Hard-To-Borrow Securities and Reg SHO

What is a Hard-To-Borrow (HTB) security?
A hard-to-borrow stock is one that is difficult to borrow for short sale transactions. When short selling a hard-to-borrow stock, you must pay a daily stock borrow fee, which varies based on the stock's price, availability, and volatility. This fee can significantly impact the profit or loss of your short sale. To learn more about HTB fees, please visit interest and short selling fees.

What are the risks of selling hard-to-borrow securities?

Designation

You must designate any short sale as such when placing the order.

Borrowing

Apex Clearing must borrow stock to cover delivery to the purchaser. If the stock is recalled by the lender, Apex may be forced to cover your short position at the current market price, and you will be liable for any resulting debit balance.

Fees

Additional fees may be charged for hard-to-borrow stocks.

Dividends

If you are short a stock on the dividend record date, you are responsible for paying the dividend to the person from whom you borrowed the shares (payment in lieu of dividends).

What is Reg SHO Rule 204?
Regulation SHO Rule 204, implemented by the SEC, sets industry-wide standards for short selling, promoting market integrity, and imposing obligations on market participants. It applies to both equity and options markets.

How does Reg SHO impact me?

If your short position is at risk of failing to deliver, you may need to close out or "buy in" your short position. If the position is not addressed, our clearing firm may close the position on your behalf the following business day at market open. Please be advised that covering your short position on the settlement date (T+1), or thereafter, does not exempt your account from the possibility of a buy-in by our clearing firm. We urge you put this information into consideration as you plan and execute your trading strategies.