Not that I've received. Try this: http://www.elitetrader.com/vb/showthread.php?s=&postid=1017138#post1017138 Jack
So today, I got a different value for DUK: 2.75. Can someone from IB comment on exactly what this translates into in terms of costs for the following scenarios if that is the rate that will ultimately be used: 1. I short and then cover 1000 shares at $29 intra-day. 2. I short 1000 shares at $29 and hold overnight, covering the next day. When exactly is the limit for overnight? 3. I short 1000 shares at $29 on Monday and cover on Friday. 4, 5, 6: Same as 1, 2, 3, but for 10K shares ($290K principal).
if i got it right [which i doubt]: overnight with 1000shares u get around $1.78 from monday to friday [excluded] with 1000shares u get paid around $7.15. overnight with 10.000shares $10.78 from monday to friday [excl] with 10.000shares u get paid around $43.12. this based on a 2.75% rate.
oops me bad, previous calculation is based on 2.25%. based on 2.75%: it is $2.184 for overnight on 1000shares from monday to friday [excluded] is: $8.7397 monday to friday [included] is: $10.924 it is $21.84 for overnight on 10k from monday to friday [excluded] is: $87.397 moday to friday [included] is: $109.24 edit; overnight with 1000shares is $17.8 at 2.25% rate, not $10.78
I think you need to adjust your figures. I don't work for IB but here is the way I understand it: IB Policy on Short Balances: IB calculates interest on credit and debit cash balances using daily rates applied to end-of-day settled cash balances. The interest methods conform to international standards. Short Stock Interest Earned Rates** On Balances Less Than $100K = $0 On Greater Than $100K BM minus 1.25% On Greater Than $1M BM minus 0.5% On Greater Than $3M BM minus 0.25% **Costs for position borrowing of stocks with special considerations (for example hard to borrow instruments) are usually higher than for normal availability stocks. These additional costs will be passed on in the form of lower short stock credit interest. Thus, it is my belief that AlanM would get nothing on his dinky 1000 share short position but would get 2.75% minus 1.25% or 1.5% interest on the portion of the ten thousand share position eligible for payment ($290K-$100K). Bear in mind the $100k minimum would apply to his entire short balance so he could earn a higher rate if he exceeds $1M or $3M. Here is a link to IB's info http://www.interactivebrokers.com/en/accounts/fees/interest.php?ib_entity=llc#shortCredit Jack
I thought u would be gettin' paid da equivalent margin rate u pay to long a stock....too bad would be nice for ib reps to clear da matter...
Clarification Time on "Automated" Locate Service 1) Web Explanation: there will be a web page describing the service and details relating to it. It is a largely manual process and we are still ramping up so we have not made a big noise about it. 2) Workflow is as follows: client attempts to short stock, is rejected IB picks up the reject message and sends to SLB group (security lending/borrow) SSLS (short stock location system) analyzes all requests based on a variety of factors including: which client made the request, clients followup performance historically (when made avail, did client thereafter actually execute a short sale), number of clients requesting that title, historical success finding the title, etc. Result of the analysis is a priority queue for the various stocks that have been requested. SLB group flags the top priority stocks and initiates locate requests to market counterparties. A locate request is implemented by phone call or with some counterparties, by email. In other words, it is a largely manual process. The request function takes a little time but the counterparties can take anywhere from a few minutes to a few hours to respond. Responses come back available/notAvailable/noInfo. Stocks that are available are immediately processed through automatically to the brokerage system and a TWS bulletin message is generated to all accounts who had tried to short the stock in that trading session. This takes only a few seconds. The latency between the first rejected short sale attempt and the final location are 2 main areas: a) we currently are unable to process all stocks. We are getting thousands per day and have capacity -- due to the manual nature -- to handle a fraction of them. We do the most likely, top priority candidates first. b) contra responses can takes up to hours. 3) PreOpening Requests: at this time, we cannot process locate requests pre-opening. It is not worth getting into the detail of the SLB sub-industry, but the early mornings focus on actual borrows (i.e. on settle date) and neither IB, nor the big lenders are able to focus on locates which relate to events which possibly may occur in 3 days. 4) Manual Requests: there is a good possibility that we will add a manual request service. It would come in from Account Management and would merge with the automated imputed "requests". This will take 6-8 weeks (at least), but it seems like a reasonable thing. For the reasons specified in item 3, I am not sure it will result in pre-opening availability, however. 5a) Cost: the rate shown (we will change the format to make it clearer) is the estimated incremental cost for the special locate. This is not an additional charge by IB. It reflects the additional cost to IB to borrow a hard-to-find stock, i.e. it is the additional cost market lenders are charging. 1.2 means 1.2%. My previous post as quoted by 'JackR' was right after the release and we changed the meaning since then since the current method is less ambiguous (it doesn't depend on individual client short rebate interest tiers, for example). 5b) Costs(cont): AlanM seems to have gotten two quotes on DUK, one for 0.21% and the other for 2.75%. I suspect that 0.21% should have been 2.1%. It seems unlikely that the short rebate would fluctuate so much so I suspect that this is a data entry error on either the part of the contra or the IB SLB staff. 5c) Cost examples: sell short and cover intraday -> no actual cost since no loan will be necessary on T+3 (settlement date) short and cover next day -> incremental cost will be benchmark - (spread@yourTier - actualAdditionalCostToBorrowVersusEasyStocks) * numCalendarDays/calDayConventionForCurrency where *benchmark and spread@yourTier are as posted on our interest web page *actualAdditionalCostToBorrowVersusEasyStocks = what we really get from the lenders as a fee; remember, the locate rate is merely indicative since rates for stocks can fluctuate in the 3 business days to settlement * calDayConventionForCurrency = 360 for USD and most currencies, 365 for GBP and select former colonial currencies Note: day counting is based on settlement dates, not trade dates. A US stock trade executed on Monday will settle Thursday, 3 calendar days later. A trade executed on Wed-Thu-Fri will cross the weekend and will settle 5 calendar days later (assuming no holidays which would push settlement out again). See our website for specific settlement date examples. There is a page dedicated to this fascinating topic ;-) 6) Duration: per regulations, locates are good for up to 24 hours. The spirit of the rules seems to be 'for the current trading session'. 7) Short Stock Conventions: in the US and Canada the cost to borrow a stock is wrapped into something called a short rebate. This is the amount of money borrowers get on the cash collateral they need to post to borrow the stock, minus the borrow fee. It works out to be the amount of money you get on long cash balances that are a result of short sale proceeds. To me, this system is non-transparent and obtuse. But it is the US convention and we are not able to change it. In Europe, and perhaps Asia, etc, the cost to borrow a stock is specifically defined and is quoted completely separately from an investment proceeds on collateral. This is likely a result of the fact that collateral is usually not cash and can take the form of other stocks, bonds, etc. It is beyond the scope of this thread to get into the gruesome details but I thought this might shed a tiny bit of light on understanding short rebate. The programmer who developed the SSLS system is tracking this thread (at least for a while). Please feel free to post suggestions or problems.
IBj: I'm confused by these two statements in your otherwise very lucid explanation. Could you explain? Is there a difference in the "tiers" in 5a and the "yourTier" in 5c? Jack