question about short selling broker rules

chhe

Newbie
1 0
I was trying to short sell a stock with Ally Invest but it wouldn't let me place the trade. When I spoke to Ally Invest they told me that they have to have a sufficient number of shares on hand to cover the short sale and that for some reason they didn't have it for the stock I wanted to short which was why the trade was prevented. The stock was being traded on NasdaqGS at a price of around $40, market cap at around $1 billion.

My question is, Is this a common thing that happens? And if I switched to a different broker would this be more unlikely to happen? And if so, could you recommend a couple of different online brokerages as alternatives?
 

BigDeal

Active member
117 57
If a broker wants to hedge a short position they have to borrow stock to do it, and if they are unable to, have the right to refuse your trade. All brokers will potentially do this, but it depends on the circumstances surrounding the trade.
 

hatemypips

Established member
702 62
I was trying to short sell a stock with Ally Invest but it wouldn't let me place the trade. When I spoke to Ally Invest they told me that they have to have a sufficient number of shares on hand to cover the short sale and that for some reason they didn't have it for the stock I wanted to short which was why the trade was prevented. The stock was being traded on NasdaqGS at a price of around $40, market cap at around $1 billion.

My question is, Is this a common thing that happens? And if I switched to a different broker would this be more unlikely to happen? And if so, could you recommend a couple of different online brokerages as alternatives?
It's strange because according to your info it's not a kind of illiquid stock. What about the recent dynamics in the stock? If a stock in a free-fall or suffers from heavy sell-off some brokers may prefer to wind up short-selling opportunity due to risk of holding bad inventory.
 
 
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