Hard-To-Borrow List
Candlefocus EditorA hard-to-borrow list is a list of stocks that have very few shares available for shorting. This can occur for various reasons, such as the stock’s popularity or a lack of sell orders in the marketplace willing to make their shares available for shorting. When brokers are unable to satisfy demand for borrowing stock, they’ll put the stock on their hard-to-borrow list.
When a stock is placed on the hard-to-borrow list, it makes it very difficult to short sell the stock, as it’s very difficult to find a seller who is willing to part with their stock in order to allow the short sale to be executed. As a result, short selling these stocks may no longer be possible, or it could incur additional stock loan fees, making it more expensive to short sell.
Short sellers also need to be mindful of their brokers’ hard-to-borrow lists, as any existing short positions in stocks on the list could be subject to fees and borrowing limits. These fees and limits vary by broker, and in some cases, these fees could be quite substantial.
In conclusion, the hard-to-borrow list is a useful tool for investors who can use it to identify stocks that may be difficult to short sell due to a lack of demand for borrowing. By having a clear understanding of which stocks are on the list, investors can short sell those stocks while avoiding additional costs or fees.