RE: Updated stock on loans/ shorts - reduced 6.2 million24 May 2022 20:45
Trading & all
Basically the Cost to borrow rises with the risk to Shorters - the higher the number the more difficult & costly to borrow stock .
A stock loan fee, or borrow fee, is a fee charged by a brokerage firm to a client for borrowing shares. A stock loan fee is charged pursuant to a Securities Lending Agreement (SLA) that must be completed before the stock is borrowed by a client (whether a hedge fund or retail investor).
The stock loan fee amount depends on the difficulty of borrowing a stock—the more difficult it is to borrow, the higher the fee. As short sellers immediately sell the borrowed stock, the borrower must reassure the lender by putting up collateral such as cash, treasuries, or a letter of credit from a U.S. bank. If the collateral is cash, the interest paid by the stock lender on it to the borrower may offset part of the stock loan fee.
Most shares held by brokerage firms on behalf of their clients are in “street name,” which means that they are held in the name of the brokerage firm or other nominee rather than in the name of the client. This way the brokerage can loan the stock out to other investors.
Stock is generally borrowed for the purpose of making a short sale. The degree of short interest, therefore, provides an indication of the stock loan fee amount. Stocks with a high degree of short interest are more difficult to borrow than a stock with low short interest, as there are fewer shares to borrow.
& if you understand the above you haven’t drunk enough grog
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