What are Hard-to-Borrow Stocks and Fees and when are those fees charged?

When any stock is sold short, the shares must be located and borrowed by a clearing firm. When there is a large demand to short a stock relative to the number of shares outstanding, stocks can be classified as hard-to-borrow. The market forces that drive increased demand for a stock vary daily depending on the particular situation.

For this reason, the fees associated with hard-to-borrow stock can vary greatly as they are based on the amount of demand in the market each day. We suggest that if you wish to sell short hard-to-borrow stocks, please contact our Customer Service Group at 800-869-8800. We can help you locate the stock in question and notify you of the availability and current fees. Firstrade generally does not allow online short sales of stocks that are classified as hard-to-borrow. A list of stocks available for shorting may be found under Quick Links in the Trading page after logging onto the Firstrade website. 

Please Note: Some stocks will not appear as hard-to-borrow and are able to be sold through the platform, but still may incur hard-to-borrow fees. This occurs when a particular stock is able to be located and borrowed, however the limited availability of shares mandates a borrow fee. In these cases, the investor will incur fees each day that the stock requires a fee to be borrowed. The fees could also be levied long after the original short sale and could appear and disappear daily, depending upon the changing availability of the shares.

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