Reg-T= (>$25K) up to 2X overnight and 4X for Day Trading. PMA = (>$150K but $175K to start) up to 5.56X overnight and up to 6.67X for Day Trading. For accounts over $5mm, we can discuss excess leverage for day trading, Wedbush allows up to 12X and so does Lightspeed with approval from the risk team.
To answer your question ... No you can't short a stock unless we can locate or borrow it. However, by entering the stock into an order and trying to sell it, it will trigger a locate alert to our stock loan team who pro-actively will seek for the shares. If you are a large account, there could be a higher level of access to the desk who can go out and locate/inform you of what size is available at no fee unless you want to pre-borrow. Should add we recently launched Stock Yield enhancement in Hong Kong and Canada where clients who own fully paid shares allow their shares to be lent out and we split the interest revenues. It's a win/win and also offers a larger in house list of hard to borrows. For leverage, for a diversified account under portfolio margin > 100K will get up to 6:1 leverage.
Thanks def, Can you kindly develop on what pre-borrow is? I am not familiar with the concept. And Velocity seems to have offered Lightspeed and the likes an RfQ functionality. I know IB has been doing a lot in the bond space recently with regards to RfQ, what are the chances you start offering this functionality to borrow stocks as well? Tony
So it's an RfQ system by the looks of it. If so, why not open it to other counter-parties to source the best pricing and/or deepest liquidity for your clients?
Pre-borrow - you borrow shares before the trade and pay for the loan whether you use the shares or not. Note, this option is only available for large accounts and large size (ie, million dollar plus tickets). RFQ for stocks, we essentially are doing that by clients entering in an order with a size when something is not available. This sends an alert to the SLB team who can then act (note, we do this in the US but to a much lesser extent elsewhere). But, even in HK, clients who have decent size requests can contact our service team who will work with the stock loan team to see if they can find any available shares.
Tonyf- this premium locate system that is on top of the free locates that we get from our clearing firm. It is a supplemental premium service. As much as I would like to have two or three of these, velocity meets our needs. Adding multiple ones is more complicated than you would imagine as it requires not just technology but also compliance.
Thanks def, 2 questions please: 1) are you saying that trying to short a stock on TWS with 0 borrow available give the SLB team a nudge to act? 2) Does IB ever act as the short counterparty? Do we ever bet agains the house sort of speak or does the SLB team alway borrow from the street? I am not at $1m yet, but can happily short a quarter mil at this stage.
IB does not charge a locate fee to my understanding, premium or otherwise. What is your fee in such situations?
We do not charge for Wedbush Locates. The premium locates have a charge because they are hard to get. Varies based on supply and is set by Velocity. Email me one or 2 symbols that are not threshold stocks are not ETB and I will email you the screenshot.