If you follow the link which @def posted in his message (https://ibkr.info/node/1839) you will see that you have a free choice whether you join the so-called Stock Yield Enhancement Program or not. If you don't want your shares to be loaned out you simply don't enroll to this program.
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Screenshot from IB - margin interest on shorts (longs?)
- Thread starter Saltynuts
- Start date
I reread the link.If you follow the link which @def posted in his message (https://ibkr.info/node/1839) you will see that you have a free choice whether you join the so-called Stock Yield Enhancement Program or not. If you don't want your shares to be loaned out you simply don't enroll to this program.
"If you don't want your shares to be loaned out you simply don't enroll to this program"
Your conclusion does not necessarily follow.
The situation you describe sounds doubtful.
Margin agreements usually have clauses that inform you shares can be loaned out. It is not up the customer. As to cash accounts with fully paid for stock the broker has to have a specific agreement to loan out shares. You might be agreeable if you have hard to borrow stock in a cash account and can receive a fee for loaning out your stock.
if your shares are fully paid in a margin account they can not be lent out unless you agree. If you use margin they can rehypothecate up to 140% of the loan.
I think you are wrong on the facts.
These are the rules - key words "Loan to the client"
In the United States, rehypothecation of collateral by broker-dealers is limited to 140% of the loan amount to a client, under Rule 15c3-3 of the SEC. Rehypothecation occurs when a lender uses an asset, supplied as collateral on a debt by a borrower, and applies its value to cover its own obligations.
Rehypothecation Definition - Investopedia
SN, just to clarify, the 960% is what IB would charge you if you were short the shares. It's not the going rate for someone if they borrow your shares. From what I've seen, IB is getting between 350-600% on loaner rates and so you're getting 50% of whatever they get (I was curious so I just bought a couple shares to see how the process works in real life). I was unable to determine where you can see what the market actually is, but someone else chimed in later in the thread. The actual rates and such show up in the stock yield portion of your IB statement each day (assuming they were lent out). An aggregate total also is listed in the account dialog box under "MTD Interest" (obviously that includes other sources as well if you have them). Most days my shares have been lent, but usually not all of them.Thanks a ton Metamega! Ah, that makes sense that the "rebate rate" is split 50/50 with IB. And my GAWD that NKLA rebate rate from post 17 - it is 960% plus - why on Earth would it be so high for a stock that is not in a freefall? Even splitting it 50% with IB, you are still getting close to 500% a year in interest (assuming you sign up and your shares get shorted)?!?!?
The stock has dropped 40% in 5 days At an interest rate of slightly less than 3% per day you have made 25% on your money with 100% maintenance requirement. The person who made the trade was a real pro.Understood. Its just its weird that people would pay that much to short the stock of NKLA (almost 1000% a year!!!), when there doesn't appear anything immanent happening with the stock. Heck its been doing relatively over the past 12 months (although worse recently). But that interest rate to pay to short it is HUGE!!!
You get what you pay for in life.
I think you are doing quite well with your trade. We can expect a rise in the supply and demand which will ultimately show its results on the stocks. Hold on to it for a week or so and hopefully you’ll get a good profit in the coming time.
I have also seen that my charts were getting frozen when I was working on the analysis. But I thought it was just my internet. It is becoming quite common and is very much affecting my focus. I am not a full-time trader but when I sit to do so, I have to face these lagging issues.
Margin account allows the holder to conduct the trade on a collateral or a deposit.The holder thus can borrow from the broker .The ability to open a futures position by placing an initial deposit.Futures trading is leveraged trading for its ability to control more assets using far less money.Also, it looks like the settings need to be changed so that the IB can take the shares and lend it to others.