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Interest and Short Selling Fees
What is margin interest? Margin interest is the cost of borrowing funds from your brokerage to purchase securities. When you trade on margin, you're taking out a loan to increase your buying power. This borrowed amount accrues interest, which you must pay back along with the principal. The interest rate depends on whether your account is enrolled in a Webull Premium plan. You can view the most up-to-date margin rates on our Pricing Page. The margin rate is set at our discretion and is subject to change without notice. When is margin interest charged? Margin interest is charged on a monthly basis, typically between the 15th and 18th of each month. The exact date may vary depending on weekends or holidays. Interest accrues daily, with the normal interest period ending on the 15th day of each month and the last day of the year. The charge will appear as a debit in your account and will reflect the total interest accrued during the previous billing period. How is margin interest calculated? Margin interest is calculated using a daily average method. Each day's closing debit balance is accumulated into a monthly total, then averaged to determine the balance on which interest is charged. The closing debit balance is based on the settlement of positions opened. If you open a position using margin and close it on the same day, no margin interest will be charged for that position. Monthly Margin Interest = Average Daily Debit Balance × (Annual Interest Rate ÷ 360) × Number of Days in Period Example If you maintain an average daily debit balance of $10,000 over a 30-day period with an annual interest rate of 8.74%, the calculation would be as follows: The daily rate is 8.74% ÷ 360 = 0.0243%. The monthly interest would then be $10,000 × 0.0243% × 30 = $72.83. Why was I charged margin interest when my account didn't have a negative cash balance? Margin interest may be charged when your account doesn't show a negative closing cash balance. This happens when you withdraw funds or initiate an internal transfer on the same day you sell securities, before the trade proceeds have settled. In this scenario, the withdrawal temporarily uses margin until the sale settles, which results in interest charges. Example You start the day on Monday with a settled cash balance of $5,000. During the day, you sell $10,000 worth of stock and initiate an internal transfer of $12,000 to another account. At the end of Monday, your account shows a positive balance because the system accounts for your pending sale proceeds. However, those sale proceeds won't actually settle until Tuesday. Since you transferred out $12,000 on Monday using only $5,000 of settled cash, you effectively borrowed $7,000 on margin for one business day. This results in a margin interest charge for that day, calculated on the $7,000 borrowed amount. How do I calculate short selling fees? For a short position, you need to borrow shares of a company before you sell them. The cost associated with a short sale is the fee for borrowing the stocks of said company. This fee does not apply to all stocks, only to those with limited borrowing availability. Stock loan rates and borrowing availability change daily based on market conditions. This fee is calculated on a daily basis and charged daily. The formula is: Daily Margin Interest (Short Position) = The Daily Market Value of the Borrowed Stocks when Market Closes * Stock Loan Rate for That Stock / 360 What is a Hard-To-Borrow (HTB) fee? The Hard-to-Borrow (HTB) fee is charged when the supply of a stock available for short selling is limited. This fee is calculated daily and is based on the stock’s price, its availability, and the current industry convention. How is the HTB fee calculated? 1. Determine the per-share collateral amount You can determine the per-share collateral amount by both multiplying the previous closing price by the current industry convention rate (this percentage is set by the securities lending market participants and is subject to change) and round the amount up to the nearest dollar. An example:
2. Calculate the trade value You can calculate the trade value by multiplying the per-share collateral amount by the number of shares sold short. An example:
3. Determine the annual HTB fee To determine the annual HTB fee, you multiply the trade value by the annual Hard-to-Borrow rate. An example:
4. Calculate the daily HTB fee Divide the annual HTB fee by 360 (standard industry practice for the number of days in a year). An example:
What else should I know about HTB fees? Billing period HTB fees are charged from the settlement of the opening transaction to the settlement of the closing transaction. If you sell a position and buy it back on the same day, no interest is charged because both trades share the same settlement date. However, if you short a stock on Thursday and buy to close on Friday, interest will accrue for three days (Friday through Sunday), since the closing trade settles on Monday. HTB fees accrue even on non-trading days. Daily rate changes The HTB rate may vary daily, as it depends on the current supply and demand in the market. Stock availability Whether a stock is Easy-to-Borrow (ETB), Hard-to-Borrow (HTB), or non-shortable is determined by a list provided by our clearing firm, which is updated daily. You can check the HTB status of a stock by locating the HTB icon within the stock quote. |
To learn more about our pricing, please visit https://www.webull.com/pricing. |
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