Interactive Brokers True Cost of Shorting

Off the subject, but if you buy on margin in Japan, the interest rate is around 2 to 3%. Is this high, low, or about in line with that of other countries around the world? Someone once asked me but I wasn't sure and too lazy to look it up.
If someone knows offhand, thank you.
 
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learner2007 said:
Off the subject, but if you buy on margin in Japan, the interest rate is around 2 to 3%. Is this high, low, or about in line with that of other countries around the world? Someone once asked me but I wasn't sure and too lazy to look it up.
If someone knows offhand, thank you.
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Hard to compare as you are borrowing a different currency with a different cost of funds. In the US for USD, Fed Funds is base cost for institutional brokers and prime rate for many retail brokers. Either way, 2% to 3% does not sound high to me.
 
learner2007 said:
Off the subject, but if you buy on margin in Japan, the interest rate is around 2 to 3%. Is this high, low, or about in line with that of other countries around the world? Someone once asked me but I wasn't sure and too lazy to look it up.
If someone knows offhand, thank you.
More...

That is reasonable for retail
 
blueraincap said:
I agree. It seems that you are confused about the basics of shorting vs margining. You need a margin account to short, but shorting over your deposit has nothing to do with margin interest. It is amazing how you comment without knowing the very basics
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HobbyTrading said:
If you want to short sell stock you need to borrow the stock from someone who has these stock. You pay a fee to the stock owner.
If you don't have enough cash, and have a margin account, you borrow money from your broker and need to pay debit interest to your broker."
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you are the one who still confuses the issues. there is a difference in costs resulting from shorting easy to borrow stocks vs. hard to borrow stocks.
shorts don't pay interest on easy to borrow stock unless the stock goes up. it is marked to market. if a debit balance is created because you don't have enough of your OWN cash in the accountr than you pay interest on the newly created debit balance. if a stock goes down it creates a credit balance in your account. that credit balance can be withdrawn from your account.
if it is hard to borrow but not impossible to borrow you need to pay a daily fee. as previously mentioned by another poster. if that daily fee creates a debit balance you need to pay interest on the debit balance. if the stock is going down that debit balance will be offset by credit balances created by marking the account to market in your favor.
 
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Robert Morse said:
Hard to compare as you are borrowing a different currency with a different cost of funds. In the US for USD, Fed Funds is base cost for institutional brokers and prime rate for many retail brokers. Either way, 2% to 3% does not sound high to me.
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Traditional margin base rate for US retail brokers is broker call - currently 2.75%.
 
I'm thinking of entering a longer term long short strategy and ought to understand the short borrow rates better.

So, what is the effective cost to the short borrower? Is it just the fee rate?

Is the rebate rate strictly for stock loaners, hence irrelevant for shorts

Do you get interests on cash balances according to the interest schedule on short sale proceeds?
 
What's a general cutoff where a stock would be classified as 'hard to borrow' vs 'easy to borrow'? For example, if IB charges 0.25% interest and lists > 10 million shares then I'd say it's easy to borrow, but would you still classify it as easy to borrow if interest rate was say below 2% and borrowable shares were over 1 million or a certain percentage of average daily volume?
The reason I'm asking is to decide which stocks to short in my IB vs AMTD accounts. IB publishes detailed short rate and shares available at ftp://ftp3.interactivebrokers.com (always charging a fee even if shorting most liquid ETB stocks such as MSFT) while AMTD only qualifies it as ETB (easy to borrow with NO short interest and NO commission) or HTB (hard to borrow with undetermined fee) or NTB (none to borrow) on their Think Or Swim platform.
 
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markd01 said:
What's a general cutoff where a stock would be classified as 'hard to borrow' vs 'easy to borrow'? For example, if IB charges 0.25% interest and lists > 10 million shares then I'd say it's easy to borrow, but would you still classify it as easy to borrow if interest rate was say below 2% and borrowable shares were over 1 million or a certain percentage of average daily volume?
The reason I'm asking is to decide which stocks to short in my IB vs AMTD accounts. IB publishes detailed short rate and shares available at ftp://ftp3.interactivebrokers.com (always charging a fee even if shorting most liquid ETB stocks such as MSFT) while AMTD only qualifies it as ETB (easy to borrow with NO short interest and NO commission) or HTB (hard to borrow with undetermined fee) or NTB (none to borrow) on their Think Or Swim platform.
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The URL in your message seems to be broken. It does not lead me to an IBKR page.
Whether shares are easy/difficult to borrow also depends on the quantity you need. Borrowing 100 shares is easier than borrowing 1 million shares.
 
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