Why are some stocks not shortable?

C

cunparis

I've noticed that some stocks which show up on my scans aren't shortable. I'm curious what the reasons are for this. I've heard that IB allows you to short almost any stock, but I always find a lot that aren't shortable.

I also check with MB Trading & Fidelity, they won't let me short them either. So I'm thinking it's not something specific to IB but something more general.

Any ideas?
 
Your clearing firm has to have shares to cover you and often times, they cannot obtain them. There is a whole secondary market between bank back offices that deals with lending out shares. Some stocks either aren't liquid enough or are hoarded by various clearing firms. If you're clearing firm does not have access to the shares, they will not allow you to short the stock.
 
Quote from cunparis:

I've noticed that some stocks which show up on my scans aren't shortable. I'm curious what the reasons are for this. I've heard that IB allows you to short almost any stock, but I always find a lot that aren't shortable.

I also check with MB Trading & Fidelity, they won't let me short them either. So I'm thinking it's not something specific to IB but something more general.

Any ideas?
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If you are concerned about trading a short position and shares not being available you can always contact your broker and pay a small fee for the shares to be available.

w
 
Quote from timscott:

usually it is as simple as there are no available shares - especially in heavily shorted issues. Got a for instance?
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For my scan for today there is ROYL.
 
Quote from thegazelle:

TOS says ROYL is "easy to borrow" , and they use penson, same as MB.
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Too bad for Royal, went down big time.

I kept my eye on both IB & MB and neither would let me short it. :(
 
Quote from nassau:

If you are concerned about trading a short position and shares not being available you can always contact your broker and pay a small fee for the shares to be available.

w
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not true. only a firm firms have the accounting systems set up to handle this situation.
 
Got an interesting message from IB today:

You recently attempted to enter one or more short sale orders in securities which were not available for shorting at that time. We have located shares on your behalf so you may be able to enter short sale orders for these titles within the next minute(s).

Stock

Symbol

Exchange

CostToBorrow


URANIUM RESOURCES INC

URRE

NASDAQ

1.81%


The rates shown are the indicative additional costs to borrow these securities above the normal borrow rates. The effective cost to borrow will be determined at the time the borrow is actually established.
Please note that the above stocks are generally deemed hard to borrow and may not be shortable again in the future. Additionally, certain borrowed positions have a higher likelihood of being recalled by the lender. In the event of a recall you may be required to repurchase positions on short notice or, if the lender initiates the repurchase, IB may pass on the transaction costs to you.
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I didn't take them up on it, it was way too late and the almost 2% premium is too much. but it was nice of them to offer.
 
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