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Post by petech on Jun 3, 2015 8:14:43 GMT -5
So I contacted Interactive Brokers to see if they offer a program similar to Fidelity/Schwab and they do. Fully collaterialized. As to what rates they offer....Fidelity is a bit better now. But check this out...the rate they lend at is 50.6% as of right now. IB charges 50% as a service fee...so you end up getting 25.3%...thus making Fidelity at 27% a better return for us. But just think that shorts that borrow from IB are PAYING OVER 50% INTEREST. Gives me hope that everyone else is going to jack their rate into that range. If past performance is an indication, Fidelity keeps 9.75%...so we'd be getting a little over 40% if they lend it out at 50%. And here I thought the lending rate couldn't go much higher.  So here is the summary of what we know (anyone know Schwabs?): Brokerage Rate Charged Out Rate Paid to Shareholders Interactive Brokers 50.6% 25.3% Fidelity 36.75% 27.0% Charles Schwab ?? 20% Resources: Interactive Brokers: individuals.interactivebrokers.com/en/index.php?f=shortableStocks&p=stockyieldFidelity: capitalmarkets.fidelity.com/app/item/RD_13569_22178.htmlCharles Schwab: (need to call them; don't have website specific to this) www.schwab.com/public/schwab/nn/articles/Short-Selling-Strategies-Risks-and-Potential-Rewards#Where do the shares come from?
Also, not unnoticed was the subtle jab by IB on their website that says they fully disclose what rate they are lending to shorts at; whereas other brokerages hide that. With Fidelity, you have to dig for it (I found it in active trader)...so it isn't a completely fair statement. I have no idea about Schwab....but the program...let alone the borrow rates...are not easily found online.
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Post by kc on Jun 3, 2015 8:43:23 GMT -5
Its easy to find on fidelity's site on both trading platforms AT and the web based. For a person shorting they get this message:
To find the rate shorts pay. Hit link on quotes for selling shares short and you will see this: Hard to Borrow, Available to Short: 0 Shares
Est. Annual Interest Rate: 36.750%
Hard to Borrow - Short Positions
You currently have no Hard to Borrow short positions in this account that are accruing interest.
The Short Interest Rate represents the current rate as of the date and time indicated. This rate is subject to change due to several factors such as changing market conditions and at the discretion of Fidelity. The Accrual Price is used to determine the loan value and is the last available or known price for the security. Frequently traded securities will generally display the previous business day's closing price.
For a person loaning you get this message:
Loaned Securities
As of 06/03/2015, 9:45 AM ET
MNKD - MANNKIND CORP 27.00%
Total Collateral for Loaned Positions
*The Collateral Amount reflects a position related to securities on loan which is held outside of your Brokerage Account and which is not covered by the Securities Investor Protection Corporation (SIPC) or included in your Account Net Worth. See the Loaned Securities Help page for more details.
The Rate displayed is the current average rate of all shares of a security on loan. The Rate is subject to change over the duration of the loan.
The market value of loaned securities is included in Account Net Worth. All loaned securities are secured by collateral provided to you pursuant to the lending agreement executed by you. Loaned Securities are not covered under the Securities Investor Protection Corporation
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Post by petech on Jun 3, 2015 8:58:38 GMT -5
Thanks KC. I was referring to the rate Fidelity charges to the shorts. I am very aware of the rate I am given. For that rate (36.75%), I did a detailed quote inside of the active trader screen...scrolled down...clicked on the "shares available to borrow" line...and that's where it said 36.75%. If there is another way to find that, I am unaware of it.
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Post by kball on Jun 3, 2015 9:00:43 GMT -5
Its easy to find on fidelity's site on both trading platforms AT and the web based. For a person shorting they get this message:
Hard to Borrow - Short Positions
You currently have no Hard to Borrow short positions in this account that are accruing interest.
The Short Interest Rate represents the current rate as of the date and time indicated. This rate is subject to change due to several factors such as changing market conditions and at the discretion of Fidelity. The Accrual Price is used to determine the loan value and is the last available or known price for the security. Frequently traded securities will generally display the previous business day's closing price.
For a person loaning you get this message:
Loaned Securities
As of 06/03/2015, 9:45 AM ET
MNKD - MANNKIND CORP 27.00%
Total Collateral for Loaned Positions
*The Collateral Amount reflects a position related to securities on loan which is held outside of your Brokerage Account and which is not covered by the Securities Investor Protection Corporation (SIPC) or included in your Account Net Worth. See the Loaned Securities Help page for more details.
