Any brokers pay short interest?

J Livermore

Junior member
10 0
Does anyone out there know of any brokerage house that pays short interest to the public? I know that when professionals short a stock they earn interest from their clearing firms. However, it seems that when dealing with the public, the brokers tend to be cheap and keep all the interest earned to themselves.
 

hatemypips

Well-known member
340 16
Does anyone out there know of any brokerage house that pays short interest to the public? I know that when professionals short a stock they earn interest from their clearing firms. However, it seems that when dealing with the public, the brokers tend to be cheap and keep all the interest earned to themselves.
What kind of interest on the stock are you talking about? When does it come from? I mean you borrow the stock to sell what are the costs of lender in this case?
 

J Livermore

Junior member
10 0
What kind of interest on the stock are you talking about? When does it come from? I mean you borrow the stock to sell what are the costs of lender in this case?
When a stock is sold (whether it's long or short) it generates cash which goes to the clearing firm for holding for the account holder. For short sales the clearing firm holds onto that cash for the trader's margin account. Professionals, (say a specialist on the floor of the New York Stock Exchange) engage in short selling all the time. When they hold a short position overnight their clearing firm gives them a piece of the interest earned on that cash.

Other professionals who may work for trading companies who are off floor also get paid short interest if they are big enough.

In my opinion, it comes down to how big an account you have before you can demand your broker pays short interest. Only once back in 90's when I was looking through a newspaper did I see a brokerage house advertise that it pays short interest to the public.

Hope this helps.
 

Georgelopez

Junior member
11 0
Yes, when you borrow shares and sell them short, the proceeds do earn interest. But usually not for you. Do any brokers pay interest on the proceeds of short sales? All my discount brokers sit on the money without paying interest, which doesn't seem particularly fair.