Non-Direct Hard to Borrow Fees too high?

Discussion in 'Trading' started by ThinkLogical, May 23, 2012.

  1. Hello,

    I am currently trading stocks with Interactive Brokers that are not very liquid and i hold short-positions overnight. It seems to me that I pay too high borrow fees every day, including weekends and of course the rate is not fixed, which makes it impossible to calculate my fees and planning.

    Has anyone encountered the same problem and is there any good broker which offers lower borrow fees?

    Thanks!
     
  2. rmorse

    rmorse ET Sponsor

    This is a common procedure for short rates. They move up and down based on supply/demand every day. No one will offer you fixed rates.
     
  3. Hi Robert,

    Thank you for your reply. Can you suggest me any good broker that offers low borrow fees?

    Thanks!
     
  4. You may want to investigate carrying the short delta via a Single Stock Future. The HTB rate will be reflected in the SSF price but once you enter into the trade the enbedded rate will not change as the SSF cannot be called away and you carry the position until you offset or it expires.

    Of interest is that if the HTB increases once you enter into the SSF then you will have marked-to-market payments flow into your account irrespective of any stock moves due to the increased pressure put on the SSF price from the higher HTB rate.

    Conversely, if HTB rates decrease you will see the SSF price rise and absorb marked-to-market losses as the downward pressure on the price is reduced by the lower borrow fee.

    Best.