It depends on when your short position is closed and how the trade settles.

Overnight borrow fees are based on the settlement timing (T+1)

Fees may apply if your position remains open past the 8:00 PM ET cutoff

If your short position is still open after the Thursday 8:00 PM ET cutoff, you may be charged multiple days of borrow fees

This is because the cover for a short position held overnight on Thursday cannot settle until Monday at the earliest

Holidays may also impact settlement timing and result in additional borrow charges

No weekend fee: Short on Tuesday → Cover on Thursday

Weekend fee applies: Short on Tuesday → Cover on Friday

No weekend fee: Short on Friday → Cover on Monday

Weekend fee applies: Short on Thursday → Cover on Monday

Borrow fees are determined by settlement timing, not just trade timing

Fees are charged daily while the short position remains open

Always review borrow estimates before holding positions overnight"

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Stocks that are easy to borrow are identified directly in the trading platform.

How it works:

A green “S” indicator next to the symbol means the stock is easy to borrow


If the green “S” is displayed, no locate is required to short the stock

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When holding any short position overnight, an overnight borrow fee will
apply. This fee will be charged every day you hold a short position
overnight and until the short position is covered.


You can see an estimate of the fee by logging into your 


The overnight borrow calculator will include all weekdays, weekends, and
holidays where a fee will apply.


It is important to check the overnight borrow calculator every day you
plan on holding your short position overnight.

If you hold a short position after the 8:00 PM ET cutoff on Thursday, your account may be charged multiple days of overnight borrow fees.

How it works:

The cover for a short position held overnight on Thursday cannot settle until Monday at the earliest

This may result in up to 3 days of overnight borrow fees

The exact amount depends on the borrow rate and market conditions

Overnight borrow fees apply when you hold a short position overnight.

How it works:

The fee is charged each day a short position is held overnight

Fees continue to apply until the cover trade settles

Charges may include weekdays, weekends, and holidays

Important:

Borrow rates can change daily based on market conditions

You can view an estimate in the client portal under: Tools → Overnight Borrow Calculator

The calculator reflects all applicable days, including weekends and holidays

It is recommended to check the calculator regularly if you plan to hold short positions overnight

Short locate fees are the cost to borrow shares before entering a short position.

Rates are based on supply and demand and can change throughout the day

You are only charged if you accept the locate price

If you do not accept the locate, no fee is charged

If a stock is halted, trading is temporarily suspended and you will not be able to cover your short position until trading resumes.

If the halt is brief, you can cover your position when trading resumes

If the halt is extended and your position remains open past 8:00 PM ET, it will be carried overnight

You will be responsible for any overnight borrow fees, margin costs, and other applicable charges while the position remains open

You must maintain sufficient equity in your account to support the position

These charges will continue until the position can be covered or the security is no longer tradable

https://www.finra.org/investors/investing/investment-products/stocks/trading-halts-delays-suspensions

When a stock is halted, it means trading is suspended by the regulatory bodies overseeing the exchanges and marketplaces. This may occur for a variety of reasons including, pending news, regulatory investigation, corporate restructure, or activation of the Limit Up Limit Down rule.

If a stock is halted only for a brief period during the day, your open short position can be covered when trading resumes.

However, if a stock is halted for an extended period of time and you cannot cover the open short position before the close of after-hours trading at 8 PM ET, you will be responsible to pay any overnight borrow costs, margin costs and any other fees incurred daily until the stock begins trading and the position can be covered or until DTC delists the security.

TradeZero will need to have sufficient equity in the account to cover these charges.

For more information on trading halts see: 

Equity securities with a market value of less the $3 per share may not be purchased on margin or deposited as margin collateral.

If the market value of a security drops below $3 per share, the security will not be assigned any value as collateral to secure your margin obligation.

As of August 2, 2024, the new margin requirement for short positions that are low priced is as follows:

Stocks priced below $5.00 = $5.00 per share margin requirement

Margin requirement = 5,000 x $5 = $25,000

Please also be aware that margin requirements may change daily and overnight due to various factors including, but not limited to, volatility, low float, and percentage of insider holdings.

The Short List is a tool on the trading platform that shows the availability and cost to locate shares for securities that require a locate.

How it works:

Displays whether shares are available to short

Shows the price per share to locate

Important:

Used for securities that are not easy to borrow

You must accept the locate price before entering a short position

Locates can be used and later sold back, as long as they are not currently in use

 Send your queries to support@tradezero.us and we’ll get back to you promptly.

The number of shares you can locate and the number you can short may differ because they are calculated at different times.

The Short Locator estimates how many shares you can short at the time you request a locate

When you place a short order, the system re-checks your buying power and eligibility in real time

Stocks priced below $3.00 are non-marginable

Stocks priced below $0.50 cannot be shorted

Locate fees are non-refundable, even if you cannot use all located shares

You may be able to sell back unused locates (not currently in use) to recover a portion of the cost

Unused locates can typically be offered for credit until 8:00 PM ET

Regulation SHO Rule 204 is the Close-out Requirement that requires brokers and dealers that are participants of a registered clearing agency to take action to close out “failure to deliver” positions.

Under Rule 204(a) of Regulation SHO, all “failure to deliver” purchases must be closed out by borrowing or purchasing securities no later than the start of regular trading hours on the following settlement date.

If you day trade a security and consistently hold a short position, then you are consistently net short the security and are at risk of a “failure to deliver” if TradeZero America or it's clearing firm cannot borrow the securities.

TradeZero tries to make this process as transparent as possible. We request from our clearing house before close of business any client positions that are at risk of “failure to deliver”. We then send to those clients a notice via email so they can make a better decision whether to stay in the position or get out of the position.

Reg SHO Rule 204(b) states that if a clearing house does not close out its “failure to deliver” in an equity in accordance with Reg SHO Rule 204(a) then the clearing house and any broker dealer for which it receives trades for clearance and settlement may not accept short sale orders from its customers in that equity without first borrowing the security or entering into a bona fide arrangement to borrow the stock. To avoid this, TradeZero takes the extra step to inform its clients of any potential “failure to deliver.”

As a rule of thumb, stocks that have a small float or have a large short interest are more at risk of a “failure to deliver” resulting in receiving a Reg SHO Rule 204 notice than stocks that have a large float and small short interest. It is important to be an educated trader and understand the rules that may affect your decision making.

For more information visit:


https://www.sec.gov/investor/pubs/regsho.htm

https://www.sec.gov/divisions/marketreg/mrfaqregsho1204.htm

TradeZero’s short locator calculates the number of shares you can short at the time you request the locate quote.


Some variables that may affect the number of shares you can short at a given time are price of security, margin requirement of security, and the available cash in your trading account.


When sending a short order, the order server will then recheck how many shares you can short based on those variables at the time you send the order.


Stocks that fall below $3 are non-marginable and the non margin ability of a stock may reduce the number of shares you may trade regardless of how many shares you have located.


TradeZero does not permit shorting any stock below $0.50. If the price of a stock falls below $0.50 between the time you locate shares and the time you place a short order, you will not be able to short the stock.


TradeZero cannot refund the cost of any shares you locate due to changes in stock price, marginability of the stock, or the available cash in your account.


Reminder: TradeZero does give you the ability to put up for credit any located shares not currently in use and you may be able to recoup a portion of your locate fees. You can put any unused located shares up for credit until 8:00 PM ET.


Short Selling & Borrow