Does short sale borrowing rate change during the term of the loan?

Question

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?

Bob Baerker · 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.

Does short sale borrowing rate change during the term of the loan?

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