Stock Borrow/Loan is available for Portfolio Margin customers.
To enable stock/borrow permissions, you must log into Account Management and from the Manage Account menu select Trade Configuration and then Permissions. From the Trade Permissions section, enable United States (AQS Stock Lend Borrow) from the Stocks column.
The Borrow/Loan Market
The market’s regular hours are from 6:45 - 15:00.
Most active time for borrow/lend occurs between 9:00 and 11:00 am.
Recalls and Rerates
As a borrower, if you request a rerate on the borrow, the lender has 25 minutes in which to respond. If there is no response or if the rerate request is rejected, the transaction is closed and borrowed shares are returned to the lender.
Rates and Fees
The borrow and lend rates display in the data line for the stock underlying in the Borrow and Lend fields.
When you hover your mouse over the borrow rate, you see the Total rate, which is:
Interest Rate - Borrow Rate
The interest rate is always the current opening Fed Funds Effective rate.
The borrow/lend rates change based on availability of underlying contract.
The borrow rate is applied to the collateral to calculate the daily borrow fee.
The borrower is responsible for the daily borrow fee and for collateral on the transaction. The collateral is equal to the settlement price x quantity. The settlement price is 102% x mark price rounded up to the nearest 1.00 with a 1.00 minimum.
Collateral is returned to the borrower when the borrowed shares have been returned to the lender.
In the case of dividend-paying shares, since shares are only being lent (not sold) by the lender, dividends paid during the borrow belong to the lender who actually owns the shares. The borrower of the shares must pay dividends to the lender in what is called Payment in Lieu of Dividends.
Transaction Information
Orders are only eligible to fill during regular trading hours.
There is a price minimum of 200k for borrow transactions of easy-to-borrow shares. This minimum is in effect from the market’s open at 6:45 am up until 11:00 am. Shares are considered easy-to-borrow if the borrow rate is less than or equal to 0.00.
To lend, you must own the shares outright, and they must be physically available and held at the DTC. The quantity you have available to lend is shown in the Loanable Quantity field. If your account has a margin balance, you may not be able to lend out all of the shares in a position. IB’s segregation algorithm determines which shares are available to lend.