adiggs
Well-Known Member
Fidelity down to 11.25% to borrow TSLA today. I've known it was too good to last
I'm curious to see if the rate continues dropping rapidly the next few days and where it next stabilizes. I was really partial to 14.50.
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Fidelity down to 11.25% to borrow TSLA today. I've known it was too good to last
I'm curious to see if the rate continues dropping rapidly the next few days and where it next stabilizes. I was really partial to 14.50.
adiggs
Well-Known Member
hire a COOSchwab's way down to paying 6% on TSLA. I am losing money because I have had too many things going on to open a new account.
adiggs
Well-Known Member
Has anyone else had difficulty getting IB to pay the published rates? I moved shares over recently to experiment with share lending and the TSLA rates have been significantly below the market rate posted.
Have not been able to get a satisfactory answer yet. I am starting to suspect they are lending out below the published rates to favored short sellers and sticking some retail customers with the less favored rates. For reference, they have been paying 6.4x percent on TSLA shares the past couple days.
I will likely close my IB account and move these shares elsewhere if they do not resolve this quickly.
Have not been able to get a satisfactory answer yet. I am starting to suspect they are lending out below the published rates to favored short sellers and sticking some retail customers with the less favored rates. For reference, they have been paying 6.4x percent on TSLA shares the past couple days.
I will likely close my IB account and move these shares elsewhere if they do not resolve this quickly.
adiggs
Well-Known Member
I don't have any personal experience with IB, but I did research them when I was looking into lending out my TSLA shares. One thing that was clear from the documentation, is that outside of a very small sliver, IB splits the borrow rates 50/50 with you.
I hope that helps.
Thanks @adiggs.
The 50/50 split is not the problem. IB consistently has been using a "borrow rate" well below the advertised rate as the baseline.
TSLA borrow/lend rates being posted by IB were down to 12.2 percent/6.1 percent over the weekend.
I just noticed the same thing going on in my IB account -- I was paid at a rate of 12.19% (so I get 6.1%) for the past several days, even as the advertised rates have been around 14-15%. What's unclear to me is that IB lists 3 different borrow rates: a min, max, and mean (all of which are greater than 12.19%).
I've never shorted a stock, so I don't exactly get how the borrow rate can have a min/max range. It seems like IB would set one rate and it wouldn't really be negotiable since they control the market. Which then goes to the next point of if you close your IB account, where would be better? Seems like it's a totally opaque market at any brokerage.
I've never shorted a stock, so I don't exactly get how the borrow rate can have a min/max range. It seems like IB would set one rate and it wouldn't really be negotiable since they control the market. Which then goes to the next point of if you close your IB account, where would be better? Seems like it's a totally opaque market at any brokerage.
adiggs
Well-Known Member
Fidelity now paying 7.25% (down from 8.00%) to borrow TSLA.
@durkie - when I was evaluating brokers, my decision came down pretty quick to IB and Fidelity. I can't explain the disparity between the borrow rates you're seeing, and the rate you're actually being paid. The way I read IB's literature, there is some small amount of the rate paid that goes to overhead (transaction costs). My impression is that it's a really small amount - 0.1-0.5% kind of scale. Close enough that I mentally rounded it to 0 when I was evaluating IB vs. Fidelity.
My primary suggestion to your comment is to give IB a call and ask them about that. You may also want to ask about the rates people pay to borrow shares to establish a short position - does their rate change on a daily basis, does it stay the same as when they borrow (unlikely), or how does that work.
The opaqueness also seems to be what I see with Fidelity. Then again, others have reported circumstances where their shares weren't lent out, the brokerage was reporting 0 shares available, and more than a day went by. Then they called and asked, didn't get much of an answer, but there shares were lent back out the same day. So just making contact with IB about your question may also change your outcome.
From what I can tell, Fidelity sets the two rates separately, with sometimes paying >50% of the rate they charge to borrow, and sometimes paying <50%. Overall, it seems to work out to 50-55%.
I mostly chose Fidelity because IB is clear about being a brokerage for frequent traders, and I'm not. The characteristics that make IB friendly for frequent traders are either irrelevant or a negative for me.
@durkie - when I was evaluating brokers, my decision came down pretty quick to IB and Fidelity. I can't explain the disparity between the borrow rates you're seeing, and the rate you're actually being paid. The way I read IB's literature, there is some small amount of the rate paid that goes to overhead (transaction costs). My impression is that it's a really small amount - 0.1-0.5% kind of scale. Close enough that I mentally rounded it to 0 when I was evaluating IB vs. Fidelity.
My primary suggestion to your comment is to give IB a call and ask them about that. You may also want to ask about the rates people pay to borrow shares to establish a short position - does their rate change on a daily basis, does it stay the same as when they borrow (unlikely), or how does that work.
The opaqueness also seems to be what I see with Fidelity. Then again, others have reported circumstances where their shares weren't lent out, the brokerage was reporting 0 shares available, and more than a day went by. Then they called and asked, didn't get much of an answer, but there shares were lent back out the same day. So just making contact with IB about your question may also change your outcome.
From what I can tell, Fidelity sets the two rates separately, with sometimes paying >50% of the rate they charge to borrow, and sometimes paying <50%. Overall, it seems to work out to 50-55%.
I mostly chose Fidelity because IB is clear about being a brokerage for frequent traders, and I'm not. The characteristics that make IB friendly for frequent traders are either irrelevant or a negative for me.
Chickenlittle
Banned
adiggs
Well-Known Member
Is that a normal borrow rate to short? How does it compare, say for example, to short borrow rates of DIS or AAPL?
I don't know how much they pay stockholders but to borrow AAPL at IB you pay 0.25%.
Chickenlittle
Banned
Yes they returned another 2500 shares to me. Less than a third of my shares loaned out. Short interest definitely reduced
all my TSLA shares got returned to me as well. The SCTY shares are still on loan.
adiggs
Well-Known Member
I don't know about those two in particular, but I believe paying 6% on Fidelity's part, to then lend TSLA at 10-12%, is still a very high borrow rate to establish a short position. Of the other companies I own that Fidelity could borrow from me to lend out, none of them have been lent out even once over the last 2 months.
An earlier poster indicated 0.25% for borrowing shares at IB - I suspect that is more typical.
For TSLA, it is almost the lowest rate I have seen in the last 2 months. I believe Yonki posted a chart of lend rates/borrow rates for TSLA that he's seen over the last year, and on that scale, 6% is still pretty high even for TSLA.
So maybe low to middlin' for TSLA, and high for a generic market participant.
adiggs
Well-Known Member
My shares are still lent out at Fidelity, but now down to 4%.
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