Overnight borrow rates for hard to borrow securities can be very expensive especially when held for many days.  The hard to borrow fees may be substantial and vary daily based on demand for the security. Beginning on February 1, 2019, updated pricing for holding hard to borrow securities overnight is as follows:

• Seven times (7x) the accepted borrow rate per share for the first night.
• One time (1x) the accepted borrow rate per share for each night thereafter.
• Weekdays and holidays are counted. For example, any hard to borrow short position held for the first night on a Friday will incur a 7x charge for Friday night and, subsequently a 1x charge for Saturday and Sunday respectively.
• There will be no additional charges billed on settlement.

TradeZero America may inform the trader if TradeZero America does not have the ability to carry a trader’s short position overnight or if the trader’s short position exceeds TradeZero America’s risk parameters. If the trader does not cover the position, TradeZero America may cover the short position by 4pm Eastern Time and a $20 desk fee will apply.

Yes. Pattern Day Trader(PDT) restrictions apply. 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 Account must have settled funds before a purchase can be made and before a security can be sold. These 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.

Click here to read FINRA Rule 4210 on Pattern Day Trading (PDT Rule).

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:

• Falls between 15-20%, TradeZero America may, at its discretion, buy-in or liquidate the customer’s position in order to raise account equity up to 25% or more;
• Falls to 15% or below, TradeZero America may, at its discretion, buy-in or liquidate the customer’s entire 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 Electronic Transaction Clearing (“ETC”) Margin Form.

Likewise, If ETC 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.

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