Please be advised that Alpaca will begin charging borrow fees on overnight short positions for the month of June 2021 and onward. As part of our ongoing efforts to provide world-class brokerage services and APIs, Alpaca is making you aware of some pass-through charges (borrow fees) that you may soon see in your account in regard to short selling.
What is a borrow fee?
A stock loan fee, or borrow fee, is a fee charged by a brokerage firm to a client for borrowing shares.
How does someone incur a borrow fee?
Customers incur borrow fees when short positions are carried overnight. Short selling is a fairly simple concept — an investor borrows a stock, sells the stock, and then buys the stock back to return it to the lender. Short sellers are betting that the stock they sell will drop in price. The difference between the sell price and the buy price is the profit or loss.
Alpaca has passed through these charges in the past but has not charged the fees between February to May 2021. Fees were waived during this period as we transitioned to a new clearing firm. Alpaca will resume pass-through charges from our clearing firm to the end client, starting June 2021.
How do I see if I have incurred borrow fees?
If you sold short any securities during the month of June and held those positions overnight, you will soon see activity in your account with a code of 'FEE' and a description of ‘June 2021 Stock Borrow Fees.’
Please note that if you hold short positions as of a Friday settlement date, you will incur stock borrow fees for 3 days (Friday, Saturday, Sunday).
How are borrow fees charged?
Stock borrow fees are charged in the nearest round lot (100 shares) regardless of how many shares were actually shorted. This is because stocks are borrowed in round lots.
For more information please see Margin & Short Selling - Documentation or email us at Support@Alpaca.Markets