RE:RE:Short sales and stock lendingMaxmoe wrote: And by the way, despite the endless conspiracy theory chatter, only a very small percentage of short selling involves retail investors. Most short sellers are sophisticated hedge funds. Most of the shares actual short sellers borrow do NOT come from retail accounts. They come from fellow hedge funds, large mutual funds (where permitted) and from large pension funds and the banks own house accounts. Many large pension funds and fund managers, use the fees from securities lending to cover their custodial fees which can be $millions for 10s of $billion dollar portfolios. I used to work for one. Every now and then for shiggles, and to keep everyone honest and on their toes, we'd remove one holding from our portfolio as eligible for lending if we saw a big short position. There was inevitably a brief scramble that would ensue thereby confirming everything was working as it should. So relax, it is extremely unlikely anyone is sweeping the street for retail shares to borrow and short.
Maxmoe wrote: Don't believe everything you read about short sellers borrowing your shares. No, nobody can borrow your shares and lend them to a short seller unless you buy on margin. Which seems fair to me. You borrow money , you don't really own them do you? So not out of your cash account, not out of an rsp or tfsa either because there is zero margin allowed. In fact, even if you have a margin account, nobody can borrow your shares unless you are currently, actively, actually using margin. If you reduce your margin to zero on your margin account, your shares must be immediately returned by the borrower. I called and spoke to my back office admin folks at TD and bmo to confirm all of the above. Plus I spoke to iiroc that is the regulator with the big stick on short selling. They take the rules VERY seriously. If you have concerns about your broker, call iiroc. They are nice people. If you want to confirm your shares are not eligible for lending take a look at your last monthly statement of holdings. You'll have to look closely but somewhere your shareholdings will be identified as "SEG" or "Segregated". On my TD statement it is right beside my number of shares. So for example,
Athabasca Oil Corp (ATH) 1,000,000 SEG $2.54. Etcetc
hope this helps and like I said, call your back office folks and/or iiroc if you want a better explanation.
I understand sweet F.A about options/shorting but that process may be about to change, I just read that National Bank clients can now sign up to agree to let their shares be lent out and they get 50% of the fee the bank charges the borrower, as I said I am not clear on this stuff so if any one is interested do a web search for details