free shorting at prop company possible?

Discussion in 'Prop Firms' started by tonyzhou, Mar 25, 2012.

  1. I just have a question about prop company that since prop company need to close trade daily, can I short any stocks for those hard borrowed shares?

    Personally, I am not interested in leverage, but just need to short those hard borrowed stocks. Hate to see no shares at Interactive Brokers. Thanks
  2. rmorse

    rmorse Sponsor

    Not all Prop firms require flat at end of day. It's hard to find the rule on the SEC/Finra website. To my knowledge, if a securities is NOT on the easy to borrow list, you can't enter an order to short the securities without first requesting and receiving a locate from your Prime Broker. When you buy it back does not give you an exemption. Broker Dealers with or without a JBO relationship are not, as far as I know, exempt from locates.

    The only exemption I'm aware of is an options market making selling short in order to hedge an options trade, is not required to get a locate. That's the last advantage left for Market Makers.