The cost to borrow located shares overnight for the 1st night will be 5x times the market rate cost. The market rate cost will be equal to the highest rate that the client paid for locating the shares during the day. For example, if 100 shares were located for 0.01 per share and another 100 shares is located for 0.02 per share, the cost to borrow 200 located shares overnight will be 200 x 0.02 x 5 = $20.00. If only 100 located shares are borrowed overnight, then the cost will be 100 x 0.02 x 5 = $10.00.
The cost to carry an overnight borrow for every night after the 1st night will be charged at 1x the market rate cost. The market rate cost will be the highest rate paid for the located shares when the shares were initially located.
Are there any other fees associated with Zero Commission Stock Trading?
Hard to Borrow Short Location | At cost |
Hard to Borrow Overnight Shorts | 5x market rate cost for 1st night, additional days charged at 1x market rate |
Hard to Borrow Overnight Short Positions | Odd lot positions will be rounded up to the nearest hundred |
Margin Debt Interest | 5% |
TAF Fee | $0.000119 per share, sell side only |
SEC Fee | 0.0000221 x dollar amount, sell side only |
NSCC Fee | 0.00003 per share, $0.18 maximum and $0.033 minimum |
FOCUS Fee | 0.0000007 per share |
SIPC Fee | 0.000015 per share |
Assisted Trade | $30 |
Are there any day trading restrictions?
Yes. Pattern Day Trader(PDT) restrictions apply to stock and options trading. A Pattern Day Trader is a FINRA designation for a margin account that executes four or more day trades in five business days, provided the number of day trades are more than 6% of an accounts total trading activity for that same five-day period. These accounts need to maintain a daily equity balance of $25k or more and receive 4:1 Day Trading Buying Power from the clearing house. When the Starting Day Equity Balance is below $25k, the Day Trading Buying Power is reduces to zero (0).
Margin accounts receive 2:1 margin and must adhere to the PDT restrictions when the Starting Day Equity Balance is below $25k.
Cash Accounts are not intended to be day trading accounts. A cash account must have settled funds before a purchase can be made and before a security can be sold. If a cash account trades daily and liquidates long term positions, it is possible for the account to receive a "Good Faith Violation". Cash accounts are not allowed to short stock.
TradeZero America, Inc., like all other registered Broker Dealers in the US, enforces the Pattern Day Trading (PDT) rule as defined by FINRA Rule 4210 (Margin Requirements).
The PDT rule generally states that a customer is limited to three (3) round trip trades in any consecutive five trading day period unless maintaining a daily equity balance of $25,000.
If a customer creates a fourth (4) roundtrip trade, the account is classified as a pattern day trading account for ninety days. During this time, the account is restricted from day trading unless the equity balance is $25,000 or more.
The PDT rule applies to margin accounts that trade stock and options.Click here to read FINRA Rule 4210 on Pattern Day Trading (PDT Rule).
Day Trade Counting Examples | |
---|---|
This is one day trade because account bought and sold 100 shares XYZ in the same day. | Account starts with 0 shares XYZ. |
Buy 100 XYZ today | |
Sell 100 XYZ today | |
This is one day trade because account shorted and covered 100 shares XYZ in the same day | Account starts with 0 shares XYZ |
Short 100 YXY today | |
Cover 100 XYZ today | |
This is one day trade. The trade that opened before today does not count. | Account start day with 100 shares XYZ |
Sell 100 XYZ today | |
Buy 100 XYZ today | |
Sell 100 XYZ today | |
This is one day trade. The Buy of 50 and Sell of XYZ occurred today. | Account starts day with 100 XYZ |
Buy 50 XYZ today | |
Sell 100 XYZ today | |
This is one day trade because there is only one change of direction in the account, going from long to flat on the same day. | Account starts day with 0 shares of XYZ |
Buy 100 XYZ today | |
Buy 100 XYZ today | |
Sell 50 XYZ today | |
Sell 50 XYZ today | |
Sell 100 XYZ today | |
This is two day trades because a change of direction happened when a Cover of 50 XYZ occurred. The counter started on the second trade on the next short of 100 XYZ. | Account starts day with 0 shares of XYZ |
Short 100 XYZ today | |
Short 50 XYZ today | |
Cover 50 XYZ today | |
Short 100 XYZ today | |
Cover 100 XYZ today | |
Cover 100 XYZ today |
What is the short list?
The short list is a proprietary tool on the trading platform that queries all TZA locate required securities for availability and price per share to locate.
How are clients able to see what is easy to borrow? (no locate required)
The easy to borrow list (short list) is imported daily into the trading platform. If the stock is easy to borrow the trading platform will show a green "S" next to the symbol box. This means a locate is not required.
What are the short locate fees?
Locate fees are quoted per share. The rate is determined by the supply and demand to locate the shares on that day. The fees can vary during the day depending on market conditions. Locate fees are charged only after the price for the locate is accepted. If the locate shares are declined, then no fee is charged.
Will TradeZero ever cover your equity positions?
TradeZero America can force the sale or cover of equities positions in a customer’s account(s) without prior notice. If during the trading day, the equity in a customer’s account:
After buy-in or liquidation, it is the customer’s responsibility to maintain or increase account equity to meet the requirements stated in the Apex Clearing (“APEX”) Margin Form.
Likewise, If APEX cannot continue to borrow the securities in which a customer has a short position, TradeZero America may notify customers to cover their short positions during trading hours.
Furthermore, if the customer receives a margin call and fails to fund his/her account, TradeZero may liquidate any positions in the account to satisfy the maintenance margin call.
What is the margin requirement when shorting a stock under $2.50? Are these stocks marginable?
Margin requirement will be 100% of $2.50. ex: if you short 1000 shares of stock at $1.00, the cost to carry the position will be $2500.