The Rate displayed is the current average rate of all shares of a security on loan. The Rate is subject to change over the duration of the loan.
The market value of loaned securities is included in Account Net Worth. All loaned securities are secured by collateral provided to you pursuant to the lending agreement executed by you. Loaned Securities are not covered under the Securities Investor Protection Corporation
Anyone else needing to buy a new filing cabinet just for LOANED SECURITIES COLLATERAL mail from Fidelity? |
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Post by petech on Jun 3, 2015 9:04:42 GMT -5
Ha! I did want paper statements for the first month just to have a trail in case I disagreed with the amount they paid me. I can tell you that it is to the penny every month. So I switched to online statements for that. I still get a monthly paper statement on this...which is waaayyyy more helpful. I can't recommend singing up for the online confirmations enough.
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Post by kc on Jun 4, 2015 8:30:22 GMT -5
Buckle up the ride is going to get bumpy. The Loan rate just went up to 38.250% and the lending rate is now 27% from Fidelity
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Post by petech on Jun 4, 2015 8:37:29 GMT -5
I'm showing 38.25 from Fidelity as of right now...up from the 36.75% yesterday. That should mean we'll see 28.5% today/tomorrow.
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Post by ezrasfund on Jun 4, 2015 9:28:58 GMT -5
Even AF has noticed. via Twitter
Adam Feuerstein @adamfeuerstein 10 minutes ago
@biorunup I’m told borrow cost on $MNKD now +75%. Won’t help sell any more Afrezza but hurts those shorting the stock.
And Interactive Brokers has taken MNKD off the list of shortable stocks for the moment. Joey, Brentie...any better info on this?
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Post by xoxoxoxo on Jun 4, 2015 9:44:49 GMT -5
If only we had awesome sales reported tomorrow we could have a really nice squeeze. Unfortunately that is pretty unlikely.
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Post by jpg on Jun 4, 2015 10:11:10 GMT -5
Even AF has noticed. via Twitter Adam Feuerstein @adamfeuerstein 10 minutes ago @biorunup I’m told borrow cost on $MNKD now +75%. Won’t help sell any more Afrezza but hurts those shorting the stock. And Interactive Brokers has taken MNKD off the list of shortable stocks for the moment. Joey, Brentie...any better info on this? I personally think that is all AF thinks about and that he is focused on the short lending rate and the interests of the shorts and little else. |
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Post by dreamboatcruise on Jun 4, 2015 10:40:10 GMT -5
petech... since I have a Scwhab account I thought I'd call in to see what their spread is between what they pay me and what they are getting... drum roll... Scwhab: pay 20% and charge... 89.5%  Can anyone really be paying 89.5%? I asked twice because I thought I misheard. After the second answer, I asked "you mean almost 90%" and he said yes. I then went to the doctor for a hearing test and called them again. (ok... the last one didn't really happen) Can you imagine the world of hurt the dumb shorts are in... i.e. the ones that shorted at the bottom on the recommendation of that guy with the $1 target... and now having the borrowing rate move against them like this. It makes me sad for them...  just kidding. Quick question for those that know the answer. If I've shorted the stock at an initial borrowing rate of X, do I keep that rate until I cover or am I subject to arbitrary hikes... i.e. could Scwhab have lent to someone at say 30% and then tell them they are now paying 89.5%?
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Post by kc on Jun 4, 2015 10:52:46 GMT -5
I believe they retain the right to keep raising the rates on the shorts based on Market condition. That is why it can't go on for ever like we saw with the Tesla situation in 2013.
Attachment Deleted |
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Post by bobw on Jun 4, 2015 10:56:16 GMT -5
You are subject to a new borrowing rate every day.
I have been trying to understand how the share price keeps going up if the lending rate going up as much as it is because there is increasing demand to short. Could it be instead that some institutions are buying shares and not lending them, thus reducing the supply of shares available to borrow?
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Post by dreamboatcruise on Jun 4, 2015 10:59:36 GMT -5
Question for those with more experience in heavily shorted issues... does the recent price movement have the ring of any sort of short squeeze/covering? To me it seems too orderly of a rise. And the astronomical rates charged seem to indicate shorts are not unloading position. Does that seem about right? Should we expect greater upside volatility if a true short squeeze begins?
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Post by bobw on Jun 4, 2015 11:03:23 GMT -5
It is either an increase in demand (more shorts coming into the market), or supply (less shareholders willing to lend), or a combination of both.
The question is which is it? An increase in demand does not seem to be consistent with a rise in share price.
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So here is the summary of what we know (anyone know Schwabs?):
just kidding.