The Hard-to-Borrow fee may apply when Legent Clearing charges interest on stock loans. The Hard-to-Borrow fee is based on the interest rate or negative rebate the clearing firm charges when you short a security that is in low supply. This annualized stock loan fee is assessed for each day you hold a short position through the settlement of the closing transaction; you will be charged this fee on a monthly basis.
Please note that the negative rebate is subject to change based on market fluctuation.
It is calculated by multiplying the market value of the short position by the interest paid and dividing that amount by 360. For example:
Market value of XYZ stock = $40
Number of shares sold short = 2,500
Negative rebate rate = 2%
$40 x 2,500 = $100,000 (market value of short position)
$100,000 x .02 = $2,000 (annualized)
$2,000 / 360 = $5.55 per day