If I borrow shares to short, and the initial borrowing rate at the time that I open the position is 10%, will that be fixed until I close the position? i.e. if the borrowing rate increased to 20% while I am still shorting, would my interest payments increase as well, or do only new borrowers pay the increased rate?
1 Answer
The borrow rate is a floating rate that can change day to day. In addition, the total daily fee will also fluctuate based on the value of the security. No fee is charged for a day trade. The fee formula is:
- (Borrow rate) x (security's closing price) x (# of shares) / 365
That means that you pay for holding on the weekend and holidays as well.
answered Apr 18, 2020 at 12:01
