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in the USA you can’t control if your shares are leant by the...

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Klgrutman

18 Posts.

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09/10/19

20:18

Post #: 40802225
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Originally posted by stuzenz: ↑

This might be relevant and of interest for some of you - where others will already know this.

For STX to be shorted the shorters need to have pre-borrowed the stock from investors who are long. If this is not done it is call naked shorting which is illegal on the ASX (as it is in most markets). Naked shorting is technically difficult to do as the brokerage firms should have controls in place to not allow you to short without the shares borrowed first.

So, as holders of STX stock, you have the option of lending out your stock for others to use it for shorting against your position - or not allowing your shares to be lent out. You can opt in to lending your shares out and earn a few dollars a month (out of curiosity I joined my broker's programme for a month and found myself earning maybe $5 - 10 for the month on what may have been $50K - $100K of securities.

I am not sure if it is always opt-in (as it is with IB). It might be worth checking with your own broker if you are allowing them to lend out your shares to shorters or not. STX is still illiquid enough that if we as a group didn't allow our shares to be lent out it would have some impact to the share price by reducing the ability of the shares being borrowed for shorting.

I imagine short interest is low at the moment, but with the next leg up we will have technical analysis coming in with shorters thinking we should be reverting some of our gains. Making that slightly harder to do now might save us all a cent (or 3) in downward movement in the share price when we are trying to get it to maintain gains based on the fundamentals.

I am going into my account now to make sure my shares are not able to be lent against our long positions in STX. It would be nice if some of you could do the same.

With the above said, a little disclaimer - I personally think shorting companies is a good market feature for price discovery. And that activist shorts are a net positive to help expose corruption/fraud/bad behaviours etc.

My Interactive Brokers programme describes their programme as below:

Stock Yield Enhancement Program
Earn extra income on the fully-paid shares of stock held in your account by joining IBKR's Stock Yield Enhancement Program. This plan allows IBKR to borrow shares from you in exchange for cash collateral, and then lend the shares to traders who want to sell them short and are willing to pay interest to borrow them. Each day that your stock is on loan, you will be paid interest on the cash collateral posted to your account for the loan based on market rates.

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in the USA you can’t control if your shares are leant by the brokerage firm if you are on margin. You can only get paid on herd to borrow stock if you are in a cash account

STX Price at posting: 27.5¢ Sentiment: Buy Disclosure: Held
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(20min delay)
Last 18.5¢		Change 0.015(8.82%)		Mkt cap ! $530.0M

Open	High	Low	Value	Volume
17.0¢	18.5¢	17.0¢	$2.155M	12.01M

Buyers (Bids)

No.	Vol.	Price($)
11	851855	18.0¢

Sellers (Offers)

Price($)	Vol.	No.
18.5¢	131078	7

View Market Depth

No.	Vol.	Price($)
9	593855	0.180
13	898781	0.175
34	2111342	0.170
28	2089452	0.165
39	1603646	0.160

Price($)	Vol.	No.
0.185	76078	5
0.190	1277542	11
0.195	1127755	4
0.200	894999	13
0.205	685147	7

Last trade - 16.10pm 06/09/2024 (20 minute delay)

STX (ASX) Chart

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