I heard of a retail firm that was charging the brokers.........
Please be advised that we received the following notice from our clearing firm,
Penson, last night.
This is effective as of 12/18/08. If you have any questions please contact the
trade help desk, 718-923-3007.
As you all know, we find ourselves in extraordinary times in the
securities mar
kets, and the stock lending segment of the market is no exception. Historically,
Easy-to-Borrow securities have been highly liquid and have traded at positive r
ates to borrowing parties in the market covering short sales.
Due to several factors, including downward pressure on interest rates
from the
Federal Reserve (the fed funds rate is hovering just above zero percent,) and sh
rinking liquidity due to recent SEC emergency orders, rates on many easily borro
wable securities have declined to zero, and in many cases, have slipped into neg
ative territory.
Until now, it has been Stock Loanâs policy to identify securities
trading at th
ese levels and remove them from the Easy-to-Borrow List prior to publication, bu
t market conditions have forced us to rethink this approach.
Effective immediately, securities trading from zero to negative five
percent (-
5%) interest will no longer be removed from the Easy-to-Borrow list. Securities
trading at or greater than negative five percent will be catalogued as hard-to-b
orrow and will not be included on the Easy-to- Borrow list.
Until further notice, the Easy-to-Borrow list will merely identify
highly liqui
d securities â and not be an indication that the included securities can be borr
owed at a positive rate. As has been the practice of charging for hard-to-borrow
securities, correspondents should be advised that the costs associated with bor
rowing these securities will be passed through to the customer.
Please take this into consideration before carrying out short sales, as
we expe
ct the majority of securities to be impacted by this development.
Please be advised that we received the following notice from our clearing firm,
Penson, last night.
This is effective as of 12/18/08. If you have any questions please contact the
trade help desk, 718-923-3007.
As you all know, we find ourselves in extraordinary times in the
securities mar
kets, and the stock lending segment of the market is no exception. Historically,
Easy-to-Borrow securities have been highly liquid and have traded at positive r
ates to borrowing parties in the market covering short sales.
Due to several factors, including downward pressure on interest rates
from the
Federal Reserve (the fed funds rate is hovering just above zero percent,) and sh
rinking liquidity due to recent SEC emergency orders, rates on many easily borro
wable securities have declined to zero, and in many cases, have slipped into neg
ative territory.
Until now, it has been Stock Loanâs policy to identify securities
trading at th
ese levels and remove them from the Easy-to-Borrow List prior to publication, bu
t market conditions have forced us to rethink this approach.
Effective immediately, securities trading from zero to negative five
percent (-
5%) interest will no longer be removed from the Easy-to-Borrow list. Securities
trading at or greater than negative five percent will be catalogued as hard-to-b
orrow and will not be included on the Easy-to- Borrow list.
Until further notice, the Easy-to-Borrow list will merely identify
highly liqui
d securities â and not be an indication that the included securities can be borr
owed at a positive rate. As has been the practice of charging for hard-to-borrow
securities, correspondents should be advised that the costs associated with bor
rowing these securities will be passed through to the customer.
Please take this into consideration before carrying out short sales, as
we expe
ct the majority of securities to be impacted by this development.