Shortable Stocks

We make the stocks listed under the following links available for shorting:

North America
Country	Shortable Stocks
United States	Shortable: 11837   Listed for Trading: 20009
Canada	Shortable: 740   Listed for Trading: 4293

Click Here for most recent updates, if available.

Europe
Country	Shortable Stocks
Germany	Shortable: 1576   Listed for Trading: 3633
United Kingdom	Shortable: 1458   Listed for Trading: 2677
France	Shortable: 570   Listed for Trading: 1124
Netherlands	Shortable: 132   Listed for Trading: 269
Switzerland	Shortable: 339   Listed for Trading: 587
Belgium	Shortable: 97   Listed for Trading: 174
Sweden	Shortable: 114   Listed for Trading: 404
Spain	Shortable: 139   Listed for Trading: 193
Austria	Shortable: 47   Listed for Trading: 97
Italy	Shortable: 124   Listed for Trading: 457

Click Here for most recent updates, if available.

Asia
Country	Shortable Stocks
Australia	None available at this time
Japan	None available at this time
Hong Kong	Shortable: 164   Listed for Trading: 1452

Click Here for most recent updates, if available.

IB customers who only execute through IB, but do not use IB as their clearing broker or custody agent ("Non-Clearing Customer"), may click here for a list of valid Market Participant Identifier (MPID) codes to be entered with their short sale orders.

The SEC emergency order 34-58592 expired on 9 October 2008.

The UK Financial Services Authority (“FSA”) has issued a prohibition on short sales in approximately 40 UK-listed Financial Services Companies. The prohibition is complex and refers to any trading strategy that is economically equivalent to a short sale, and therefore applies as well to derivative strategies such as put option purchases or call option sales. The rule was scheduled to remain in effect, subject to FSA review, until January 2009. More information regarding UK short sale regulations can be found on the FSA website, and also at:
http://www.fsa.gov.uk/Pages/Library/Communication/PR/2008/index.shtml

Many countries have imposed special restrictions on short selling. IB has respected the regulations where the restriction is consistent with IB's existing systems. Where the regulations define security lending practices not currently supported by IB, we have restricted short sale activities altogether.

Pre-Borrow Restriction (short sales allowed only with pre-borrow prior to the actual sale): IB does not support pre-borrow services⁽¹⁾. All stocks are therefore effectively restricted: Australia, Japan, Hong Kong.

Restrictions on Specific Stocks: UK, Germany, France, Netherlands, Switzerland, Belgium, Sweden, Canada, Norway, Italy.

SEC Emergency Order 34-58572 expired on October 17, 2008.

Amendments to Regulation SHO

Interim final temporary rule and request for comments.

SUMMARY: The Securities and Exchange Commission ("Commission") adopted an interim final temporary rule under the Securities Exchange Act of 1934 (“Exchange Act”) to address abusive "naked" short selling in all equity securities by requiring that participants of a clearing agency registered with the Commission deliver securities by settlement date, or if the participants have not delivered shares by settlement date, immediately purchase or borrow securities to close out the fail to deliver position by no later than the beginning of regular trading hours on the settlement day following the day the participant incurred the fail to deliver position. Failure to comply with the close-out requirement of the temporary rule is a violation of the temporary rule. In addition, a participant that does not comply with this close-out requirement, and any broker-dealer from which it receives trades for clearance and settlement, will not be able to short sell the security either for itself or for the account of another, unless it has previously arranged to borrow or borrowed the security, until the fail to deliver position is closed out.

Effective Date: October 17, 2008 except §242.204T which is effective October 17, 2008 until July 31, 2009.

 

Scenario: Trader A decides he wants to sell a stock short in hopes of being able to repurchase it at a lower price in the future.

1. Locate shares for shorting.
   To enact a short sale, Trader A must first confirm that he will be able to borrow the number of shares he plans to sell. Brokers keep a list of available inventory on what is called a Box List. Brokers populate the Box List through their own inventory and shares of others, including their customers who borrow on margin and agree to lend their shares, and other third-party brokers.
   
   
2. Execute a short sale trade.
   After locating available shares, Trader A executes a short sale trade on trade date, or “T.” Most major equity markets have a three-day settlement period, which means that the exchange of shares for cash occurs three days following the trade date, or “T+3.” .
   
   
3. Shares are borrowed and the short sale transaction settles.
   On the morning of T+3, Trader A's Securities Lending Department determines its actual delivery obligations for that day. They consult their Box List and use the shares to settle the short sale. As with the short sale availability process, in the case that their own Box List does not contain borrowable inventory, they consult and use shares from the Box List of other brokers.
   
   It is important to understand that there may be times where a given stock appears to be borrowable on T, but in the intervening three days the availability changes such that on T+3 it is no longer borrowable. This creates a situation in which the short sale trade will "fail;" in other words the timely delivery obligation will not be met by the broker. In this case, a forced repurchase, or "buy-in" may be issued by the broker and the resulting buy trade will be charged to the Trader A’s account, thereby reducing or eliminating the short position.
   
4. Cash from the short sale is used as collateral on borrowed shares.
   When the trade settles, the cash received from selling the shares is used as collateral on Trader A's borrowed shares. Trader A's Broker invests the cash collateral.
   
   
5. Interest is paid to short seller( if applicable).
   A portion of the interest from the invested collateral is used to pay administration fees and stock borrowing fees. Because of steep administration costs, remaining interest is generally only paid out to large balance short sellers. In certain hard to borrow cases, borrowing fees are so high (greater than the interest earned) that the short seller ends up paying for the privilege of borrowing stock.
   
   
6. Payments in Lieu of Dividends made by short seller (if required).
   If the stock in the short sale pays dividends, the purchaser of the stock receives the dividend payments. However, the lender of the shares is also entitled to dividend payments since he did not sell the stock but is only lending it. Trader A is responsible to making these payments to the lender in the form Payment in Lieu of Dividends.

At some point in the future the need to maintain the borrow is reduced, either when Trader A decides to repurchase his short position, or if the shares are recalled by the lender. In the former case, the deal is closed. In the latter case, the broker will try to find another lender, the loan will be moved to the new trader or broker, and Trader A's short position will remain unaffected. In the case that no substitute loan can be arranged, the broker may notify Trader A that the loan has been recalled and that he must cover his position immediately. In many cases the broker will simply execute the forced repurchase, or buy-in, of the recalled shares.

SEC regulations implemented in September 2008 require that short sellers comply with their delivery obligations on the standard settlement date, generally three business days after the trade date. The regulations additionally require a repurchase of securities that are not delivered ("fail") by the next trading session for the securities. This contrasts with previous practice wherein a trade could "fail" for several days after the target settlement date, permitting brokers more time to make delivery by finding lenders for the stock(s).

As a result of the more stringent regulatory enforcement of the delivery rules, lenders have generally become more conservative in their lending activities leading to a decline in the general availability of inventory in many less widely held stocks. This creates an additional effect on the securities borrow/loan market by causing dealers to more readily recall existing loans rather than establishing new borrows to manage their inventory needs. For a fuller discussion of short sale and stock borrow and lend ("SLB") mechanics, please click here.

For details on how IB processes buy-ins please refer to the following IB Knowledge Base article http://ibkb.interactivebrokers.com/node/845.