Short Stock Borrow Fee (Schwab)

[BMK]

We shorted GME for a little over two weeks.

Sold 200 shares short for 116.50 on 05/27 and bought to cover for 117.50 on 06/13.

Yes, it was a losing trade.

Schwab has charged our account a stock borrow fee of $880.63.

Is this some sort of mistake?

I'd like to hear others' thoughts before I get on the phone with Schwab...

BMK

 

[FSU]

No Mistake. GME short rate currently is around 35%, but was around 100% recently.

Assume it was at an average of 80%. That would mean you would pay about $51 a day, or about what they charged you.

You can see borrow rate history through this app that scrapes IB's borrow rate
IBorrowDesk

 

[stepandfetchit]

Scary that the fee was not discovered till closing the trade. I have TDA, not Schwab, and they disclose the HTB fees charged each day. I don't trade GME, but the products I short have rates that change each day. To control my position cost, I have switched to using synthetic shorts (using options) that have proved much more efficient and allow better control.(I have observed rates on UVXY from about 5% to 13% this year)

 

[BMK]

Scary that the fee was not discovered till closing the trade.

The stock borrow fees are displayed in Schwab's platform when placing an order to sell short. And they did indeed send messages informing us that the rate had changed.

I wasn't paying attention. I did not think the fees could be so high, even for something hard-to-borrow.

 

[TradeZero_Dan]

We shorted GME for a little over two weeks.

Sold 200 shares short for 116.50 on 05/27 and bought to cover for 117.50 on 06/13.

Yes, it was a losing trade.

Schwab has charged our account a stock borrow fee of $880.63.

Is this some sort of mistake?

I'd like to hear others' thoughts before I get on the phone with Schwab...

BMK

Would love to have you give is a try at TradeZero, where we specialize in facilitating short selling. The overnight borrow rates are known before you enter into any trade.

 

[FreeGoldRush]

The fees are determined by a market process (in theory). If you buy GME and then allow the broker to lend your shares you will get half the borrow fee at many brokerages. So imagine people buying GME just because it looks like such a great short and people are willing to pay them big to short it. The short demand can actually support the price and make it firmer in a weird way.

 

[zdreg]

If you buy GME and then allow the broker to lend your shares you will get half the borrow fee at many brokerages.

re:you will get half the borrow fee at many brokerages
There are not many brokerages. Even IB has minimum conditions before they share the borrow fees.
Can you name a few others without minimum conditions

 

[zdreg]

Would love to have you give is a try at TradeZero, where we specialize in facilitating short selling. The overnight borrow rates are known before you enter into any trade.

The same is true at Schwab. The rate is given before entering the order. The OP said he knew the rate. You didn't address his issue which are fluctuations in the rate on overnight positions.

 

[FSU]

The fees are determined by a market process (in theory). If you buy GME and then allow the broker to lend your shares you will get half the borrow fee at many brokerages. So imagine people buying GME just because it looks like such a great short and people are willing to pay them big to short it. The short demand can actually support the price and make it firmer in a weird way.

Or you could do the synthetic long in options and get almost the full borrow rate, without having to split it with your broker.

 

[tomkat22]

I dont mean to sound harsh but shame on you for not checking that SLB/CTB fee before doing a swing trade on a stock with a high borrow fee. It's grade school level math to figure that fee.