Hard-to-borrow (HTB) means that the supply is limited for short selling. You’ll be charged with a daily stock borrow fee, based on a stock’s price and its availability.
Here is an example:
Previous closing price = $13.00
Number of shares sold short = 1,000
Hard-to-borrow rate (Approx Annualized Margin Rate) = 6%
Current industry convention = 1.02
* The current industry convention percentage set by the securities lending market participants is subject to change.
(Closing price of Stock) x (1.02) = Per Share Collateral Amount (rounded up to the nearest dollar)$13.00 x 1.02 = $13.26 = $14.00
(Per Share Collateral Amount) x (Share Quantity) = Trade Value$14.00 x 1,000 = $14,000
(Trade Value) x (Annual Hard-to-Borrow Rate) = Annual Hard-to-Borrow Fee $14,000 x 0.06 = $840
(Annual Hard-to-Borrow Fee) / (360 days) = Daily Hard-to-Borrow Fee $840 / 360 = $2.33 Daily Hard-to-Borrow Fee
Please note that the hard to borrow rate changes daily so the fee may vary each day and it started to be calculated from the settlement date, so the rate you see when shorting might not be the rate that the fee is charged at.
Whether a stock is a ETB or HTB or non-shortable stock depends on the list provided by our clearing firm, which changes on a daily basis. You can check if a stock is HTB from our stock page, as shown below.