Hard to Borrow (HTB) Fee Calculator
Calculate the daily and total locate costs for short selling restricted stocks.
What is a Hard to Borrow (HTB) Rate?
In the world of stock trading, "Hard to Borrow" refers to a security that is in high demand for short selling but has a limited supply for lending. When you want to short a stock, your broker must find shares to "borrow" so you can sell them. If the stock is on the HTB list, the broker charges a fee, known as the HTB rate, to cover the costs of locating these shares.
How HTB Fees Are Calculated
HTB fees are typically quoted as an annualized percentage rate. However, these fees are accrued daily, including weekends and holidays. The standard industry formula used by most prime brokers and retail platforms like Interactive Brokers or Fidelity is:
(Market Value of Shares × Annual Rate) / 360 = Daily Fee
Note: Most financial institutions use a 360-day year (Actual/360) for these calculations, though some may use 365. This calculator defaults to the standard 360-day financial convention.
Key Factors Influencing HTB Rates
- Short Interest: The higher the percentage of the float that is shorted, the higher the HTB rate usually climbs.
- Institutional Ownership: Stocks primarily held by retail investors are harder to borrow than those held by large institutions that participate in lending programs.
- Corporate Actions: Mergers, acquisitions, or upcoming dividends can suddenly spike HTB rates.
- Volatility: High-volatility "meme stocks" often see HTB rates exceeding 100% or even 200% annually.
Real-World Example
Imagine you want to short 200 shares of a stock priced at $50.00. The current annual HTB rate is 30%. You plan to hold the position for 5 days.
- Position Value: 200 shares × $50.00 = $10,000
- Annual Fee: $10,000 × 0.30 = $3,000
- Daily Fee: $3,000 / 360 = $8.33
- Total Cost for 5 days: $8.33 × 5 = $41.65
This cost is deducted from your account balance regardless of whether the stock price goes up or down. It is a critical "overhead" cost that short sellers must factor into their break-even analysis.