What is the Hard-to-Borrow (HTB) fee and how is it calculated?

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 the HTB Fee is Calculated

1. Determine the per-share collateral amount

You can determine the per-share collateral amount by:

• 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.)
• Round the above amount up to the nearest dollar.

Example:

Previous Closing Price: $13.00

Current Industry Convention Rate: 1.02

Per Share Collateral Amount: $13.00 x 1.02 = $13.26, rounded up to $14.00

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.

Example:

Per Share Collateral Amount: $14.00

Number of Shares Sold Short: 1,000

Trade Value: $14.00 x 1,000 = $14,000

3. Determine the annual HTB fee

To determine the annual HTB fee,

• Multiply the trade value by the annual Hard-to-Borrow rate.

Example:

Trade Value: $14,000

Annual HTB Rate: 6% (0.06)

Annual HTB Fee: $14,000 x 0.06 = $840

4. Calculate the daily HTB fee

• Divide the annual HTB fee by 360 (standard industry practice for the number of days in a year).

Example:

Annual HTB Fee: $840

Daily HTB Fee: $840 / 360 = $2.33

What else should I know about HTB fees?

Billing period

The short-selling fees are charged from the settlement date of the securities lending and opening transaction until the closing transaction is settled. These fees apply 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.