If there are no shares to short available anywhere then it’s trader’s choice to not trade at all, or pay the outrageous fees. Though I also think that locate fees are meant for shorting intraday and you need to get out of position the same day. If you want to short through multiple days then short the stock (again) after it becomes available for shorting without locate fees, or with small symbolic fee if the broker doesn’t support shorting without locates. (those fees go down after plenty of shares are available)
you are correct. 18x 7= $126. it looks like he was charged for 3 days, which is closed to $385. Please ignore this post.
They explained earlier that their overnight rate is based on locate fee and not related to IB’s borrow interest rate.
You are right and your comment should be in bold. "]Though I also think that locate fees are meant for shorting intraday and you need to get out of position the same day
"msaidi@tradezero.us www.tradezero.us 718-709-4925 #42 Today at 3:14 PM" It is a little early to have left this important thread.
Borrow fees & locate fees are two very different things. Borrow fees are something that everyone has to pay whenever they hold a short position overnight. Hard to borrow locate fees are what the broker charges to locate shares for shorting whenever they aren't available in house at their own clearing firm. I'm not sure how exactly the fee is derived. I would assume it's based off what their partnering clearing firms charge them. The reason this fee seems so outrageous is because he paid a 5% locate fee for this stock. That's extremely high. Most HTB locate fees I've seen are 1-2%. I've heard that firms like Centerpoint & Cobra charge a lower overnight fee than Tradezero, but they also charge commissions. So it's a trade-off.
. I think most firms charge hard to locate fees even if they have shares in house. That is the reason firs want clients to sign margin agreement even if shares are fully paid for. Then they can automatically loan them out and collect locate fees etc. they can also lend it out to the street and receive hard to locate fees. IB does not get involved in these shenanigans . With zero commissions this policy may change.