What is a borrow rate?

The borrow fee is the amount you can be charged for short positions you hold in your account, expressed as a percentage of the market value of the security. Any short position can be subject to borrow fees at any time. The borrow rate applies only if you hold the short position past 4 p.m. ET.

The borrow rate at Questrade can vary up to 4 p.m. depending on the demand and inventory of the security. The borrow rate is a floating rate, meaning it can change during the day. If a borrow rate changes, and the resulting new borrow fee is beyond what you’re willing to pay, you’ll need to close the position prior to 4 p.m. ET to avoid being charged the new rate.

To see the actual borrow rate of securities you hold at any time, review your holdings on the Positions tab.

Your borrow fee per day is calculated as (borrow rate x market value of security)/365 days in the year.

Here’s an example:

You borrow 100 shares of AAPL. You hold the shares past 4 p.m. ET and sell them the next day. At the end of the day, the stock was valued at $130 per share, making your total short position $13,000. This stock is in high demand, so your borrow rate is 20%.

Your borrow fee for the day would be (20% x $13,000)/365 = $7.12.

The borrow rate shown in the borrow rate agreement is an estimate of what the borrow rate for your investment will be. When you agree to pay the fee to borrow an investment to short, it does not guarantee the availability of the investment for the entire duration you intend to hold the short position.

Questrade reserves the right to cover your short positions at any time without prior notice.

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