1. The short list reflects the ease at which certain stocks are borrowed AND the "strength" of the brokerage account base and interdealer networking that a brokerage firm has. It is not that certain stocks are not shortable. Some firms are self-clearing, have billions of assets in hundreds of thousands of accounts, and their cages (where the physical securities are kept, if not in book entry form) are extensive. Other firms are introducing brokers, clear through correspondent relationships, and have to depend upon what their clearing firm can allocate to them in a particular issue.
Also, firms can set their own in-house limits on what can be borrowed such that they control their own risk exposure and maintain compliance. As long as the internal rule is stricter than their particular SRO's rules (NYSE or NASD), it's legit. Examples include making internet stocks subject to cash requirements (no margin purchases) or saying that stocks under a certain price are not marginable.
2. I'll assume you're talking about getting bought-in on a thin float. Generally, a buy-in is supposed to give you three days. It really depends upon the policy of the firms you use AND, ha ha, the floats of the issues you're trading in. In my experience and travels, I've been bought in with at times a two hour time limit. Sometimes it happens when a brokerage firm can also give you a little breathing room to short something and, upon determining that there is in fact no stock to borrow and no 'affirmative determination' for delivery, call you in instantaneously.
As a daytrader, it could also be that you executed a short sale, and it was subsquently determined by either the cage or a risk management staffer that either 1) they didn't have the stock or 2) some movement of it suddenly met some preordained statistical limits which tripped their proprietary "not shortable" risk limit. So, they called it home.
LPS5 |
