days. In my experience, IB has as good a list as anyone, if not better. They are good about letting you short all the way down and they have nearly everything (not on the UPC list). The list is pretty much it... I don't think calling is going to net you anything but you can try. The list is updated daily.

With all the hedge funds out there these days, shorting has grown increasingly popular and shares are generally harder to come by in large quantities. Once the market starts the next bull session and a few get blown out, there should be more borrowable supply.
 
I started with Scottrade much as you did. I now have both IB and Scottrate accounts, primarily because of a lack of shorting capability. I had checked to see if IB had shares avail. for short several times when Scottrade did not and IB never failed. However, now that I have the account I have not shorted anything.

-RLB
 
I've used IB for quite some time and have gotten use to the rather weak customer service but I really enjoy the low commissions and the functionality of the trading platform. I know they list a lot of stocks available to short but I've have quite a few instances where I cannot short due to inventory not available. This is quite frustating and from what I've read it seems to be due to the fact that they self-clear. Gary B. Smith (RealMoney.com) has done a quick study and found that it all depends on the clearing firm that a broker uses. He's found the clearing firm, Pershing, to be pretty good at getting stock to short since Pershing handles other brokers as well. I'm currently searching for a broker that has the ability to frequently obtain short inventory. Gary mentions Schwab and Yamner as good brokers for short inventory. If anybody finds out more info. on this topic please post it. Thanks.
 
I use MyTrack/TrackTrade and rarely have a problem finding short inventory and when they don't have it available, they can usually get it. I send the request in the morning and they usually find it before the market opens. They use Penson to clear. The equity commissions are cheaper with TrackTrade than IB also.

I moved my accounts (cash and margin) from IB to MyTrack (actually use the TrackTrade software) not because of the short inventory or lower commissions but because IB insists upon a T+3 settlement in my cash account. At TrackTrade, my funds are available immediately for reinvestment.

MyTrack uses a per ticket commission schedule where their TrackTrade account/software uses a per share schedule. TrackTrade has a monthly software charge but it is waived for a certain volume level. Just do the math to see which is better for you.
 
Quote from catmango:


Are there any IB users out there who short frequently and can tell me their experience using IB? If you use TWS and the short order is rejected, can you call IB directly to see if they can borrow the shares, or are you just SOL?

Thanks for all of your help!!!
More...

Ib is is one of the better retail brokers in terms of shorts.

If TWS says its not available then its not, don't bother calling.

As for max share size, I've never encountered any restrictions on my selling and I doubt TWS even has such a mechanism built in. But once IB does run out of the stock, it will simply not let you short it anymore.

A couple of times I've had open short orders cancelled abruptly when the stock when from shortable to non. Rather annoying.
 
donncf/janp,

IB self clears but also has access to stock loan from the largest banks and lenders. many stocks that are non-shortable are on the resticted lists set by the federal reserve. if you are getting stock elsewhere that is non-shortable at IB, let me know.

if traktrade is crediting your cash account immediately, I dare to say that they might be violating regulations.
 
I generally haven't had any problem shorting stock in my IB account but I've seen posts on this message board complaining about what happens when you are short and availability dries up. It has been reported that if IB no longer can short the stock (e.g. someone holding it long sells), the stock will be immediately purchased in your account. No phone call, no three days to straighten it out, just a "ding" sound telling you that something has happened.
 
Quote from catmango:

(I typically do all my trades as close to end of day as possible)
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I don't know if you trade a PDT account, but since you like to trade near or at the close, you need to be aware of what I call IB's "Cinderella"(TM) procedure for PDT account.

In a nutshell, 15 minutes before the close (but based on experience--and maybe a slow clock--I'd say better make it 16 or 17), your account must revert to overnight margin requirements. "Must" here means that you either do it, or IB's system will automatically do it for you by liquidating the necessary portion of your position(s) to bring your account in line with overnight requirements.

Why "Cinderella"? Because she had to be out of there before midnight, after which it all turned into a pumpkin :-)

You can check IB's short list on their web site
http://www.interactivebrokers.com/index.html

I'll echo what someone else replied on this thread: no problem shorting. When there is something that I can't short it on my IB account (and it doesn't happen often), I rest easy with the thought that I probably wouldn't be able to short it with most other brokers either. I don't short the really thin arcane issues though, so take what I say with a grain of salt. The last one that I remember being rejected as a short was Expedia in its final convulsive throes.

Elvis
 
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