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Post by Deleted on Jun 8, 2015 8:11:05 GMT -5
Funny. Now its higher than Fidelity after being like 20% behind.
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Post by petech on Jun 8, 2015 8:17:37 GMT -5
I don't know how they can do that when they "don't lend to hedge funds and are much less risky than Fidelity" (their answer as to why their rates are much less than Fidelity historically). Of course, if you ask them what they are lending at to shorts, you'll hear things like 90%+...so Fidelity must therefore be lending at 200%. That said, the rate Fidelity is actually lending at jumped on Friday to a bit over 41%; so if history is any indication, we'll see a small jump for Fidelity's rates for us today/tomorrow.
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Post by kc on Jun 8, 2015 9:23:23 GMT -5
They are loaning to RETAIL shorts as the Hedges have their own system of finding shares to borrow thru the bigger boys. But interesting enough I went to Scottrade this AM to see where they stand on Shorting MannKind since they don't pay for lending shares and this is the message they had when you clicked on MannKind to short.
Error: At this time MNKD is not available for shorting.
I don't know how they can do that when they "don't lend to hedge funds and are much less risky than Fidelity" (their answer as to why their rates are much less than Fidelity historically). Of course, if you ask them what they are lending at to shorts, you'll hear things like 90%+...so Fidelity must therefore be lending at 200%. That said, the rate Fidelity is actually lending at jumped on Friday to a bit over 41%; so if history is any indication, we'll see a small jump for Fidelity's rates for us today/tomorrow.
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Post by petech on Jun 8, 2015 9:31:13 GMT -5
They are loaning to RETAIL shorts as the Hedges have their own system of finding shares to borrow thru the bigger boys. But interesting enough I went to Scottrade this AM to see where they stand on Shorting MannKind since they don't pay for lending shares and this is the message they had when you clicked on MannKind to short.
Error: At this time MNKD is not available for shorting.
Retail shorts meaning....individual investors? Wouldn't the risk in doing that be astronomical? With bigger players; they have cash in case things go sideways....not so much the other side of the house. All I am saying is they alluded to their lending to shorts being much less risk (and that's why their rate was less); yet if you ask them what they are lending it out at...it's a multiple of what they are paying to borrow from the shareholders...so I think that logic goes out the window.
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Post by dreamboatcruise on Jun 8, 2015 9:41:35 GMT -5
The logic could be that lending to many smaller players is less risky than a few big players... it may not be correct logic in all circumstances but perhaps that is it. Maybe if it's retail Schwab clients that are shorting then Schwab imposes really high margin collateral requirements.
Whatever the reason Schwab feels safe, it sure isn't safe to be short MNKD right now. That's a painful bag to be left holding.
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Post by dreamboatcruise on Jun 8, 2015 10:04:06 GMT -5
Just called Schwab lending program to see if I bothered transferring some more shares if they wanted them. They sounded very eager to get them.
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Post by petech on Jun 8, 2015 10:05:47 GMT -5
I'd disagree with that. One share lent out is one share lent out. What are the chances the borrower can return it depends on their sophistication and deep pockets. Secondly, would you rather be chasing 5 smaller guys trying to get your shares back, or 1 larger guy? That's just my theory. But seeing as how Fidelity is 41.25% right now (unless it's moved in the last couple minutes)...and Schwab was "about 90%" based on anecdotal internet reports....I think the risk models line up with what I am espousing.
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Post by jgv on Jun 8, 2015 10:09:08 GMT -5
Not that my shares matter or that it would make a difference but I canceled my margin account Thurs to prevent Schwaab from loaning my shares.
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Post by dreamboatcruise on Jun 8, 2015 10:12:34 GMT -5
I'm one of the sources for the "90%". I have an account. I created a short order and called the number that was displayed saying it had special requirements. At that point last week they said 89.5%. Today I called the lending program to discuss putting more shares in and they claimed that the rate they loan out at is "proprietary". The guy I was talking to tried to claim that the rates vary a lot based on volume, counter party risk, etc. and that was the reason he couldn't give me a number and that the 89.5% I was told last week shouldn't be assumed to apply in all cases.
For what it's worth.
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Post by anderson on Jun 8, 2015 10:23:05 GMT -5
Just checked Fidelity 41.75% borrowing rate. Still have 3k shares that havent been lent out, but havent had any shares returned recently.
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Post by petech on Jun 8, 2015 10:31:32 GMT -5
I'm one of the sources for the "90%". I have an account. I created a short order and called the number that was displayed saying it had special requirements. At that point last week they said 89.5%. Today I called the lending program to discuss putting more shares in and they claimed that the rate they loan out at is "proprietary". The guy I was talking to tried to claim that the rates vary a lot based on volume, counter party risk, etc. and that was the reason he couldn't give me a number and that the 89.5% I was told last week shouldn't be assumed to apply in all cases. For what it's worth. Yes, that sounds like total BS. Fidelity displays the lending rate on their website; and IB (I'm told) does the same. Those are the other two brokerages that I know of that lend MNKD...and they are transparent. So Schwab went from 90% to "we can't tell you." I am starting to agree with IB's statement (other brokers hide their rate because they don't want you to know how much of a spread they're making).
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Post by dreamboatcruise on Jun 8, 2015 10:40:52 GMT -5
The "we can't tell you" is from the department responsible for borrowing from me. They don't want to admit they are paying such a small fraction of what they get.
I just called the other number to talk to the department that loans the shares out to shorts. He said that they don't have any available to loan right now but that the last ones they did were at 89%. It is interesting that shares at Fidelity are sitting not loaned out while at Schwab nothing is available. One might assume that has something to do with the mix of who is doing the shorting now vs before... or random chance.
All of this should be taken with a grain of salt and the understanding that I am a very small fry retail investor (a humble country lizard), so an institution or client with tons of money might be handled in a different way.
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Post by gomnkd on Jun 8, 2015 10:45:55 GMT -5
I transferred some shares from IB to fid (to get extra 2% yield). I emailed fid guy and in 15 mins, my transferred shares were loaned out.
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Post by tbone on Jun 8, 2015 10:49:55 GMT -5
Schwab not lending to big players/hedge funds makes sense. They are saying, "We can only get retail shorts to pay 90%."
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Post by Deleted on Jun 8, 2015 10:58:55 GMT -5
I transferred some shares from IB to fid (to get extra 2% yield). I emailed fid guy and in 15 mins, my transferred shares were loaned out. transferring shares between brokers faster than a wire transfer these days?
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