I work in a professional trading setting and this was never the case in my experience. Many trades require shorting and locating equities and we certainly paid attention to Reg SHO.
I was charged a ridiculous overnight short fee
- Thread starter GotherL
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I work in a professional trading setting and this was never the case in my experience. Many trades require shorting and locating equities and we certainly paid attention to Reg SHO.
I also have hard time believing this is still happening right now, although I think I’ve read about naked short selling in the past.
Right now SEC can track and analyze most of the trading and they’d easily spot records of trades not backed by the float. We’re talking about penny stocks with companies valued at several $million. A few hedge funds, trading firms or banks shorting them would be quickly spotted due to short volume exceeding low float and small market cap. Maybe there is some room for short term naked shorting of Tesla and Uber , but this is not what this thread is about.
And there isn’t much room for taking risk of whistle blowers exposing any illegal schemas. Banks and trading desks/firms can’t afford more scandals, fines, regulation, etc - especially as they already make less money from trading than ever.
So how much is the exit fee to leave Tradezero?? You think they screwed you with the market rate, wait till you leave...
Not only is there an exit fee, you will have to open a new account. Or you can close your positions and get a check...2-4 weeks (while they enjoy the float). Or wire transfer to a bank...Another fee.
If you opened an account at IB and transferred your position, I believe you must close all shorts...Am I wrong?? And isn't there a transfer fee??
About 15 years ago I moved accounts from Morgan Stanley to either Schwab or Fidelity. They wouldn't accept some on the mutual funds I held...Had to liquidate them (they used a few more days for the money to show up in the money market account...Another float, while I am waiting to transfer). If you move to IB, there may be some stocks IB would not accept (penny stocks or certain ADRs). I may be wrong with one or more of these...Don't know. Eyes wide open...
Not only is there an exit fee, you will have to open a new account. Or you can close your positions and get a check...2-4 weeks (while they enjoy the float). Or wire transfer to a bank...Another fee.
If you opened an account at IB and transferred your position, I believe you must close all shorts...Am I wrong?? And isn't there a transfer fee??
About 15 years ago I moved accounts from Morgan Stanley to either Schwab or Fidelity. They wouldn't accept some on the mutual funds I held...Had to liquidate them (they used a few more days for the money to show up in the money market account...Another float, while I am waiting to transfer). If you move to IB, there may be some stocks IB would not accept (penny stocks or certain ADRs). I may be wrong with one or more of these...Don't know. Eyes wide open...
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you are making too many guesses about a number of firms. Furthermore the issue of this thread. cost of locates far likely fare exceeds any possible exit fees.
Furthermore tradezero has nothing to do with transfer of funds which is handled by its clearing firm and likely follows very strict rules on transfers and sending of checks etc.
what is your point?
My point is since everyone has gone to zero commissions, how are they making their money...Billions (Schwab, Fidelity, TDA). Besides market makers, they make it on; the float, margins, wealth management, fees (that people may not see when opening an account). Hey, Google is free...Right!! No money made there right?? Be a small or medium size business and see how much Google will extract from you to keep you on their radar/system.
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Not sure where you are getting your info. First, at IBKR the shares available are listed real time along with the rates. Second, when shares are not available in the US markets, for decent size, the SLB team will attempt to locate shares for placed orders and are pretty successful at doing just that.
For a current snapshot on the stock in questions, I just entered ASLN along with some easy and hard to borrows for indications as an example.
While I can't speak for other brokers, I do know counter-party financial strength is a factor in entering into SLB agreements and I do know we have agreements and active relationships with most of the major counter-parties.
Just to add to this - IB's help desk confirms to me that no locate fee is charged by IB on top of the borrow fee (charged daily). Good news! Having said that:
1) amount available to borrow is theoretical at best when dealing with illiquid shares. You are mercy at the SLB team. Anything with borrow fee >1% I would say is dangerous to play with.
2) For some reason, you can not restrict a margin account at IB from short selling. Only cash accounts are restricted in that way. Be careful about unintended shorts. I would really like to see one day such a risk management functionality at IB if possible.
3) Last (and this is common to all brokers/dealers): your shorts can be called back at any time. IB liquidates without even asking you in that case (but I could be wrong on this one). Again, something to be very weary off in the case of illiquid shares and/or corp actions.
No, IB forwards multiple notifications the day before. If IB does not find shares to borrow and you do not buy back the shares, IB will liquidate the following day.
Where did you got the impression that IB will liquidate without notification? Just a guess?
"(but I could be wrong on this one)"
Chill dude. It's a new year full of joy.
I am aware of the notification when you enter a short but am not sure about notification if it's called back subsequently. Chat line agent could not confirm it to me either way.