I have exactly the opposite to report. I am amazed how I can even short the most illiquid symbols. I would say 95% of the Russel2000 is shortable at IB.
how was the message send to you that you could no longer be short the stock? how long were you short the stock before it was called back? how much time did you have to close your position before IB closed the position for you? The message was sent by email. I was short the stock from the previous trading session. I had from approximately the open to 3:00PM EST of the day of the notice to cover: In accordance with Regulation SHO you must close out 515 shares from your short position in MWY. If by 15:00:00 EST today you have not purchased the shares Interactive Brokers will close out the position. Please manage your risk accordingly. Regulation SHO creates new restrictions on short sales and stricter "close out" requirements. In Reg SHO the SEC has adopted additional requirements for "threshold securities", which are securities with substantial settlement failures. For securities that IB has an open fail to deliver for 13 consecutive days we are required to execute a "close out" buy in.
When stocks are hard to short, it pays to have multiple accounts. When I wanted to short JSDA, Schwab had it available and other brokers didn't. The commissions was $10 plus an exchange fee, so normally I'd use a broker that costs less. In the more general case, all brokers will occasionally have connectivity or software problems. A couple times, Schwab couldn't accept orders from their trading platform and I had to call. Schwab and Ameritrade sometimes lose knowledge of some option series for short periods of time. IB wasn't accepting logins from a number of users last Sunday night, and when I logged in early Monday morning, it didn't list my QM holdings in my portfolio, making me wonder whether or not they'd been liquidated. If you know of a single broker that has such good commissions and great uptime such that we could close all of our other accounts, let us know.
My experience in shorting stock with IB was not that great--but not bad either. Sometimes I was able to short a stock with Ameritrade which I could not do with IB. (In some other rare occasions, the vice versa was true.) TradeKing is miserable. I have heard Cybertrader can update their short availability in their trading platform, and can get you hardly-shortable stocks from Penson, Schwab, or from somewhere else in a reasonable period of time. Having multiple brokers with different clearing firms does help if one shorts often.
It sounds like there is no broker that is the place to go for shorting stocks. CyberTrader sounds interesting if it has the capability to see the shares available and the ability to obtain shares from other brokers. I wish ameritrade had either of these capabilities. I have often exited one position to try to short a stock intraday and received the message that no stocks are available to short.